Here is the latest post from Mike Krieger:
Rogue Government Traders
Everything that is happening around the world right now reminds me of the movie “Rogue Trader.” In case you haven’t seen it, it is the 1999 film where Ewan McGregor plays the role of Nick Leeson, the Barings Bank trader whose trades gone bad brought down Barings Bank, the oldest merchant bank in London at the time. The reason why this story is so compelling and why I recommend everyone go watch it is because it demonstrates what can happen when a small loss or mistake is ignored and then covered up in a futile attempt to get back to where you were. In this case, Nick Leeson started losing money trading futures in Singapore and rather than cutting his losses he kept trading more and bigger. Pretty quickly, the losses became so enormous he knew he would be forced to close them out if someone noticed and he might even be fired. So what did he do? He decided to transfer the losses to a hidden account. The 88888 account. He figured he would hide the losses there and then close the hidden account when he got back to even. He never got back to even and Barings went bankrupt.
Any of this sound familiar? Yes of course it does. Unfortunately for all of us, he story of Barings bank and Nick Leeson is merely happening on a global scale. However, rather than one trader making bad bets what we are dealing with is a gigantic credit bubble ponzi scheme created by TBTF banks, or as Bill Black more appropriately refers to them, Systemically Dangerous Institutions (SDIs) that now needs to be covered up. This ponzi first started unraveling back in 2008 and rather than deal with it the best we could, global “leaders” decided to bail them out with taxpayer money and guarantees. What did we get for this act of kindness? A dead economy, monstrous unemployment, 15% of Americans on food stamps and a frightening reality that shows Americans are having a much harder time than the Chinese putting food on the table. See this article http://www.shtfplan.com/headline-news/startling-survey-americans-are-struggling-more-than-chinese-to-put-food-on-the-table_10152011. Meanwhile, what did the banksters get? They consolidated even more power over their Washington D.C. puppets because now establishment politicians are “in” the doubled down Nick Leeson bet with Wall Street and of course they got record bonuses and no one was prosecuted.
So here is the world as I see it at the moment. You have a gigantic credit/derivatives ponzi scheme created by SDIs that cannot be settled or unwound without a lot of pain. The banks know this but of course they don’t tell the serfs. They did tell the governments this back in 2008, but with the caveat that if the politicians saved them they would save the economy and be considered heroes. Given the financial ignorance, stupidity and massive egos floating around that cesspool called Washington D.C. they fell for it line hook line and sinker. Well, nothing improved except for bank bonuses and now people are unsurprisingly out in the streets all over America. Now what?
Well since the politicians are now “in the bet” with the banksters they are just doubling down and doubling down on past mistakes and making things worse and worse. Except this time they won’t just blow up an old bank. They will blow up the entire planet. I mean did you see what Bank of America just did? They purposely moved their derivatives in with the FDIC insured deposits subsidiary and away from the Merrill unit. The FDIC is apparently not into this but the FED thinks it is a good idea. They are purposely putting a nuclear bomb in bed with customer deposits so they have a gun to the head of everyone again. Aren’t you glad we bailed them out? Read this http://www.bloomberg.com/news/2011-10-18/bofa-said-to-split-regulators-over-moving-merrill-derivatives-to-bank-unit.html and this http://www.nakedcapitalism.com/2011/10/bank-of-america-deathwatch-moves-risky-derivatives-from-holding-company-to-taxpayer-backstopped-depositors.html.
No Solution Announced in Europe. Why?
One of the most hilarious and disturbing things that has dominated market related news lately is the lack of any “solution” in Europe but rather commentary/rumors every other day about some master plan that is to be unveiled any moment. Of course nothing is ever unveiled and then they say oh it will be “next week.” It’s always next week. Just like every bankrupt country on the planet is supposedly going to have miraculous budget surpluses in 2020. They are lying folks. No solution has been announced in Europe because there is no solution. I think it is actually pretty simple. The extent of the debt problem is so enormous when you include Italy (which you need to do as yields reach back up to 6% on the 10 year bond and people are getting violent in the streets) that any “solution” would have to be so huge and involve a lot of new money/credit creation in the Eurozone that it would pass the buck entirely to Germany and lead to extremely high inflation in the Eurozone. This is why Germany rightly has not agreed to the bazooka approach that France and Tiny Timmy Geithner is trying to shove down their throats. While things may not be great in Germany, I don’t think they want a situation where their people have a harder time eating than the Chinese. That is what Americans have gotten as a reward for pulling out the bazooka in 2008 and bailing out the criminals at the government-ward banks.
Here is the other problem with the whole thing. Germany seems to be pushing for greater private sector write downs on Greek debt. The number floating around is 50%. While this is the responsible thing to do it isn’t really workable as a “solution.” Why? Because why would ANY other nation ever perform austerity and agree to pay their debt burden after that? They just saw that all you have to do is cheat and riot and the EU will give in because they will to do anything to save their precious little Euro project. So if Greece gets away with not honoring its debts no nation will ever honor them and then you will either see the biggest chain reaction of debt default in human history or the biggest money printing episode since Zimbabwe. This is completely binary and there are no good outcomes. That is why nothing has been announced. I still think the chance of Germany pulling itself out has a much higher probability than people realize. To see some of the friction between Germany and France read this quick piece from yesterday http://www.cnn.com/2011/10/18/business/france-euro-summit/.
Life in a Looted United States of America
Let this message serve as a warning to Germany. If you follow the path to mutually assured destruction with the rest of Europe you will end up with what we have here in America. In a post looted America, the landscape is dominated by criminal oligarchs running around spouting lies via the media to the ignorant sheep. You see states like Louisiana apparently banning cash for certain transactions http://dailyreckoning.com/louisiana-law/. You see Washington D.C., home of nothing productive or creative but rather a nest of immoral parasites take over as the highest household income from San Jose, home of companies like Apple and Cisco. You have the only good news from our Nobel Peace Prize winner President this year being the murder of two people. Osama Bin Laden (which I believe was a totally fake story) and now today Gadhafi. Wow, America really is number 1.
This is how a nation descends from one of productivity and innovation to ruthless, corrupt feudalism in a very short period of time. My message for Americans follows up from my email of two weeks ago. The reason the liberal mainstream corporate media demonized the Tea Party is because it threatens the status quo. The reason the conservative corporate mainstream media demonizes Occupy Wall Street is because it threatens the status quo. These are textbook divide and conquer strategies being used on the American people. Do not fall for it. Yesterday I read a really interesting gallup poll that stated: “Not surprisingly, Americans who consider themselves supporters of the Occupy Wall Street movement (26% of all Americans) are more likely to blame Wall Street than the federal government for the nation's economic problems. Supporters of the Tea Party movement (22% of Americans) are overwhelmingly likely to blame the government.” What is most compelling to me is that 26%+22% = 48% so basically almost a majority. All we need to do is teach people that Washington D.C. and Wall Street are now the same corrupt entity. They are one gigantic rogue trader sucking the lifeblood out of America. If we can unite these forces, which I can say with certainty agree on the important issues, we can put an end to the status quo and free ourselves of this bondage.
********************************************************************************
I really like statistics. You have probably figured that out by now. While they can be manipulated, see the inflation stats, they usually paint a very true picture. For everyone who thought the bailout helped the American people, the numbers prove otherwise. Here is the most recent example.
If you work hard, you can live a richer life than your parents did. That's the American Dream. But thanks to reckless government policy, that dream is in peril. The average individual has $1,315 less in disposable income than he or she did at beginning of the subprime crisis in 2008 – though the recession technically ended in mid-2009.
Per-capital disposal personal income peaked in spring 2008 at $33,794 of after-tax income. As of the second quarter of 2011, that's down to $32,479 – nearly a 4% drop.
The decrease in the standard of living reflects three main factors: Stagnant wages (real median income is down 9.8% since the beginning of the recession through June), falling net worth (home prices and investment portfolios are down), and inflation (consumer prices are up 3.25% since mid-2008). The largest of these three problems is the decline in real estate prices. Before the crisis, Americans could tap the equity of their home for extra cash. But since 2007, Americans' collective net worth has fallen $5.5 trillion – more than 8.6%, according to the Federal Reserve. Remember… this is a government-reported number, meaning the actual numbers likely far worse.
Currently, 64% of Americans worry they won't be able to meet their expenses at least some of the time, according to a survey completed in mid-September by the Marist Institute for Public Opinion. And of those surveyed, one-third say they have chronic financial problems.
*******************************************************************************
Now it's time to lighten up. If you don't think gold is important, check out what this crazy Irishman did to come up with his own gold.
Man jailed after trying to turn feces into gold
A man from Northern Ireland has been jailed after an experiment in which he attempted to turn his own feces into gold went wrong and started a fire in a block of flats.
Paul Moran will now serve three months in jail and a further 12 months on license after the failed experiment caused a fire at his Housing Executive home in Derrin Park, Enniskillen.
Moran admitted arson and endangering the lives of others in the fire, which reportedly caused over £3,000 worth of damage.
It is thought that as part of the bizarre experiment Moran left his faeces, along with other waste products such as fertiliser, on a heater.
In his ruling Judge McFarland told Moran: “Rather bizarrely you were attempting to make gold from human faeces and waste products.
“It was an interesting experiment to fulfil the alchemist’s dream, but wasn’t going to succeed.”
Moran’s barrister mentioned that his client was a man of ‘considerable intellectual ability’ but that he had problems battling drug abuse.
*******************************************************************************
My generation grew up on the movie, The Goonies. Chunk was the funniest character, in my opinion. I have a friend who even calls his fantasy football team, The Truffle Shuffle. This was Chunk's signature dance.
Well it turns out, Chunk founded his own firm in 2002. His real name is Jeff Cohen. He wrote an artcile for CNBC the other day. You can read it here.
He doesn't look like Chunk anymore. People can change, no way I would have recognized him.
*******************************************************************************
I'm sure everyone has their own memories of red solo cup. We used them for pong games in college. Probably not our finest hour, but it sure was fun at the time. Here is Toby Keith in his ode to Red Solo Cups.
*******************************************************************************
The Hogs take on our former coach, Houston ClownShoes Nutt, this weekend. This was the moment I realized he had to go. We had just barely beat the worst team in our division. I calling it Hogs 38 - Hooty's Bears 14.
No comments:
Post a Comment