TimcastIRL w/ Steve Bannon on Gamestop, AMC, short sellers, information warfare and the Fourth Turning.
Full Episode: https://www.youtube.com/watch?v=B_nUUzvrjJQ
“Government has coddled, accepted, and ignored white collar crime for too long. It is time the nation woke up and realized that it’s not the armed robbers or drug dealers who cause the most economic harm, it’s the white collar criminals living in the most expensive homes who have the most impressive resumes who harm us the most. They steal our pensions, bankrupt our companies, and destroy thousands of jobs, ruining countless lives.” – Harry Markopolos, Madoff Whistleblower
The tenth anniversary of the Wall Street created financial catastrophe brought back some bittersweet memories this week. I wrote my first articles during the summer/fall of 2008 for Seeking Alpha. They included: Is The U.S Banking System Safe? (Aug 2008), The Great Consumer Crash of 2009 (Aug 2008), Looming Financial Catastrophe: A Real Inconvenient Truth (Aug 2008), Is Wachovia the Worst Run Bank in America (Sept 2008), The U.S. on the Precipice (Sept 2008), On Board the U.S.S. Titanic (Sept 2008), Our Coming Depression (Oct 2008), among others. I was pumping out 5,000 word articles every 2 or 3 days.
“So the modern world may be increasing in technological knowledge, but, paradoxically, it is making things a lot more unpredictable.” – Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder
“Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.” – Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder
I had read Nassim Taleb’s other best-selling tomes about risk, randomness and black swans – Fooled by Randomness & The Black Swan. They were not easy reads, but they were must reads. He is clearly a brilliant thinker, but I like him more because he is a prickly skeptic who scorns and ridicules academics, politicians, and Wall Street scumbags with gusto. There were many passages which baffled me, but so many nuggets of wisdom throughout each book, you couldn’t put them down.
When his Antifragile book was published in 2012, the name intimidated me. I figured it was too intellectual for my tastes. When I saw it on the shelf in my favorite used book store at the beach, I figured it was worth a read for $9. I’m plowing through it and I haven’t been disappointed.
His main themes are more pertinent today than they were in 2012. He published The Black Swan in 2007, just prior to one of the biggest black swans in world history – the 2008 Federal Reserve/Wall Street created financial collapse. His disdain for “experts” like Bernanke, Paulson, and Wall Street CEOs, and their inability to comprehend the consequences of their actions and in-actions as the financial system was blown sky high, was a bulls-eye.
Guest Post by
Earlier today, Ryan Grim and Paul Blumenthal published a blockbuster piece in the Huffington Post, titled: The Vultures’ Vultures: How A New Hedge-Fund Strategy Is Corrupting Washington.
It details the secretive world of the dark money groups representing mercenary hedge funds in their insatiable quest for more and more money. In many ways, it’s merely a microcosm of America in 2016. A culture in which ethics has become so irrelevant, it isn’t even a nuisance; it simply never factors into the equation.
The first few paragraphs set the stage perfectly:
WASHINGTON – Take Robert Shapiro.
A Harvard-trained economist, Shapiro is the head of a consulting firm called Sonecon. That business card doesn’t do it for you? He’s got a few more in his wallet:
Senior fellow at the Georgetown University School of Business.
Adviser to the International Monetary Fund.
Director of the Globalization Initiative at NDN, a progressive think tank.
Shapiro, a Democrat, has advised presidents and presidential candidates, and has held powerful government posts. It stands to reason, then, that when he has thoughts on public policy, he can find an outlet ready to publish them.
Recently, he’s had ideas on how the government can address the debt crisis in Puerto Rico and how it can end the conservatorship of Fannie Mae and Freddie Mac by moving them into the private market. Before that, he had a take on how to deal with Argentina’s debt crisis. For all three, he produced academic-looking papers, complete with footnotes and charts.
All three situations have one thing in common: If they were resolved the way Shapiro suggested, a variety of bets placed by a select group of the most politically powerful hedge funds would pay off in a huge way. In the case of Argentina, they mostly have. Fights over how to resolve the other two issues are still raging in Washington.
For this article, we called Shapiro to ask on whose behalf he has been waging these intellectual battles. His answer was surprising in its honesty: He’s working with DCI Group, a political dark arts master known to be advocating on behalf of a group of powerful hedge funds that are changing how Washington works.
The housing market peaked in 2005 and proceeded to crash over the next five years, with existing home sales falling 50%, new home sales falling 75%, and national home prices falling 30%. A funny thing happened after the peak. Wall Street banks accelerated the issuance of subprime mortgages to hyper-speed. The executives of these banks knew housing had peaked, but insatiable greed consumed them as they purposely doled out billions in no-doc liar loans as a necessary ingredient in their CDOs of mass destruction.
The millions in upfront fees, along with their lack of conscience in bribing Moody’s and S&P to get AAA ratings on toxic waste, while selling the derivatives to clients and shorting them at the same time, in order to enrich executives with multi-million dollar compensation packages, overrode any thoughts of risk management, consequences, or the impact on homeowners, investors, or taxpayers. The housing boom began as a natural reaction to the Federal Reserve suppressing interest rates to, at the time, ridiculously low levels from 2001 through 2004 (child’s play compared to the last six years).
Mortgage applications fell 17.0% this week on a non-adjusted basis (following a 7.2% the previous week) for the biggest 2-week drop since January 2015. Even on a seasonally-adjusted basis the last 2 weeks have dropped 6.2% and 7% (the biggest 2 week drop since Feb 2015). However, just as Sept 2014 was notably seasonally weak for mortgage applications, for this time of year, mortgage applications have not been weaker since 2000.
So we have mortgage rates still hovering near record lows. We supposedly have the lowest unemployment rate since 2007. Obama is tweeting about the 13 million jobs he has created. The economy has supposedly been growing for the last six years. Consumer confidence is back to pre-recession highs. And home prices have risen by 30% since 2012. The National Association of Realtors reports price wars and tremendous demand for homes.
One question. In a normal, non-manipulated, market based housing market, wouldn’t homes be bought by families who obtained a 30 year mortgage? Does the chart below present a strong recovering housing market?
Mortgage applications to purchase a home are at 2009 recession lows. They haven’t gone anywhere in five years. The peak was 2005 and the housing market was in full collapse mode in 2008. Mortgage applications are 40% below 2008/2009 levels. They are 50% below 2001/2002 levels. There is no housing recovery. Tolls Brothers and Hovnanian are reporting lower sales versus last year.
The entire housing recovery meme is bullshit. Wall Street, the Fed, the Treasury and the White House have colluded to drive home prices up to benefit the Wall Street shysters and to use as propaganda in their game to convince Americans the economy is great. Chinese and Russian billionaires, hedge funds, and flippers have been the major buyers driving up prices to unaffordable levels for most Americans.
This shitty recovery is all we’ve gotten with mortgage rates at all-time lows. Imagine the shitstorm headed our way with mortgage rates headed higher.
Submitted by Tyler Durden on 07/21/2015 22:00 -0400
On Monday evening, we noted that market participants are reducing the size of their trades and turning to derivatives in order to avoid the perils associated with what are increasingly illiquid markets.
While we’ve been pounding the table on bond market liquidity for years, the rest of the world (operating on the standard 2-3 year time lag) has just begun to wake up to how thin markets have become. Now, pundits, analysts, billionaire bankers, and incorrigible corporate raiders alike are shouting from the rooftops about the pitfalls of illiquidity. The secondary market for corporate credit has received the lion’s share of the attention (for reasons we outlined yesterday) and as Carl Icahn was at pains to explain to Larry Fink last week, ETFs are a large part of the problem.
The story is simple. Shrinking dealer inventories (the result of a post-crisis regulatory regime wherein the term “prop trader” is taboo) have made it harder to transact in size without having an outsized effect on prices for corporate bonds. Meanwhile, artificially suppressed borrowing costs and the attendant hunt for yield have led to record corporate issuance and voracious investor demand. In short, the primary market is booming while the secondary market has become a veritable no man’s land. If you need an analogy, try this: the crowded theatre is getting larger and more crowded while the exit keeps getting smaller.
Continue reading “Wall Street Prepares To Reap Billions From Another Main Street Wipe Out”
It’s always interesting to see a long term chart that reflects your real life experiences. I bought my first home in 1990. It was a small townhouse and I paid $100k, put 10% down, and obtained a 9.875% mortgage. I was thrilled to get under 10%. Those were different times, when you bought a home as a place to live. We had our first kid in 1993 and started looking for a single family home. We stopped because our townhouse had declined in value to $85k, so I couldn’t afford to sell. In 1995 I convinced my employer to rent my townhouse, as they were already renting multiple townhouses for all the foreigners doing short term assignments in the U.S. We bought a single family home in 1995 with the sole purpose of having a decent place to raise a family that was within 20 minutes of my job.
Considering home prices on an inflation adjusted basis were lower than they were in 1980, I was certainly not looking at it as some sort of investment vehicle. But, as you can see from the chart, nationally prices soared by about 55% between 1995 and 2005. My home supposedly doubled in value over 10 years. I was ecstatic when I was eventually able to sell my townhouse in 2004 for $134k. I felt so smart, until I saw a notice in the paper one year later showing my old townhouse had been sold again for $176k. Who knew there were so many greater fools.
This was utterly ridiculous, as home prices over the last 100 years have gone up at the rate of inflation. Robert Shiller and a few other rational thinking people called it a bubble. They were scorned and ridiculed by the whores at the NAR and the bimbo cheerleaders on CNBC. Something smelled rotten in the state of housing. We now know who was responsible. Greenspan and Bernanke were at least 75% responsible for the housing bubble and its eventual implosion, which essentially destroyed our economic system. They purposely kept interest rates at obscenely low levels, encouraging every Tom, Dick and Julio to buy a home with a negative amortization, no doc, nothing down, adjustable rate mortgage, so they could live the American dream of being in debt up to their eyeballs.
Submitted by Tyler Durden on 01/15/2015 06:07 -0500
“As if millions of macro hedge funds suddenly cried out in terror and were suddenly silenced”
Over two decades ago, George Soros took on the Bank of England, and won. Less than two hours ago the Swiss National Bank took on virtually every single macro hedge fund, the vast majority of which were short the Swiss Franc and crushed them, when it announced, first, that it would go further into NIRP, pushing its interest rate on deposit balances even more negative from -0.25% to -0.75%, a move which in itself would have been unprecedented and, second, announcing that the 1.20 EURCHF floor it had instituted in September 2011, the day gold hit its all time nominal high, was no more.
What happened next was truly shock and awe as algo after algo saw their EURCHF 1.1999 stops hit, and moments thereafter the EURCHF pair crashed to less then 0.75, margining out virtually every single long EURCHF position, before finally rebounding to a level just above 1.00, which is where it was trading just before the SNB instituted the currency floor over three years ago.
Visually:
The SNB press release:
Swiss National Bank discontinues minimum exchange rate and lowers interest rate to –0.75%
Target range moved further into negative territory
The Swiss National Bank (SNB) is discontinuing the minimum exchange rate of CHF 1.20 per euro. At the same time, it is lowering the interest rate on sight deposit account balances that exceed a given exemption threshold by 0.5 percentage points, to ?0.75%. It is moving the target range for the three-month Libor further into negative territory, to between –1.25% and -0.25%, from the current range of between -0.75% and 0.25%.
The minimum exchange rate was introduced during a period of exceptional overvaluation of the Swiss franc and an extremely high level of uncertainty on the financial markets. This exceptional and temporary measure protected the Swiss economy from serious harm. While the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate. The economy was able to take advantage of this phase to adjust to the new situation.
Recently, divergences between the monetary policies of the major currency areas have increased significantly – a trend that is likely to become even more pronounced. The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.
The SNB is lowering interest rates significantly to ensure that the discontinuation of the minimum exchange rate does not lead to an inappropriate tightening of monetary conditions. The SNB will continue to take account of the exchange rate situation in formulating its monetary policy in future. If necessary, it will therefore remain active in the foreign exchange market to influence monetary conditions.
The resultant move across all currency pairs has seen the EUR and USD sliding, the USDJPY crashing, and US futures tumbling even as European stocks plunged only to kneejerk higher as markets are in clear turmoil and nobody knows just what is going on right now.
Sometimes I wish I could just passively accept what my government monarchs and their mainstream media mouthpieces feed me on a daily basis. Why do I have to question everything I’m told? Life would be much simpler and I could concentrate on more important things like the size of Kim Kardashian’s ass, why the Honey Boo Boo show was canceled, the Victoria Secret Fashion Show, whether I’ll get a better deal on Chinese slave labor produced crap on Black Thanksgiving, Black Friday, or Cyber Monday, fantasy football league standings, the latest NFL player to knockout their woman and get reinstated, Obama’s latest racial healing plan, which Clinton or Bush will be our next figurehead president, or the latest fake rape story from Rolling Stone. The willfully ignorant masses, dumbed down by government education, lured into obesity by corporate toxic packaged sludge disguised as food products, manipulated, controlled and molded by an unseen governing class of rich men, and kept docile through never ending corporate media propaganda, are nothing but pawns to the arrogant sociopathic pricks pulling the wires in this corporate fascist empire of debt.
I’m sure my blood pressure would be lower and my mood better if I just accepted everything I was told by my wise, sagacious, Ivy League educated, obscenely wealthy rulers as the unequivocal truth. Why should I doubt these noble, well intentioned, champions of the common folk? They’ve never misled us before. They would never attempt to use two highly publicized deaths as a lever to keep black people and white people fighting each other and not realizing all races are now living in a militarized police surveillance state supported by the one Party. They would never use their complete control over the financial, political, judicial, and media organisms to convince the masses that voting for one of their hand selected red or blue options will ever actually change anything. They would never engineer the overthrow of a democratically elected government, cover up the shooting down of an airliner, and attempt to blame their crimes on the leader of a nuclear power in their efforts to retain a teetering global empire. They would never overthrow or wage economic warfare on countries that don’t toe the line regarding the continued dominance of the petrodollar in global commerce.
Sadly, I’m cursed with a mind that questions everything and trusts no one in authority or associated with the status quo. It’s the reason I don’t read newspapers or watch mainstream media television entertainment propaganda, disguised as news. It’s the reason I will never vote in a national election again. The lesser of two evils is still evil. I’m skeptical of every piece of data fed to the sheep by the government apparatchiks working for the state. The faux journalists being paid millions by one of the six corporations controlling the media and dependent upon the government, Wall Street bankers, and mega-corporations for their advertising revenues regurgitate whatever they are told by those pulling the purse strings. The mainstream media are nothing but propaganda peddlers for the Deep State and truth telling is prohibited in their world of deception, debt, and denial. Their job is to sustain, enhance, and further enrich the status quo by engineering consent through what they report and what they do not report. The true ruling powers who operate in the shadows behind the scenes are men of power, wealth, status and education who truly believe they are better equipped to consciously manage and manipulate the public mind to achieve their ends. They are disciples of the Edward Bernays School of deception, manipulation and propaganda.
“If we understand the mechanism and motives of the group mind, is it not possible to control and regiment the masses according to our will without their knowing about it? The recent practice of propaganda has proved that it is possible, at least up to a certain point and within certain limits.” – Edward Bernays
The Nazis were pikers compared to the technologically savvy Madison Avenue maggots and Silicon Valley snakes who mold the opinions, tastes, and beliefs of the iGadget addicted, vapid, unintelligent, unquestioning, zombie-like masses who beseech to be led, told what to do and what to believe. A vast swath of the population don’t read books or even know how to read above a grade school level. They couldn’t write a coherent paragraph if their life depended upon it. But they can twitter, text, Instagram, and facebook at the speed of light. Try walking down any street in an American city without some iGadget distracted oblivious moron bumping into you. The addicting nature of today’s technology is being used by the ruling elite to monitor, control, and make you respond the way they choose.
Facebook, corporate media organizations, quasi-government organizations, and the NSA are creating a corporate totalitarian state where the slaves willingly sacrifice their privacy, liberty and freedom for mindless entertainment and distractions. The 21st Century totalitarian state captures your political beliefs, daily activities, habits, interests, spending behaviors, organizational associations, love life, pictures, psychological makeup, and fears from your own postings on the internet. With the right algorithms they can uncannily predict how you will react to different situations and messaging. They can also uncover threats to the status quo. Under the guise of keeping you safe from terrorists they are actually ferreting out subversives and radicals who refuse to conform to their idea of a good citizen slave. We will all be subject to our own Room 101.
Dan Kaplan in his recent article about Facebook as a tool for totalitarianism lays out the extreme threat to our future:
Today’s totalitarian demands a more subtle way to influence cultural and political sentiment. But if you got your hands on an algorithmically filtered newsfeed? One that could control the stories people see every day and influence their emotions across geographic, political and economic lines? You’d be in business.
But then there was the mood-influence study that scandalized us for a couple of weeks this year. Facebook changed the tone of content showing up in people’s feeds to test the impact it could have on their moods. The results, not too surprisingly, suggested that Facebook has the power to manipulate sentiment at scale.
Given how easy it is to scare people about the scary-seeming-but-actually-low-risk Ebola, and how dumb we all get when we are afraid, it is not crazy to think that under the wrong circumstances — like one or two more mass-scale terrorist attacks on major cities — modern democracy gives way to something akin to 1984.
If Big Brother were to seize the reins of power, sure, he’d use the cable news the way it’s being used today. But Facebook’s data maw, targeting power and sentiment-manipulation capabilities would be far more insidious. Whether this is what we become or not comes down to the future we choose to build.
The saddest part of this episode of mass delusion, mass confusion, and mass media collusion is that even though we are moving towards Orwell’s totalitarian vision of society, thus far, technology, triviality and an unending array of distractions have lured the masses into passive preoccupation with egotistical pleasures. We’ve been persuaded to love our servitude while drowning in a sea of irrelevance, diversions, and trifles. We continue to amuse ourselves to death while forging our own chains of debt and yielding to the direction of an all-powerful welfare warfare surveillance state that promises to protect us from phantom threats while actually abolishing our rights, freedoms, and liberties. No coercion necessary. We have been trained to love our servitude.
“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” – Aldous Huxley – Brave New World
“Facts do not cease to exist because they are ignored.” – Aldous Huxley
The level of data massaging by the government and their co-conspirators on Wall Street and in the corporate media is a futile attempt at a happy ending that will never come to fruition. The intensity and relentlessness with which the state and its quasi-state minions attempt to paint a false picture of economic recovery is equal parts arrogance and desperation. The arrogance is a function of successfully pulling off the greatest heist in world history from 2003 through 2008 with no adverse consequences, no criminal charges, no penalties for their crimes, and more power and wealth than they had prior to 2003. The only way to stop sociopaths is to throw them in jail or kill them. In our dystopian paradise of greed, they were rewarded with trillions in rescue packages by their cohorts in crime at the Federal Reserve and in Congress. They’ve paid themselves billions in bonuses for gorging at the Federal Reserve trough of QE and ZIRP. The desperation is borne from the fact that after $7.5 trillion of debt added by the Federal government and $3.5 trillion of debt created by the Federal Reserve since 2009, the Greater Depression for average Americans deepens by the day.
The men pulling the strings behind the scenes are drunk with power and their hubris allows them to believe their own infallibility and blinds them to the dire consequences for our country when their debt Ponzi scheme fails. But, as we grow ever closer to the day of reckoning, they will use every means at their disposal to paint a positive picture, regardless of the facts and reality for the average person. The examples of twisting, distorting and outright lying about the economic reality of our times are endless. These are some of the major false storylines peddled by our benevolent corporate fascist leaders:
The BLS reported 321,000 jobs added in November and the unemployment rate at 5.8%. Jobs are plentiful, based upon these statistics.
A skeptical critical thinking individual might ask a few questions or point out a few inconvenient facts the government purveyors of propaganda might not want us to ponder:
According to the government reported figures, the economy hasn’t been this strong since 2007. GDP has supposedly grown at greater than 4% over the last two quarters.
Anyone who is sentient knows consumer spending accounts for 68% of GDP. Capital investments that lead to long term prosperity continue to decline as a percentage of GDP from 20% in 2000 to 16% today. We’ve chosen consumption and financialization over savings and investment. This fact leads to some observations:
According to the quasi-governmental mouthpieces at the Conference Board, consumer confidence is near a 5 year high, reflecting what should be robust spending.
So we are told by the representatives of corporatism that we are confident about the economy and the future. How does that measure up to the facts on the ground:
According to the government, the deficit was ONLY $483 billion in 2014.
This is a real doozy. Obama has been touting how he has cut the deficit through his wise management of the budget. This is where government accounting is used by apparatchiks to mislead the public and obscure the truth. A few pertinent facts are always left out by the politicians touting deficit reduction:
According to the government, we’ve experienced a strong housing recovery since 2010.
The supposed housing recovery storyline continues to be beaten like a dead horse by the Wall Street media (CNBC) and the shills at the NAR. Anyone with a functioning brain (eliminates CNBC bimbos, hacks, and Ivy League economists) can see there has been no real housing recovery:
According to the corporate media, the auto market is hitting on all cylinders with annual sales of 16.4 million, the highest since 2006.
Pretending to sell automobiles to people without the means to pay you for the automobile is always a good business idea. Of course, when you have Ally Financial and the rest of the Wall Street banking cabal doling out 7 year 0% loans and subprime auto loans like candy, it’s easy to move inventory. The temporary boost to GDP by issuing more bad debt always works out in the long run. Right?
According to the corporate mainstream media pundits, the plunge in oil prices from $100 per barrel to $61 per barrel is unequivocally good for the economy. The shale oil boom has worked its magic and happy times are here again.
Sometimes you have to wonder whether the highly educated spokesmodels on the corporate mainstream media are really as vacuous and clueless as they appear or whether they are just paid to look pretty and mouth the corporate line. They seem incapable of comprehending the unintended consequences of various events. The collapse in oil prices is one of those events.
These are just a few examples among a multitude of lies. Others include: stocks aren’t overvalued, gold isn’t money, inflation is good for you, and ISIS terrorists are an imminent threat to your way of life. Every feel good story fed to the masses by the oligarchs running this shitshow we call America is no different than the propaganda doled out by other infamous totalitarian regimes throughout history. We believe things because we’ve been conditioned to believe them. The crony capitalist oligarchs are intelligent enough to invent theories to explain how the world should work, but not intelligent enough to interpret their models correctly. When they act on their theories (Keynesianism), their actions appear to be those of a lunatic. Despite all evidence refuting their theories, their arrogance and hubris lead them to destruction. The collective insanity of this world is almost too much for a rational thinking person to grasp. The extremely wealthy men operating in the shadows will use every means at their disposal to retain power, enhance their wealth, and crush dissent.
“Being a card carrying member of the privileged class means never having to say I’m sorry, much less ‘not guilty.’ Power is doing what you want when you want, and consequences are for everyone else. Or perhaps these titans of modern industry and the halls of power are at heart just good natured bumblers, who in a genuine belief destroy lives and crash economies, while pursuing insane ideological assumption put forward by vested interests, all the while stuffing their pockets, and crushing all dissent with the political skills of a Machiavelli and the ruthlessness of Al Capone.” – Jesse
The two party system is nothing but a ruse designed to keep the people believing they have a say in how things are run in this country. Both parties support the military industrial complex. Both parties support the militarization of police forces around the country. Both parties support the mass surveillance of its citizens. Both parties do the bidding of their rich corporate and special interest benefactors. Both parties favor deficit spending for eternity. Both parties believe the government should expand its role in our everyday lives. Both parties do the bidding for and protect the Wall Street interests who really run this country. No more proof is needed than what has occurred over the last five years, as criminal Wall Street bankers were rewarded for their malfeasance with trillions of dollars from taxpayers and their puppets at the Federal Reserve. While we were allowing ourselves to be distracted, amused, entertained, and indebted, the oligarchs were busy conducting a silent coup.
“Let’s be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.
This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill-gotten gains.
But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake-up call, and the tide then turns to genuine reform.” – Simon Johnson
The oligarchs have had a good run. The system cannot be reformed from within. The corruption runs too deep. The system is broken and can’t be fixed. There is no doubt in my mind that a collapse approaches which will make 2008/2009 look like a walk in the park. The anger, blame and retribution will sweep away the existing social order and replace it with something new. It will be up to the people to decide what happens next. We were warned two centuries ago by a wise man. Hopefully, we’ll get a 2nd chance.
“However political parties may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.” – George Washington
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson
Does this chart portray an economic recovery in any way? Wages have been stagnant since the START of the supposed recovery in 2010. Real median household income, even using the highly understated CPI, is on a glide path to oblivion. You just need to observe with your own two eyes the number of Space Available signs in front of office buildings, strip centers and malls across America to realize we have further to fall. Low paying, part-time burger flipping jobs aren’t going to revive this debt saturated economic system. But at least the .1% are enjoying their Federal Reserve created high. Fiat is a powerful drug when administered in large doses to addicts on Wall Street.
The S&P 500 has risen from 666 in March of 2009 to 1,972 today. That is a 196% increase in a little over five years. During this same time, real household income has fallen by 7%. There have been a few million jobs added, while 11 million people have left the labor market. According to Robert Shiller’s CAPE ratio, the stock market valuation has only been higher, three times in history – 1929, 1999, and 2007. He seems flabbergasted by why valuations are so high. Sometimes really smart people can act really dumb.
The Federal Reserve balance sheet was $900 billion before the 2008 financial crisis. Today it stands at $4.4 trillion. The Fed has increased their balance sheet by 220% since the March 2009 market lows. Do you think there is any correlation between the Fed puppets printing $2.4 trillion and handing it to their Wall Street puppeteers, who used their high frequency trading supercomputers and ability to rig the markets so they never lose, and the third stock bubble in the last 13 years? It’s so self evident that only an Ivy League economist or CNBC anchor wouldn’t be able to see it.
Let’s look at the amazing stock market recovery without Federal Reserve heroine pumped into the veins of Wall Street banker addicts. If you divide the S&P 500 Index by the size of the Federal reserve balance sheet, you see the true purpose of QE1, QE2, and QE3. It wasn’t to save Main Street. It was to save Wall Street. Without the Federal Reserve funneling fiat to the .1% banking cabal and creating inflation in energy, food, and other basic necessities for the 99.9%, there is no stock market recovery. The recovery has occurred in Manhattan and the Hamptons. It’s been non-existent for the vast majority of people in this country. The wealth effect and trickle down theory have been disproved in spades. The only thing trickling down on the former middle class from the Fed is warm and yellow.
The entire stock market advance has been created on record low trading volumes and record high levels of monetary manipulation. Even though the Federal Reserve has driven senior citizens further into poverty with 0% interest rates, those with common sense have refused to be lured back into the lion’s den. They have parked record levels of fiat in no interest bank and money market accounts. They are tired of being muppets led to slaughter.
Quantitative easing was supposed to force little old ladies into the stock market and consumers to spend their debased dollars before they lost more value. The spending would revive the dormant economy just as the Keynesian text books promised. It didn’t happen. The peasants haven’t cooperated. Quantitative easing and ZIRP sapped the life from the middle class as their wages have stagnated and their living expenses have skyrocketed. Mission Accomplished by the Fed. Of course, the CNBC bimbos and shills would declare this $10.8 trillion to be money on the sidelines ready to boost the stock market ever higher. I love that storyline. It never grows old.
The MSM, government and Wall Street continue to flog the story about a housing recovery. It’s been nothing but a confidence game based upon the Fed’s easy money and the Wall Street scheme to buy up foreclosed properties with the Fed’s money. The scheme was to artificially boost home prices by restricting home supply through foreclosure manipulation, in order to allow the insolvent Wall Street banks to get out from under their billions in toxic mortgage loans.
Shockingly, the Case Shiller home price index has soared by 25% since 2012 despite first time home buyers being virtually non-existent and mortgage applications plunging to 14 year lows. How could that be? Don’t people need mortgages to buy houses? Isn’t real demand necessary to drive prices higher? Not when Uncle Ben and Madam Yellen are in charge of the printing press. Housing bubble 2.0 has arrived. I wonder if the Federal Reserve balance sheet increase of 50% since 2012 has anything to do with the new housing bubble.
It seems a similar result is obtained when dividing the Case Shiller Index by the size of the Fed’s balance sheet. The real housing market for real people is worse than it was in 2009. The national home price increase has been centered in the usual speculative markets, aided and abetted by the Fed’s easy money, managed by the Wall Street hedge funds, and exacerbated by the late arriving flippers who will be left holding the bag again. The Fed/ Wall Street scheme has priced young people out of the market and has failed to ignite the desired Keynesian impact. Investors/flippers account for 34% of all home sales. Foreigners with no knowledge of value metrics account for 30% of all home sales. The lesson of history is that most people don’t learn the lessons of history. The 2nd housing bubble in seven years is seeking a pin.
If ever you needed proof of the confidence game in its full glory, the chart below from Zero Hedge says it all. Mortgage rates have been falling for the past year, home builders have been reporting soaring confidence about the future, and the National Association of Realtors keeps predicting a surge in home buying any minute now. One small problem. Mortgage applications are in free fall, new home sales are at 1991 levels, and existing home sales are falling. Home prices have peaked and are beginning to roll over. The Wall Street hedgies are all looking to exit stage left. Young people are saddled with over a trillion of government issued student loan debt and millions of older subprime borrowers have been lured into more auto loan debt. Home sales will be stagnant for the next decade.
Quantitative easing will cease come October, unless Yellen and Wall Street can create a new “crisis” to cure with more money printing. By every valuation measure used over the last 100 years, stocks are overvalued by at least 50%. By historical measures, home prices are overvalued by at least 30%. Ten year Treasuries are yielding 2.4%, while true inflation is north of 5%. With real interest rates deep in negative territory, the bond market is even more overvalued than stocks or houses. These simultaneous bubbles have been created by the Federal Reserve in a desperate attempt to keep this debt laden ship afloat. Their solution to a ship listing from too much debt was to load it down with trillions more in debt. The ship is taking on water rapidly.
We had a choice. We could have bitten the bullet in 2008 and accepted the consequences of decades of decadence, frivolity, materialism, delusion and debt accumulation. A steep sharp depression which would have purged the system of debt and punishment of those who created the disaster would have ensued. The masses would have suffered, but the rich and powerful bankers would have suffered the most. Today, the economy would be revived, saving and investing would be generating needed capital for expansion, and banks would be doing what they are supposed to do – lending money to businesses and individuals. Instead, the Wall Street bankers won the battle and continue to pillage and loot the national wealth while impoverishing the masses.
The arrogance, hubris and contempt for morality displayed by the ruling class is breathtaking to behold. They think they are untouchable and impervious to norms followed by the rest of society. They may have won the opening battle, but will lose the war. Discontent among the masses grows by the day. The critical thinking citizens are growing restless and angry. They are beginning to grasp the true enemy. The system has been captured by a few malevolent men. When the stock, bond and housing bubbles all implode simultaneously, all hell will break loose in this country. It will make Ferguson, Missouri look like a walk in the park. I wonder if the occupants of the Eccles building in Washington DC will get out alive.
“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford
Charts provided by Confounded Interest
Some very interesting developments have occurred in the world of Petty Despots, namely Laurent Ghabo of the Ivory Coast and “Baby Doc” Duvalier of Haiti. Larry appears to be defaulting on some loans and has had all his Assets frozen by “Authorities” in Switzerland, while Baby Doc returned to Haiti and then was promptly arrested and then mysteriously released. This is all some very confusing stuff to try to get a handle on.
Now, Ghabo appears to have a few tons of possessible Gold keeping him nominally Rich for the moment despite the fact his other financial assets are frozen. However, it is unclear where Ghabo might go with his pile of Gold where they will allow him to keep it. One suspects wherever he goes, the “authorities” in Switzerland will send a Repo Squad to wherever he turns up and divest him of it in order to pay off some of his outstanding debts. One also suspect whatever country he goes to will cooperate with the Swiss “authorities”, since if they don’t their own financial assets might get frozen also for aiding and abetting a Financial Criminal, as defined by of course, the Swiss “Authorities”.
One of my favorite financial Bloggers, Ambrose Evans-Pritchard often uses the term “Authorities” when talking about the folks in Brussels who run the EMU, World Bank and IMF offices situated there. What I would like to know is why they have “authority” over anything? Have these folks been voted into their offices of authority by anybody anywhere? Why do they get to decide whose assets get Frozen?
At the same time Ghabo is doing a disappearing act from Ivory Coast, Baby Doc Duvalier reappears in Haiti a quarter century after being deposed. Does anyone here suppose Baby Doc did this willingly? He is returning there to Save Haiti all of a sudden? There is a popular uprising among the Quake Vicitms longing for the good old days when a Duvalier was in charge of torturing people? What?
Here is my WAG on Baby Doc. He’s been living “peacefully” in France for the last 25 years, doubtless on tons of Haitian Assets he absconded with, but with all the shit going on in Haiti now, said assets aren’t paying off anymore, and Creditor “Authorities” in Switzerland informed him that if he didn’t get his ass back to Haiti and take control of them he would have whatever assets he stole Frozen. His Job is to get those assets paying off again, which he promises to do with the help of a squad of Halliburton Mercs and perhaps some local Gangstas he might have some family connections to.
Ghabo is in a disputed election with some other despot named Ouattara, who apparently is the Most Favored Puppet by the UN Globalists, who are holding some $3B in IMF “aid’ hostage until Ghabo officially steps down. Ouattara clearly has cut deal with the IMF letting them know he is the BEST Puppet, and will make sure to give them all the cheap cocoa they want to sell at as high a price as they want on the international markets.
To an extent, this is all BAU down in the banana republics, except for the fact that for the most part the system has been in a status quo holding mode for the last 25 years, but now all of a sudden Dictators are changing faster than LLPOH swallows Smokey’s throat yogurt.
This effect isn’t limited to African and Latin American Banana Republics, the Irish are about to depose Brian Cowen, and Belgium which is home to Brussels hasn’t had a functioning Goobermint in close to a year now. Nevertheless, there are “Authorities” in Brussels who will tell whatever Goobermint does take over in Ireland exactly how they should tax their population and spend their money.
Here in the FSofA, we did a Diaper Change of Congress this last election cycle, and in the next one will likely pick a new Puppet to replace Obama, who also will take his orders from “Authorities” on Wall Street, who themselves are of course taking their marching orders from “Authorities” at the BIS in Switzerland, though of course this still goes on behind the curtain. As the FSofA progreesively morphs into Banana Republic status, its only a matter of time before the Swiss “Authorities” at the BIS attempt to take over explicit control by issuing out some new One World Currency, and doling out just as much of it as they think our “assets” are worth here.
Now, in order to keep the Gravy Train going here at the BIS, they gotta have some Protection Racket to “restore order” in all these places, which for the Banana Republics comes in the form of UN “Peacekeepers”. How many UN Peacekeepers are there anyhow? Who is funding all these Peacekeepers? Its not the boys in Brussels or Zurich, but they are calling the shots as far as where the Peacekeepers get deployed here, until they run out of Peacekeepers.
Long as these disturbances are in Banana Republics, Authorities in Brussels and Zurich can get enough Mercs from the countries that they do control to go in and bust some heads and kneecap debtors as necessary. However, once these problems work their way inward to the major countries, its going to become a whole lot harder to round up enough Mercs to do a decent job of controlling these populations. My guess would be that once Spain and/or Italy start to fail as performing assets that the UN Peacekeeping Force will be out of its League.
Meanwhile, as far as the individual Politicians and Banksters go who like Ghabo and Duvalier used their control over the economic wealth of their countries to build personal fortunes, as varying members of our political and bankster class lose control over performing assets, they will also find their personal stolen hoards Frozen by Authorities at the BIS. Try to flee to parts unknown with a Pile of Gold will be about impossible except for the most inner circle.
The Political Turmoil amongst the Petty Despots and Puppets is a sign of the Pigman v Pigman battle in progress. The small time operators are now getting flushed out and what wealth they stole is getting repoed by bigger thieves. As time goes by, bigger ones still will be thrown under the Bus. In the process, still more Political control will be lost, and just as we have failed states in places like Somalia and pretty much Mexico, eventually even the largest Nation States will become failed states.
Another form of the Petty Despot are the Hedge Fund Managers. Like Puppet Dictators, these folks control a variety of assets, just they are diversified Globally rather than being contained in a single country. In order to Perform and get big returns on their investments, these guys have to lever up to beat the band these days, and eventually the risky assets they hold are not going to be backstopped by Da Fed and there will be margin calls. State Bonds, Munis, SOMETHING here is not going to get backstopped at some point. Da Fed may get a Management Change here as Helicopter Ben is Deposed in favor of John Taylor, who might be this generation’s Andrew Mellon. Liquidate Stocks, Liquidate Real Estate, Liquidate Liquidate Liquidate! LOL. All indicators are that the Illuminati are using the SAME Playbook here, and after a massive attempt at inflation they will rapidly deflate the money supply and force liquidation across the board. Creative Destruction will take on a whole new meaning in that crash. lol.
Anyhow, we appear to be entering the beginning part of this end game. There is a LOT of Musical Chairs being played up at the top of some of the Big Name tech companies all at the same time. Steve Jobs taking a”leave of absence” for “health” reasons, Google CEO swapping seats, and practically the entire board of Hewlett Packard is being replaced. Warren Buffett also stepped off the board at That ALL of these changes are happening at the same time is unlikely to be a Coinkidink.
I have a real good Tinfoil Theory to pitch out here as I ponder on all of this stuff. We know for a FACT that the entire RE market has been one big FRAUD for the last decade, right? Is it beyond the realm of possibility that Google is one big FRAUD also, and has been cooking their books since the Dot Com Bubble collapsed? Personally, I have never really bought their revenue model for monetizing the search engine. I could easily see some Bankster creating an SIV specifically for the purpose of buying Ads on Google to inflate their income, with said SIV funded by some kind of Junk Bonds. All these bonds are basically worthless, there are no real companies behind some of the Ads or they are shell companies over in China, whatever. Accounting standards have been so lax over the last decade ANYTHING is possible here.
Similarly, are Apple’s sales numbers of I-phones and I-pads really accurate? Yes I do see quite a few more people using these toys so probably most of the sales numbers are legit, but really if they have say a 10% shortfall in the numbers they would have to sell on the balance sheet to be showing a Profit, it wouldn’t be too hard to create an SIV in say Singapore and have that fund buy up a warehouse full of I-phones and put them on ice. Da Goobermint of China is doing this with the Cars they are producing, they buy them and then stick them in parking lots.
Remember folks, we have been in a Mania period here for a full decade, and based on the Fraud that occurred in the RE market, why would similar frauds not be undertaken in the Tech market for Toys? For the Bankster originating the loans necessary for some Warehouse owner in Singapore to fill up his warehouse with Iphones the take home profit would be enormous. All he has to do is convince some investors/suckers that his Distributor in Singapore is going to bring home big profits by buying up these Iphones and selling them over in Asia. He pockets a tidy profit once he sells the securities, and the warehouse owner pockets money each time he sells a few Iphones, but most of the Iphones just sit in the warehouse. It takes a while, but eventually the Investors are left holding the bag on a warehouse full of Iphones that they can’t sell except for pennies on the dollar.
Think about the possibilities here folks! Imagine if Google is just one big Enron style Financial Fraud of GARGANTUAN proportions! If/WHEN one of these FRAUDS does exist and finally sees the light of day, there is absolutely NOTHING that could stop a massive liquidation attempt in stocks and bonds across the board. Katy Bar the Door! Defrauded Investors would lose EVERYTHING. Hedge Fund Managers jumping from Wall Street Skyscrapers, the WORKS!
This is NOT a Prediction! Its just a Tin Foil Theory fueled by a few Sam Adams. However, if it happens to be correct, you can say you heard it here first off the keyboard of Reverse Engineer. 🙂
RE