QUOTES OF THE DAY

As an Amazon Associate I Earn from Qualifying Purchases
Click to visit the TBP Store for Great TBP Merchandise

TRIGGER FOR NEXT FINANCIAL IMPLOSION

“U.S. Banks are facing some $600 billion of unrealized losses, roughly 25% of total banking capital, near the highest levels in history.” – Automatic Earth

 (Getty/Salon)

The U.S. banking system and likely, the global banking system, is essentially bankrupt. They just won’t admit it and central bankers won’t let them admit it. These “brilliant” Harvard Business School and Wharton trained financial geniuses thought it was a great idea to load up their institutions with mortgage and Treasury bonds when they were paying 0.5%. Now the ten year Treasury is 4.58%. Even a dolt like AOC or Pelosi should know bonds lose value when rates go up.

Continue reading “TRIGGER FOR NEXT FINANCIAL IMPLOSION”

IS THE U.S. BANKING SYSTEM SAFE? – 15 YEARS LATER

“We’ve got strong financial institutions…Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.” Henry Paulson – 3/16/08

The next financial crisis: Why it looks like history may repeat itself Silicon Valley Bank is shut down by regulators in biggest bank failure since global financial crisis

“I have full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event. Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again.” – Janet Yellen – 3/12/23

With the recent implosion of Silicon Valley Bank and Signature Bank, the largest bank failures since 2008, I had an overwhelming feeling of deja vu. I wrote the article Is the U.S. Banking System Safe on August 3, 2008 for the Seeking Alpha website, one month before the collapse of the global financial system. It was this article, among others, that caught the attention of documentary filmmaker Steve Bannon and convinced him he needed my perspective on the financial crisis for his film Generation Zero. Of course he was pretty unknown in 2009 (not so much anymore) , and I continue to be unknown in 2023.

Continue reading “IS THE U.S. BANKING SYSTEM SAFE? – 15 YEARS LATER”

‘Big Short’ legend Michael Burry warns stocks will keep falling – and predicts many investors will suffer heavy losses

Via Business Insider

  • Michael Burry expects US stocks to fall further and many investors to incur heavy losses.
  • The “Big Short” investor compared the ongoing market slump to the onset of the dot-com crash.
  • Burry slammed the passive-investing boom for inflating asset prices in recent years.

Michael Burry big short

Michael Burry warned US stocks have further to fall, compared the current market downturn to the onset of the dot-com crash, and predicted many investors would suffer painful losses in a flurry of since-deleted tweets over the weekend.

The investor of “The Big Short” fame noted in a Friday tweet that there are 218 companies with a primary stock listing in the US, a market capitalization north of $1 billion, and annual losses exceeding $100 million. Of those, 29 boast market caps over $10 billion and are worth a combined $655 billion, he added.

Continue reading “‘Big Short’ legend Michael Burry warns stocks will keep falling – and predicts many investors will suffer heavy losses”

‘Big Short’ investor Michael Burry warns stocks will crash and rallies won’t last. Here’s a roundup of his recent tweets and what they mean.

Via Business Insider

Michael Burry Getty

Michael Burry, the hedge fund manager of “The Big Short” fame, rang the alarm on the “greatest speculative bubble of all time in all things” last summer. He warned the retail investors piling into meme stocks and cryptocurrencies that they were careening towards the “mother of all crashes.”

The Scion Asset Management chief’s dire prediction may be coming true, as the S&P 500 and Nasdaq indexes have tumbled 15% and 24% respectively this year. In tweets he’s since deleted, Burry has taken credit for calling the sell-off, explained why he expects further declines, and cautioned against buying into relief rallies.

Here’s a roundup of Burry’s latest tweets about the stock-market slump:

Continue reading “‘Big Short’ investor Michael Burry warns stocks will crash and rallies won’t last. Here’s a roundup of his recent tweets and what they mean.”

IGNORE HIS WARNING AT YOUR OWN PERIL

Michael Burry’s investors hated him from 2005 through 2008 as his big short bet kept losing money. Someone with less courage of conviction would have folded and taken his losses. But he knew he was right. Everyone else was wrong. It was a bubble and it did burst. Excessive debt always causes the bubbles to pop. This time will be no different. You’ve been warned.

UNDERESTIMATING THEM & OVERESTIMATING US

“Do not underestimate the ‘power of underestimation’. They can’t stop you, if they don’t see you coming.” ― Izey Victoria Odiase

Image result for bernanke, yellen, powell

During the summer of 2008 I was writing articles a few times per week predicting an economic catastrophe and a banking crisis. When the biggest financial crisis since the Great Depression swept across the world, resulting in double digit unemployment, a 50% stock market crash in a matter of months, millions of home foreclosures, and the virtual insolvency of the criminal Wall Street banks, my predictions were vindicated. I was pretty smug and sure the start of this Fourth Turning would follow the path of the last Crisis, with a Greater Depression, economic disaster and war.

In the summer of 2008, the national debt stood at $9.4 trillion, which amounted to 65% of GDP. Total credit market debt peaked at $54 trillion. Consumer debt peaked at $2.7 trillion. Mortgage debt crested at $14.8 trillion. The Federal Reserve balance sheet had been static at or below $900 billion for years.

Continue reading “UNDERESTIMATING THEM & OVERESTIMATING US”

Signs Of A Market Top? This Pole Dancing Instructor Is Now A Bitcoin Guru

Sometimes history rhymes

Tyler Durden's picture

But recently, Heath has discovered a new passion: Investing in digital currencies.

Heath has spent $5,800 on Bitcoin since July and has more than tripled her investment.

“Look, I love pole dancing but lately my passion has definitely been Bitcoin,” she told SBS News.

Continue reading “Signs Of A Market Top? This Pole Dancing Instructor Is Now A Bitcoin Guru”

STUPID IS AS STUPID DOES

If you prefer fake news, fake data, and a fake narrative about an improving economy and stock market headed to 30,000, don’t read this fact based, reality check article. The level of stupidity engulfing the country has reached epic proportions, as the mainstream fake news networks flog bullshit Russian conspiracy stories, knowing at least 50% of the non-thinking iGadget distracted public believes anything they hear on the boob tube.

This stupendous degree of utter stupidity goes to a new level of idiocy when it comes to the stock market. The rigged fleecing machine known as Wall Street has gone into hyper-drive since futures dropped by 700 points on the night of Trump’s election. An already extremely overvalued market, as measured by every historically accurate valuation metric, soared by 4,000 points from that futures low – over 20% – to an all-time high. Despite dozens of warning signs and the experience of two 40% to 50% crashes in the last fifteen years, lemming like investors are confident the future is so bright they gotta wear shades.

The current bull market is the 2nd longest in history at 8 years. In March of 2009, the S&P 500 bottomed at a fitting level for Wall Street of 666. In a shocking coincidence, it bottomed on the same day Bernanke & Geithner forced the FASB to rollover like mangy dogs and stop enforcing mark to market accounting. Amazingly, when Wall Street banks, along with Fannie and Freddie, could value their toxic assets at whatever they chose, profits surged. The market is now 240% higher.

Continue reading “STUPID IS AS STUPID DOES”

QUOTES OF THE DAY

“The CDO was, in effect, a credit laundering service for the residents of Lower Middle Class America. For Wall Street it was a machine that turned lead into gold.”

Michael Lewis, The Big Short: Inside the Doomsday Machine

“Success was individual achievement; failure was a social problem.”

Michael Lewis, The Big Short: Inside the Doomsday Machine

“When you’re a conservative Republican, you never think people are making money by ripping other people off,” he said. His mind was now fully open to the possibility. “I now realized there was an entire industry, called consumer finance, that basically existed to rip people off.”

Michael Lewis, The Big Short: Inside the Doomsday Machine

“A thought crossed his mind: How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.”

Michael Lewis, The Big Short: Inside the Doomsday Machine

“A Home without Equity Is Just a Rental with Debt.”

Michael Lewis, The Big Short: Inside the Doomsday Machine


A BIASED 2017 FORECAST (PART ONE)

“The idea that the future is unpredictable is undermined every day by the ease with which the past is explained.”Daniel Kahneman, Thinking, Fast and Slow

 

A couple weeks ago I was lucky enough to see a live one hour interview with Michael Lewis at the Annenberg Center about his new book The Undoing Project. Everyone attending the lecture received a complimentary copy of the book. Being a huge fan of Lewis after reading Liar’s Poker, Boomerang, The Big Short, Flash Boys, and Moneyball, I was interested to hear about his new project. This was a completely new direction from his financial crisis books. I wasn’t sure whether it would keep my interest, but the story of Daniel Kahneman and Amos Tversky and their research into the psychology of judgement and decision making, creating a cognitive basis for common human errors that arise from heuristics and biases, was an eye opener.

In psychology, heuristics are simple, efficient rules which people often use to form judgments and make decisions. They are mental shortcuts that usually involve focusing on one aspect of a complex problem and ignoring others. These rules work well under most circumstances, but they can lead to systematic deviations from logic, probability or rational choice theory. The resulting errors are called “cognitive biases” and many different types have been documented.

Continue reading “A BIASED 2017 FORECAST (PART ONE)”

YOU ARE HERE

“The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II.” – Strauss & Howe The Fourth Turning 

The chart below was posted by Jesse a few weeks ago. It accompanied a post titled Gathering Storm. He doesn’t specifically refer to the chart, but his words reflect the ominous view of the future depicted in the chart.

“When gold and silver finally are able, through price action, to have their say about the state of Western fiscal and monetary policy actions, it may break a few ear drums and shatter a more than a few illusions about the wisdom and honesty of the money masters. Slowly, but surely, a reckoning is coming. And what has been hidden will be revealed.”

The title of the post and the chart both grabbed my attention and provide a glimpse into the reality of our present situation. The Gathering Storm was the title of Winston Churchill’s volume one history of World War II. Churchill documents the tumultuous twenty years leading up to World War II in The Gathering Storm. The years following World War I, through the Great Depression and the rise of Hitler were abysmal, but only a prelude to the approaching horror of 65 million deaths over the next six years. What appeared to be dark days in the 1930’s were only storm clouds gathering before a once in a lifetime tempest. In my view we stand at an equally perilous point in history today.

Continue reading “YOU ARE HERE”

THE GREAT CORPORATE EARNINGS FRAUD

“What are the odds that people will make smart decisions about money if they don’t need to make smart decisions–if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they’re still all wrong.” Michael Lewis, The Big Short: Inside the Doomsday Machine

Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-corporations and their compliant corporate media mouthpieces has been outrageously blatant. It reeks of desperation as the Wall Street shysters attempt to extract the last dollar from their muppet clients before this house of cards collapses.

The CEOs of these mega-corporations accelerated their debt financed stock buybacks in 2015 as stock prices reached all-time highs and are currently so overvalued, they will deliver 0% returns over the next decade. This disgraceful act of pure greed by the Ivy League educated leaders of corporate America to boost their own stock based compensation is reckless and absurd.

It is proof education at our most prestigious universities has produced avaricious MBAs following financial models and each other like lemmings going over the cliff. Proof of their foolishness is self evident after perusing the chart below. These intellectual giants evidently never learned the basic rule of buying low and selling high in order to make a profitable trade.

Continue reading “THE GREAT CORPORATE EARNINGS FRAUD”

Fortune Cookies Eat S**t

So, the little woman and I headed out this chilly afternoon in Tucson to see the movie, “The Big Short.” Good flick. Too bad that probably less than 1% of the people understand what the hell happened when the housing bubble collapsed, and a large segment of that 1% are TBP visitors.

Oh well, after the flick, we headed off to Pei Wei for a touch of Oriental cuisine. To throw in a Facebook comment (picture not included), my spicy sesame shrimp over noodles was quite tasty. Better than that chicken lettuce wrap rabbit food my wife ordered. She kept picking at my dish, which tells you something.

Then there was the fortune cookies. My main squeeze’s read, “Your financial fortune in the future is very bright.” And mine read, “Your relationship with family and friends will greatly improve in the coming weeks.” Somehow, the Queen of the SSS Household interpreted all that to mean, “Buy a Powerball ticket.”

While we both quit gambling 20 years ago (she slots, me blackjack), off we go at her urging to the nearest convenience store to buy 5 Powerball lines. 10 bucks for 5 lines of 6 numbers each, for 60 total numbers. We hit exactly 2 numbers out of 60 possible in all 5 lines. TWO.

WTF are the odds that the computer can pick only 3% winning numbers out of 60? About the same as the folks who saw the freaking housing scandal on Wall Street and bet against it. The very few won. Millions of others lost.

Never trust a fortune cookie.


THIS TIME ISN’T DIFFERENT

Last year ended with a whimper on Wall Street. The S&P 500 was down 1% for the year, down 4% from its all-time high in May, and no higher than it was 13 months ago at the end of QE3. The Wall Street shysters and their mainstream media mouthpieces declare 2016 to be a rebound year, with stocks again delivering double digit returns. When haven’t they touted great future returns. They touted them in 2000 and 2007 too. No one earning their paycheck on Wall Street or on CNBC will point out the most obvious speculative bubble in history. John Hussman has been pointing it out for the last two years as the Fed created bubble has grown ever larger. Those still embracing the bubble will sit down to a banquet of consequences in 2016.

At the peak of every speculative bubble, there are always those who have persistently embraced the story that gave the bubble its impetus in the first place. As a result, the recent past always belongs to them, if only temporarily. Still, the future inevitably belongs to somebody else. By the completion of the market cycle, no less than half (and often all) of the preceding speculative advance is typically wiped out.

Hussman referenced the work of Reinhart & Rogoff when they produced their classic This Time is Different. Every boom and bust have the same qualities. The hubris and arrogance of financial “experts” and government apparatchiks makes them think they are smarter than those before them. They always declare this time to be different due to some new technology or reason why valuations don’t matter. The issuance of speculative debt and seeking of yield due to Federal Reserve suppression of interest rates always fuels the boom and acts as the fuse for the inevitable explosive bust.

Continue reading “THIS TIME ISN’T DIFFERENT”

In Honor Of “The Big Short”, Here Is Michael Burry’s Historic Commencement Speech

Tyler Durden's picture

On the day after one of America’s greatest for over-consumption, a few moments of quiet reflection on the state of our world seemed appropriate. With the launch of “The Big Short” movie (assuredly infuriating many Americans with its “dangerous for the establishment” expose of the greed, stupidity, hubris, and arrogance of Wall Street bankers gone wild), Dr. Michael Burry’s infamous UCLA commencement speech has much to offer .

Infamous for his correct predictions of the great recession, Europe’s demise, and the collapse of the US financial system (as well as profiting handsomely from being right), the painful ‘truthiness’ of this brief speech stunningly summarizes the ominous truth facing most of the developed (and much of the emerging) world today:

“In this age of infinite distraction… when the entitled elect themselves, the party accelerates, and the brutal hangover is inevitable.”

A quarter-of-an-hour well spent from a self-described ‘chicken-little’ who was “just trying to figure it all out”.