• Marc To Market
    09/23/2014 - 11:39
    Is the Great Republic been on the verge of fragmenting as classic political philosphy said was the fate of all large republics?   
  • williambanzai7
    09/23/2014 - 11:10
    Some of you were no doubt aware that the latest round of Nobel Laureate ballistic mayhem commenced on the day after September 21: The International Day of Peace!

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Tim Geithner Glitch In The Matrix Special: Will America Become Greece In Two Years - "No Risk Of That"

Geithner April 2011: Q: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?” - Tim Geithner: “No risk of that.”

....

Geithner April 2012: Q: “If we don't deal with these debt problems we are going to be Greece in two years” - Tim Geithner: “No risk of that.

 



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Previewing Next Week's Main Events

Curious what the investing world will focus on next week? Here is a recap courtesy of Goldman Sachs, though for those who want the punchline now, just fast forward to Thursday when get Spain and French bond auctions. In the meantime just ignore all the intraday trading halts of Intesa, UniCredit And Banco Popolare. The rest is just the supporting cast.



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Exercises In Parabolic Insanity

LOLWUT



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Sheila Bair's Modest Proposal To Fix Everything: Hyperinflation

This one is actually quite funny, although we feel that the MMTers, the Neo-Keynesians, the Econ 101 textbook fanatics, and the government apparatchiks out there will fail to appreciate the humor. However, we are a little concerned how many of those in charge read into this a little too much, and decide to make this official policy...



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Bill Buckler: "No Freedom - No Money - No Markets"

When Bear Stearns hit the wall, there was no talk of a federal government bailout because of what Mr Paulson had stated in public. The other US banks refused to lend because Bear Stearns had refused to participate in the bailout of LTCM in 1998. Bear Stearns was left with two options. It could sell the “assets” in the hedge funds or it could bail them out with its own capital. For the one and only time in the GFC so far, a money centre bank tried to sell Collateralised Debt Obligations (CDOs) on an actual market. That attempt lasted hours. When the auction was closed, the bids were coming in at 30 percent of the face value of the paper. The jig was up, the valuation of the collateral underpinning the entire banking system was revealed as fictitious. Not much more than a year later, that collateral was transferred from the US banking SYSTEM to the Fed, which has maintained its fictitious “value” ever since. Europe dragged its feet, but at the end of 2011 it did the same thing in regard to its own banks.



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Muppets Vs IG9 Tranches-Bernanke Puts Vs Portfolio Insurance

The markets are wobbly, but there is a great deal of confidence in the Bernanke “put” or the ones offered by other central bankers. Without a doubt the central bankers watch the stock markets and are willing to do things to support it. Great in theory, but can they react fast enough in a decline? How many investors are “long” risk because of the Bernanke put? I think a lot are. The problem with the Bernanke Put, is that it isn’t a real put. It is policy that attempts to stimulate the market. How useful is that in a sell-off? How many managers will risk losing more money waiting for the put to kick in? This is particularly true as we near month end. Hedge funds, for better or worse, have in many cases been forced to focus on monthly returns. Being long on the hopes of a put is not the same as being long with a real actual put.



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"There Is No Chinese Wall. Please. Come On. This Is Wall Street"

Remember the look on one's face when one hears there is no Santa Claus, or tooth fairy? That, more or less, is what the visage on everyone's favorite CNBC anchors Becky Quick, Joe Kernen and Andrew Ross Sorkin was, when Chris Whalen matter of fact (because it is a fact) let a rare glimpse of reality on the NBC Universal distraction and entertainment show, when he said "There is no Chinese Wall. Please. Come on. This is Wall Street." Awkward silence follows. And why not: if the banks officially call frontrunning an "Asymmetric Information Initiative" to mask the simple illegality from the idiot regulators, why not call a spade a spade, and expose one more aspect of the lies and crime that is shoved down investors' throats every single day.



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Another Russian Chartered, German Ship Intercepted Delivering Weapons To Syria

Two months ago we explained very diligently, why courtesy of the strategic Russian Naval base in Tartus, Syria, the Russian regime will never, repeat never, let the Syrian government be replaced by various insurgent forces (very much like in other parts of MENA, which now are suffering from an absolute political vacuum and even greater corruption in the aftermath of the Arabian Spring). Subsequently there were various reports of Russian troops arriving in Tartus, both confirmed and denied by Russia, which were promptly forgotten: after all distractions from other, far greater problems can not become too repetitive or else the general audience will habituate. But all that was a month ago, and attention spans these days are short, so it is time to once again escalate, and sure enough yesterday the AP reported that Obama has approved an aid package to the Syrian rebels. Naturally, since this whole theater is all about severing strategic Russian national interests in the Mediterranean, and thus, into the Suez, Arabian Gulf, and ultimately Persian Gulf, German Spiegel reports of the immediate tat to America's tit (not to be confused with the Colombian legal prostitution tit, where it now appears whoregate is about to become a national pastime courtesy of upcoming congressional hearings involving the 12 men from Obama's staff who were Secretly Serviced on taxpayer dimes), as apparently yet another Russian-chartered, German ship has been intercepted carrying military equipment and munitions into Syria.



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Guest Post: Pakistan And India To Go To War Over Water?

A peaceful and stable Pakistan is integral to western efforts to pacify Afghanistan, but Islamabad’s obsessions with its giant eastern neighbor may render such issues moot.
Since partition in 1947, Pakistan and India have fought four armed conflicts, in 1947, 1965, 1971 (which led to the establishment of Bangladesh, formerly East Pakistan) and the 1999 Kargil clash.  With the exception of the 1971 conflict, which involved rising tensions in East Pakistan, the others have all involved issues arising from control of Kashmir. But now a rising new element of discord threatens to precipitate a new armed clash between southern Asia’s two nuclear powers – water.



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Soros On Europe: Iceberg Dead Ahead

George Soros has been a busy man the last few days. Appearing at the INET Conference a number of times and penning detailed articles for the FT (and here at Project Syndicate) describing the terrible situation in which Europe finds itself - and furthermore offering a potential solution. Critically, he opines, the European crisis is complex since it is a vicious circle of competing crises: sovereign debt, balance of payments, banking, competitiveness, and structurally defective non-optimal currency union. The fact is 'we are very far from equilibrium...of the Maastricht criteria' with his very clear insight that the massive gap, or cognitive dissonance, between the 'official authorities' hope and the outside world who see how abnormal the situation is, is troublesome at best. Analogizing the periphery countries as third-world countries that are heavily indebted in a foreign currency (that they cannot print), his initial conclusion ends with the blunt statement that "the euro has really broken down" and the ensuing discussion of just what this means from both an economic and socially devastating perspective: the destruction of the common market and the European Union and how this will end in acrimonious recriminations with worse conflicts between European states than before.



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Why The Market Is Slowly Dying

From Morgan Stanley: "In our mind, many of the approaches to algorithmic execution were developed in an environment that is substantially, structurally different from today’s environment. In particular, the early part of the last decade saw households as significant natural liquidity providers as they sold their single stock positions over time to exchange them for institutionally managed products... While the time horizon over which liquidity is provided can range from microseconds to months, it is particularly shorter-term liquidity provisioning that has become more common." Translation: as retail investors retrench more and more, which they will due to previously discussed secular themes as well as demographics, and HFT becomes and ever more dominant force, which it has no choice but to, liquidity and investment horizons will get ever shorter and shorter and shorter, until eventually by simple limit expansion, they hit zero, or some investing singularity, for those who are thought experiment inclined. That is when the currently unsustainable course of market de-evolution will, to use a symbolic 100 year anniversary allegory, finally hit the iceberg head one one final time.



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Mark Grant On The Dangerous Road Ahead

Of the twenty-five largest banks in the world there is only one that does not need to raise additional capital to de-lever to a 20x leverage and a 5% of Tangible Capital Ratio and that is Citigroup which has a current leverage of just 13 times and I also point out that Wells Fargo with a 14 times leverage needs a minor amount of capital to accomplish these goals. At the far other end of this scale is Deutsche Bank which is levered 62 times and would need a massive amount of new capital and tremendous shrinkage to accomplish these goals. The assets of DB are also equivalent to the entire GDP of Germany so that the bank could devour the country if Deutsche Bank were to hit the wall. Then the most leverage can be found at Credit Agricole at 66 times which would also swamp France, given its size, if asset values continue to decline or if Spain or Italy need to be bailed out and the contagion worsens.



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Volatility Is Back

Volatility is back. The S&P moved more than 1% on 4 of the 5 days, had the biggest down day of the year, and even the least volatile day was a 0.7% move.



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Assymmetric Secret Servicing Initiative: Obama's Colombia Visit Found To Subsidize Local Alternative Monogamy Market

Obama may not be the most successful president when it comes to creating jobs at home, but when success is measured by the number of blowjobs outsourced abroad, he may be truly second to none, as his visit to Colombia proves before it has officially begun. According to the AP, "A dozen Secret Service agents sent to Colombia to provide security for President Barack Obama at an international summit have been relieved of duty because of allegations of misconduct." Relieved here being a perfectly randomly selected verb. Because according to a tip received by The Associated Press "the misconduct involved prostitutes in Cartagena, Colombia, the site of the Summit of the Americas. A Secret Service spokesman did not dispute that allegation." Or, as Goldman would call it, an "Asymmetric (Secret) Servicing Initiative" where much more than just inside information is leasked. Unfortunately, while he may be far more successful in generating jobs in Latin America than domestically, even those jobs have proven to be quite transitory, just like virtually all quickie temp jobs "created or saved" in the US in the past several years. Furthermore, just like in the US, we doubt that the incremental wealth benefits will trickle down to the local population. After all, unlike in the US, endogenous Colombian liquidity may be abundant everywhere but certainly not at the central bank, which is far, far tighter at a rate of 5.25% (and rising), compared to extra loose central planners the "developed" world over.



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Man Vs Machine: How Each Sees The Stock Market Part 2

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