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61% Underfunded Illinois Teachers Pension Fund Goes For Broke, Becomes Next AIG-In-Waiting By Selling Billions In CDS

Tyler Durden's picture


“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank.” So begins a story by Alexandra Harris of the Medill Journalism school at Northwestern, which, however, does not focus on some exotic product-specialized hedge fund, or some discount window (taxpayer capital) backed prop desk (hedge fund) at a TBTF bank, but instead at the 61% underfunded, $33.7 billion Illinois Teachers Retirement System (TRS), which just happened to lose $4.4 billion in 2009 (a year when, courtesy of America's conversion from capitalism to socialism, the market rose 60%), and 5% in2008. Yet underperformance can be explained. What can not, is that the TRS has now become a shadow AIG. As Harris notes "TRS is largely on the risky side of the contracts, selling and writing OTC derivatives, including credit default swaps, insurance-like contracts that guarantee payment in the event of a default, that were blamed in part for the 2008 collapse of Lehman Bros. and bailout of insurance giant American International Group Inc., or AIG." Demonstrating just how far the fund is willing to go in the "for broke" category, knowing full well that if it repeats AIG's implosion, the government will likely bail it out, is the disclosure that a stunning 81.5% of the fund's investments are considered risky - this means it is the fourth-riskiest investment portfolio for a pension fund in the U.S! All it will take is another Flash Crash-like event, or a liquidity crunch, and the 355,000 "full-time, part-time and substitute public school teachers and administrators working outside the city of Chicago" will likely end up with a big, fat donut in their retirement portfolios courtesy of some deranged lunatic, portfolio manager, situated externally at a bank like Goldman Sachs, who in taking a page straight out of Obama's bailout nation, has decided there is no such thing as risk. And to those naive enough to think the TRS is the only such fund which has now gone all-in on "no risk and infinite return", wait until such stories start emerging about every single massively underfunded pension and fully insolvent fund in the US.

From Harris' report:

Frank Partnoy, a law and finance professor at the University of San Diego who worked on Wall Street as a derivatives structurer in the mid-1990s, said TRS’s portfolio is an indication that investing is not about what is smart but what will generate the highest returns.

“It’s an epic illustration of how we’ve really gotten lost in financial complexities,” he said, after studying the Illinois Auditor General's 2009 audit of TRS and the fund's March 31 derivatives positions.

TRS said it uses over-the-counter, or privately negotiated, derivatives to maximize the performance of its portfolio and only allows money managers to invest in derivatives if they “have the appropriate expertise and knowledge and employ sophisticated risk management systems,” said David Urbanek, public information officer, in an e-mail.

The fact that TRS trustees and investment advisors approved the use of OTC derivatives isn’t, in itself, alarming. The financial instruments are not explicitly prohibited in the Illinois pension code, and many derivatives contracts provide protection against losses on other investments.

In the balance sheet provided to Medill News Service, TRS’s OTC derivatives portfolio showed that in addition to writing CDSs, the pension fund was selling swaptions and shorting international-based interest rate swaps. For each contract written or sold, TRS received a premium.


And as always happens when one collects pennies before a rollercoaster, the spectacular blow up always eventually catches up with you:

Unfortunately for TRS, its OTC positions soured in late April when Greece’s debt woes worsened, Standard & Poor’s downgraded Spain’s debt to AA and the euro dropped to its lowest levels since the currency’s inception. The International Monetary Fund and European Central Bank orchestrated a $1 trillion bailout to ensure that Greece and the other PIIGS—Portugal, Ireland, Italy and Spain—would not default on their debts.

“As the European debt crisis worsens, TRS’ positions are going to bleed money,” the trader said.

Where it gets even scarier, is that TRS may be fraudulently misrepresenting its massively underwater portfolio:

But the Illinois Teachers’ Retirement System said if it unwound the OTC trades held in its pension fund today, the positions would have a market value of $5 million and a notional value of $1.1 billion. Notional value is the total value of a leveraged financial instrument’s assets.

It isn’t clear how TRS is valuing its OTC derivatives and market experts, among them Rosenthal, who estimated a loss of $515 million as of March 31, were skeptical the OTC positions could have been showing a net positive notional value.

TRS projects it will have logged a $158 million gain from its derivatives portfolio by the June 30 end of fiscal 2010— with $5 million derived from its swaptions, CDS and interest rate swaps positions—and just a fraction of its projected $627 million total return.

A significant portion of TRS’s OTC derivatives are linked to interest rate swaps and those are tied to either the London Interbank Offering Rate or Euro Interbank Offering Rate. Interest rate swaps stipulate for every basis point tick upward in the LIBOR or EURIBOR, the fund is forced to pay out an interest rate that is two basis points higher. This is why the notional value of TRS’s U.S. dollar- and international-based interest rate swaps were in the red by $361.4 million at the end of March.

TRS’ portfolio also includes a large number of swaptions—or the right at a future time to enter into a swap position—which showed a loss of $14 million as of March 31. In addition, the fund sold approximately $154 million worth of CDSs guaranteeing the debt of dozens of companies, countries and states, among them American International Group Inc., GMAC, Panama, Mexico and California. (See graphic).

A large part of TRS’s international-based interest rate swaps positions are linked to the Brazilian Interbank Deposit Rate and Euribor in a bet that inflation would stay low in Europe but rise in emerging markets.

Rosenthal, who said TRS appears to be betting that long-term Treasury yields will greatly increase, is incredulous that the fund even has this view. “Their job is not to play the [Treasury] yield curve,” Rosenthal said. “It’s not their job to have that view.”

Swaptions, Euribor exposure, curve trades? What the hell happened to buy and hold. Does TRS really expect to survive this, when there are sharks like Goldman who know every single trade the TRS has on, and one day, sooner rather than later, will destroy it, but not before margin calling it to death in the process.

The logical question of who the hell is supervising this slow motion train crash surprisingly has no answer:

Section 1-109.1. of the Illinois Pension Code states it is the duty of the board of trustees of a retirement system or pension fund to appoint fiduciaries to manage its assets—including the power to acquire and dispose of any assets—as well as assign others as fiduciaries to oversee activities other than asset management.

TRS said it makes day-to-day operational decisions concerning strategic asset allocation, portfolio structure and manager selection, but cedes all of its investment decisions, within TRS parameters, to professional money managers, a list some 60 names long that includes Goldman Sachs Asset Management, JPMorgan Investment Management, Northern Trust Co. and State Street Global Advisors.

When asked which managers were responsible for the pension fund’s derivatives portfolio, Urbanek, the Illinois TRS spokesman, said OTC derivatives positions are scattered across each asset class because they are “complementary positions” within each portfolio.

According to its investment policy, TRS encourages diversification of assets and “prudent” risk taking because these strategies align with its long-term investing goals. “Increasing risk is rewarded with compensating returns over time.”

“They’re not maintaining effective internal controls,” Partnoy said. “Is it prudent risk-taking to write CDSs on Brazil?”

At the end of the day, it appears the fund is doing nothing illegal by essentially offloading front-office duties to Goldman, which of course is happily trading in advance of the fund, to whose books it likely has full exposure, to benefit its own prop trading desk, and reward its own shareholders first and foremost: 63 out of 63 profitable trading days anyone?

The bottom line, experts say, is that there is no language in the Illinois pension code that prohibits pension funds and retirement systems from buying or selling OTC derivatives as an investment method. In the event of catastrophic losses, lawsuits would be filed against the fiduciaries, but ultimately taxpayers would be left holding the bag. 

And here we see where the next layer of catastrophic systemic collapse will come from: the multi-trillion pension system, which is now invested in the riskiest imaginable products, and whose existence is contingent on a market and economy, both priced to perfection. The Fed is surely aware of this, and will do everything in its power to prevent a catastrophic collapse. Yet the Fed always loses the battle at the end of the day. And if Americans were angry the last time they had to bail out bankers, just wait until it becomes obvious that these very banks blew up the pensions of tens of millions of Americans only so that the very same banks could enjoy at least one more year of record bonuses. It is not obvious where the next crash will happen. And it is certain that nothing will be done, as facing the problem would mean recognizing the massive losses already facing the pension system. And that would be the dominoes that forces yet another round of inevitable mark-to-market, and bank implosions. The timebomb is now ticking and there are merely seconds left before it goes off. We have been warned, and will do nothing to stop it.


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Mon, 06/14/2010 - 15:51 | 413169 AnAnonymous
AnAnonymous's picture

The good news is that before 2009, the US was capitalism.

Mon, 06/14/2010 - 17:01 | 413345 Al Gorerhythm
Al Gorerhythm's picture

This is and always will be about greed. It's the human condition. As an alternative (please explain your take on what capitalism is) to capitalism, what do you propose?

The way I read this, this is another grab at your savings whilst they still have purchasing power. A question arises: in light of the full knowledge of the theft of savings via AIG bailouts, who is it that has been bought out in the hierarchy of the TRS, to facilitate this latest scam?   

Mon, 06/14/2010 - 17:25 | 413393 downwiththebanks
downwiththebanks's picture

A start would be nationalizing the NY Fed and cutting off the spigot to the parasites.

Mon, 06/14/2010 - 19:19 | 413660 Devore
Devore's picture

So giving the henhouse keys to the foxes is the answer all along? Your definition of parasites must be different from mine.

Mon, 06/14/2010 - 21:23 | 413857 jeff montanye
jeff montanye's picture

the point seems to be that the foxes already have the keys to the henhouse:  rather than have a central bank owned and run by commercial banks, perhaps one directly controlled by the government of the u.s. with some, admittedly declining, democratic (vote based) controls/checks and balances on its actions would be preferable to the status quo.  imo it may not have made much difference; the corruption and incompetence seem nearly universal.

Tue, 06/15/2010 - 00:30 | 414094 Teaser
Teaser's picture

government f's everything up.  The only solution is a return to sound money.


for you anti-goldbugs out there, that means money tied to something tangible, that can't be made from nothing.


people asking for the government to take over the fed and print money directly are INSANE!


Have you learned nothing from reading the posts here?

Tue, 06/15/2010 - 08:48 | 414224 Howard_Beale
Howard_Beale's picture

Once again, the issue in the threads below are an argument about capitalism, which has never existed, or communism for that matter.

How do you call oil company tax breaks capitalism? How do you call farm subsidies capitalism. We are all delusional. There is no form of government on this earth that is pure anything.

Time to get over it and stop the defensive egos and utopian views. It's all an illusion we have been sold--lock, stock, and barrel. Pay the same gas prices as the rest of the world? Yeah, right. We have capitalism....NOT. 

Now to the subject of the post, which is the Illinois Teachers Pension Fund, my stepfather is a recipient, as a professor at the U of I. That's not a union gig, by the way for all you assuming that all in the fund are union employees. It covers the universities as well. In 1999 he wondered how long it would last. He's a brilliant man that understands the implications of not only a bankrupt state but how poorly managed this fund has been. Luckily (and methodically) my parents have no debt and own significant farmland. But if the pension goes belly up-and we have no way of knowing that this will be another bailout other than it is Obama's home state--there will be many others coming.

And with muni's sinking like stones with no ability to return to balance, the truth is, it is a no win situation. The bailouts will stop. The people are furious--even those that need it most--the times, they are a changing.

So, in final, we must STFU on capitalism like is was some great thing we had. Because we didn't. We had subsidized milk, gas, grains, etc for 50 years. That's no free market. Let those ridiculous tax cuts expire. Bye Bye to one of just the many transfers/maintaining of wealth to those that least deserved it. Trickle down economics my ass...try trickle down unresolved bladder issues. David Stockman was was a sham.

Tue, 06/15/2010 - 09:36 | 414440 Insert witty title
Insert witty title's picture

So lets work to devolve power to local levels and reduce the size of federal government, educate europeans that the EU and Euro is doomed to failure and reduce the ability to the state to interfere, reducing the incentive for corporates to abuse excessive governmnet power and b forced to do what they are supposed to - compete against each other.


I respectfully refuse to stop talking about capitalism because we dont' have it and havn't had it before. My beliefs may be wrong but they include that socialism at least as bad as any bastardised form of corporate statism and not a step in the right direction of reducing state size and power.

Mon, 06/14/2010 - 17:56 | 413480 ejmoosa
ejmoosa's picture

Greed is too simple a reason.  It's more about the have-nots, looking at those that have and saying "Hey, I can do that".  The only thing is they cannot.


Investing and understanding risk isn't easy.  Those in the education system teach theory.  The real world is very different.  Retirement funds of teachers and other public workers reached a critical mass and then they decided they should invest socially.  Boycott some nations, invest in others, because of the "social good" it would bring.  It never materialized.

Now they are behind the 8-ball, and their backs are to the wall.  They may as well go to the roullette table, pick black or white, and let it roll. 

Exactly how does one pick winners and losers in a capitalist system when A) you detest Capitalism and B) you really do not understand it to begin with.


The answer: Poorly

Mon, 06/14/2010 - 18:58 | 413610 aurum
aurum's picture

when our elected officials and not so elected officials get to choose who wins and looses, capitalism ceases to exist. the problem is not the concept of capitalism. the problem is most are brought up to believe that true capitalism does exist and when people find out that the game is skewed for the benefit of a few, they get pissed off and rightfully so. the problem in capitalism is the greed at the top who will stop at nothing to have a $87000 area rug for their office while their company is insolvent....and this is probably the same issue with TRS. and if it wasnt for the taxpayer, there would be plenty of "have nots" that supposedly understand true capitalism and they would not have enjoyed the full "benefits" of "capitalism".



Mon, 06/14/2010 - 21:25 | 413858 jeff montanye
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don't pick white at roulette; you'll lose.

Mon, 06/14/2010 - 22:01 | 413907 Al Gorerhythm
Al Gorerhythm's picture

Perhaps,"covet" might be a better drive descriptor for the "have nots" wanting the things that other fortunates posess. Regardless, the "have nots", wanting to increase the comforts that make life easier, is not the same as the "want all's" drive to take what is not theirs (other folk's savings) by misdeeds or (graciously) mismanagement. That denotes wanton greed.

Tue, 06/15/2010 - 07:28 | 414297 New_Meat
New_Meat's picture

Saul, you're alive!

Mon, 06/14/2010 - 17:04 | 413350 Ragnar D
Ragnar D's picture

Oh not more of your sniveling authoritarian revisionism again...

Trying to pretend the failures caused by central planners forcing their will on the ignorant peons is somehow the fault of "capitalism" makes you a useful idiot at best, and a control freak fraud at worst.


But yes, the solution to the massive failures every time you dictate to individuals that they cannot interact freely and make their own decisions will be solved by more of the same *this* time...

Mon, 06/14/2010 - 17:23 | 413389 downwiththebanks
downwiththebanks's picture

"Sniveling," eh.  Wow.

What you call 'failures', I call normal.  The savings accounts of said peons to which you refer above weren't stolen by accident, and the government didn't do the stealin' - they just abetted it.

Capitalism functions as it always has - he who accumulates most, wins.  That's the objective.  

That GS does this better than anyone means only that they steal most efficiently.

Mon, 06/14/2010 - 18:12 | 413514 ejmoosa
ejmoosa's picture

Frankly, a key component of capitalism is destruction.  Ineffective and poorly allocated capital is destroyed.

At the expense of everyone in the capitalist system, we have allowed ineffective capital that should have been destroyed to continue attracting even more capital investment, keeping it from other, effective and efficient uses.  Fannie and Freddie are prime examples.

This not only limits the performance of efficient capital, it exponentially grows the losses of bad capital, which should be destroyed. So you take away from the winners and support the losers longer than they should even exist.

Why reallocate your capital that is poorly allocated if the government is going to bail your ass out?  Hell, you do not have to do a thing.  Government will make you whole again for the decisions you know you should have made.

Don't blame capitalism.  We do not have true capitalism in this country.  We have democratic capitalism.  And it is destined to fail every time.


Mon, 06/14/2010 - 18:20 | 413540 downwiththebanks
downwiththebanks's picture

I'm not blaming capitalism, and my analysis isn't confined to Babylon.  

The users of capital operate within a dynamic system to gain control of productive forces - land, labor, and resources - by whatever means necessary.  Historically, this has occurred chiefly by means of fraud, theft, and murder.

Some people call this "freedom".

Mon, 06/14/2010 - 18:36 | 413570 ejmoosa
ejmoosa's picture

if we did a body count, socialism and communism far outnumber capitalism when it comes  to deaths.

And we already know how the productivity of socialism and capitalism turn out.

Tue, 06/15/2010 - 02:50 | 414162 BumpSkool
BumpSkool's picture

But... could you not count the 17th,18th and 19th century slave trade, driven by European-based capitalism in the death toll as well? The slavery deaths from America and South America had a massive fatality rate, at a time when warfare technology was not advanced surely rank along side the deaths from socialism/communism. In pure numeric terms, you may not be right.

Tue, 06/15/2010 - 06:11 | 414226 Howard_Beale
Howard_Beale's picture

And he may be wrong. Conjecture.

Mon, 06/14/2010 - 19:01 | 413619 damage
damage's picture

Actually.. there is absolutely nothing capitalistic about fraud, theft, and murder. It is lack of enforcement of these laws (mainly fraud) which helped lead to the state we are in today, but to say "capitalism" is all about fraud, theft, and murder.. or to say "freedom" is about fraud, theft, and murder. I completely disagree. Laws against murder and theft protect "freedom" / "liberty". Laws that go further than this though only restrict freedom.

Mon, 06/14/2010 - 22:13 | 413930 Village Idiot
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Mon, 06/14/2010 - 23:54 | 414066 KevinB
KevinB's picture

Yes. +100

Tue, 06/15/2010 - 04:10 | 414210 AnAnonymous
AnAnonymous's picture

Woooo, big comment.

Do you measure what you say actually?

The US is the wealthiest country in the world, draining more resources than any other society (per capita) before.

If indeed,  it is a lack of enforcement of these laws (mainly fraud) which helped to lead to the state we are in today, it's telling this lack is the key of the US success.

So do you measure what you say?

Tue, 06/15/2010 - 07:18 | 414228 Howard_Beale
Howard_Beale's picture


Most people don't have the ability to measure what they say. Usually the closest you can get is glass half empty, half full.

I like numbers, stats, good science, and valid analysis with something to back it up. Thus the love for ZH and their work. But this rah rah, capitalism is being tarnished by the "few" greedy and fraudulent, totally fails to perceive the greater issues at hand. I find it insulting to the collective intelligence of this blog.  

We live in a state of corporate fascism, no capitalism other than a few brave entrepreneurs to be found that hopefully will survive. All the warnings from the founding fathers to Eisenhower have come to fruition.

Capitalism...wake up. It's not even on the horizon and the sun is setting.

Tue, 06/15/2010 - 11:46 | 414681 AnAnonymous
AnAnonymous's picture

The founding fathers did envision the land grab. Some of them even pursued it.

Tue, 06/15/2010 - 12:26 | 414816 WaterWings
WaterWings's picture

Yep. The Federalists didn't even want civil rights. Those that truly envisioned freedom for all were few and far between. But we are not taught the sinister side in public schools. We are not taught how to demand the rule of law other than holding an angry sign and announcing intentions for voting time.

Fuck that. "To arms, to arms."

Tue, 06/15/2010 - 12:30 | 414804 WaterWings
WaterWings's picture

Howard, it sounds kind of like you're not gonna take it anymore.

But I want to know what greater issues we have at hand. Gulf of BP evacuations? Yeah, that's a bigger issue. Martial law? Yep, that too. Who cares about entrepreneurs coming up with some big idea - central planning is the status quo; your elected buddies will pass the cash as long you help them get rich too and keep the sex parties a secret.

So I agree, we don't have capitalism - and that's because we no longer see people going to jail. It's Open Season for corruption now. 1984 is here. Keep your head down. Say nice things to police officers. Pay all your taxes, no matter how oppressive, and thank them for allowing you to prepare online. If they want to inspect your house for whatever reason bake them cookies. Don't get angry, and don't touch gov't employees - that's assault and a federal offense. Their safety is of the utmost importance.


So this is not the United States anymore. We are a serfdom controlled by DC now.

Grab the popcorn kids, the show in the South is gonna be amazing. Poor souls.

(seriously, if you live within 200 miles of the coastline you should have moved yesterday)

Tue, 06/15/2010 - 19:34 | 415914 Howard_Beale
Howard_Beale's picture

Well said.

Mon, 06/14/2010 - 19:05 | 413629 AccreditedEYE
AccreditedEYE's picture


Tue, 06/15/2010 - 01:31 | 414127 Oh regional Indian
Oh regional Indian's picture

Actually, picking up from your first sentence, a key component of all creation, if which vaious isms are mere subsets, is destruction.

The seed of destruction allows for creation in the first place.

How the cycle plays out is one thing (the road, the way, the means), how it ends/transitions (there are no real endings) depends on which paradigm within said creation dominated.

I think greed and selfishness, both used in their most literal, common meanings, dominated this cycle. So the coming transition is going to be ugly. Retirement funds, usury based are just a symptom pf the larger malaise.


Tue, 06/15/2010 - 06:27 | 414230 Howard_Beale
Howard_Beale's picture

Nice post.

Tue, 06/15/2010 - 03:53 | 414199 AnAnonymous
AnAnonymous's picture

Please define capital.


Because the story of destruction in a nice one in a context of limited resources.

Ineffective in what terms?

If you have several solutions rising out of a pool of resources and that a solution has drained a meaningful share of the resource pool before being labelled inefficient, the solution has still drained the meaningful share of resources and casting it out is casting out that meaningful share of resources.

Please explain how your vision of capitalism deals with accumulation effects.

I am eager of reading.

Mon, 06/14/2010 - 17:41 | 413435 homersimpson
homersimpson's picture

What's next - you going to file a docket in court to remove the name Redskins from the Washington NFL team? Geez... Go grab a room with Karl Marx.

Mon, 06/14/2010 - 17:46 | 413449 Thoreau
Thoreau's picture

FYI, it's not safe to use your REAL name on this forum.

Mon, 06/14/2010 - 23:44 | 414050 williambanzai7
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My real name is williambanzai without the 7.

Tue, 06/15/2010 - 04:51 | 414231 Howard_Beale
Howard_Beale's picture


My name is Howard Beale without the underscore.

Tue, 06/15/2010 - 17:24 | 415583 Assetman
Assetman's picture

Hehe... My name is Assetman, without the "et". :)

Tue, 06/15/2010 - 12:18 | 414788 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

That's a scream...Thanks for that.

(my name is MUD)

Mon, 06/14/2010 - 17:50 | 413462 downwiththebanks
downwiththebanks's picture

I just think when one pays homage to the greatness of capitalism that they also pay homage to what it expropriated by force to get the whole damn thing going.

Mon, 06/14/2010 - 18:49 | 413597 Dr. Acula
Dr. Acula's picture

Capitalism = means of production in private hands.

Owning means of production doesn't mean you expropriated. That's only one of the ways to get there.

Mon, 06/14/2010 - 19:04 | 413628 downwiththebanks
downwiththebanks's picture


Tue, 06/15/2010 - 05:42 | 414244 Howard_Beale
Howard_Beale's picture

Capitalism means a hell of a lot more than means of production in private hands. It means laying off costs (externalities) to the taxpayer in the interest of the shareholders. It means finding the lowest cost of production worldwide, until they are no longer the lowest cost and leaving a community or country devastated. I'm not pulling this out of my's the truth of how made in China goes to made in Honduras, to made in Vietnam, to made in Jacarta (which get's labeled China for political reasons).

You may have been referring to the Utopian capitalism.

There are few corporations that have not gained wealth at the expense of taxpayers through lobbying or polluting their land and waters, or the human race for that matter. Deaths of humans are a cost of business and companies take out policies on their own employees, JUST IN CASE.  Whether it be dumping toxic waste, considering human lives as a cost of doing business (Bhopal disaster, BP, PG&E, JPM, GS, GE, Merck, Phizer, Exxon, etc) it's this lovely ideal so many seem to reach for. You expect responsibility...stand up human beings. We get nothing of the sort.

On the subject of Tech--exporting jobs has worked out really well for their bottom lines, hasn't it? But we don't really want to know how toxic the waste from producing chips is, do we? Because it's not in our back yard. It's disgusting what happens with chip waste in the Pacific Rim and other countries INTC, AMD, and all the generics manufacture. Furthermore, with the lovely outsourcing so that when Radu (and I love Radu) says, hello, this is Scott--well that's great for one little Indian town that puts their brightest to work for $10 a day. But when the people that lost their jobs to India can't afford the toys because their jobs are gone, it's one big shot in the foot. Short sighted bullshit. Oh, let me kick NIKE in the ass too. They started this build up a labor force until it is too expensive, and move on and leave a wasteland. I used to know the founder of that firm. I can't even say his name he disgusts me so.

Anyone on this post that thinks unfettered capitalism is a welcome ideal is not informed of the insane asylum we live in. It's utter horseshit. And yeah, let the criminals clean up the crime the Gulf, like Bhopal...they don't. They just want to cover their asses. I think BP should be put into receivership tomorrow. The well is broken in the casing and we all know it. Time to let Tony "get back to his life". Somewhere in obscurity and hopefully behind bars for not being forthwith before Top Kill that they knew there was a much more serious problem.

How the hell did we get here? Unfuckinglimited liability should be the way it is. PERIOD. They can keep their pets and main residences. Everything else goes on the block.

It's a sad, sorry state of affairs.

Tue, 06/15/2010 - 06:05 | 414255 Insert witty title
Insert witty title's picture

Hi Howard,


Respectfully a question if I may, because I have read a lot of your posts and thanks for taking the time to contribute.

Costs can only be externalised to the taxpayer if a state is of a certain size no? If the means of production are held by competing individuals, or if there is enough competition between larger pools of means of production/capital whatever, it is more difficult to externalise costs on to the taxpayer as no one corporate pool is big enough to influence the state.

Even better what if the state was of an insufficient size as to mean influencing it produced no outcome?

I guess I am having problems with your definition of capitalism including the exportation of costs to the taxpayer. Capitalism must mean risks and rewards are born by the capitalist. You can't call what we have at the moment capitalism.

What we have at the moment can be called corporate statism for example, but I can't see how if the state wasn't of sufficient size to attract the interest of a large corporate as the most efficient form of profiteering ie no need to compete on quality or price or whatever, just gain influence on the state to protect/grow your business.

If the state is kept small, with devolved power in the hands of local communities this course of action wont' be available to the corporates and they will have to resort to competition.

From what i have read of the US constitution, and the intentions of the founding fathers this is what they aimed to achieve - well Jefferson etc rather than the Federalists anyway, and wow, they lost that fight.

Just because this has been perverted doesn't mean its capitalism.

I am anxious to read your thoughts on what i have written, always trying to pick up new things.


Kind regards, IWT


EDIT - oh and this idea of 'unfettered' capitalism. I have never read that advocated by any libertarian text of any merit. Libertarian texts, yes i am a Hayek fan, to me advocate strong state presence in areas such as property laws for one. They just want the laws to be set in advance, known to all, and applicable to all rather than changed in an ad-hoc fashion to suit whatever cause appeals to the government at the time (Hi Obama).

Finally for me, if you reduce the size of the states power, you reduce the ability of large corporate to abuse the state.  

I'm new to this stuff as of the last two years or so, so please take it easy on me if i'd made a mistake or two.

Tue, 06/15/2010 - 08:16 | 414318 Howard_Beale
Howard_Beale's picture


My thinking doesn't encompass that last 10 or 20 years...I go back to the beginning of the industrial age when externalities were that of human life in the name of profits. Government was much smaller then. But the wealthy always preside on the matters of what war to get involved in (think JPM and Woodrow Wilson--JPM had assets to protect in Europe and we sacrificed our youth.) and how to handle those pesky people that want fair labor practices. I am not a Libertarian. I am a combination of many ideas that calls for personal responsibility on the corporate level and regulations that punish the criminals. I would like that to apply to all government criminals as well---hello, Timmay, welcome to your cell.

In matters of something like a public utility, take the easiest example of PG&E (the basis of Erin Brockovich). PG&E was basically a monopoly at the time so your thesis that competition with a smaller state might hold merit. But time and time again, competition hasn't proven to be a behavioral control if regulations are there that can't be enforced. 

There is no difference today in the military industrial complex than there was 15 years ago when there were 10 large companies. Now there are 3 due to mergers. Probably a bad example since they have had the government captured since the late 60's.

Back to a public utility like PG&E, to own up to their externalities, it took getting seriously caught with proof of cancer, miscarriages, deformed children, etc. to stop the carnage.

Small government does not make corporations more responsible. That is a human function that can only be done from the top without the interest of shareholders being the only concern. If we cannot provide structures that reward responsible behavior and severely punish those with unlimited liability to put into their models before undertaking projects for which they have no cure, then we are doomed to the lobbying efforts and government failure in the name of greed for all concerned.

We cannot afford this type of nonsense anymore. There must be unlimited liability for corporate failure for capitalism to behave responsibly. We must have a government that cannot be bought by lobbyists. The Federal Reserve has lobbyists and look at the raping and pillaging they are doing on an ongoing basis.

I believe that capitalism must be regulated and that workers have the right to form unions as they did in 1915 when they were considered nothing but part of the money machine. And again, the lives of the men and women BP has taken in just a few years are mere "costs" to them.

There is a very interesting film called "The Yes Men Who Fixed The World" who are two men that have impersonated CEO's, etc for major corporations and caused a ruckus around the globe. One of their sillier ideas was to provide corporate leaders with a human cost element that would lessen the burden of death in their endeavors. The audience responded with varying degrees of interest due to the way it was presented but a few men cornered them after it was over and said is was an idea whose time had come.

I look at the small city councils around me here in the Marsellus shales. I see Chesapeake getting rights for peanuts to drill. People around here with wells made the front page of the newspaper a few months ago since they could light their tapwater on fire. Of course, their wells were 1/2 mile from the drilling so Chesapeake told them they had a pre-existing condition--if it was 1/4 of a mile they might have had to pay up. WTF? Where is the responsibility I ask once again? Shale drilling is a whole new ballpark and with PA broke, they just let the gasholes (as I call them) do whatever they please in the name of jobs (which few are locals, most are imported from around the country) and tax revenues, although they already have so many tax breaks I doubt the state makes a penny. 

The fact that criminals should clean up their crime scenes just gets me irate--how the hell am I supposed to enjoy CSI Vegas anymore?

Because it just isn't working. The people of the southern tier of NY want the drilling to start there now and the NY EPA is still trying to decide if it is the right thing to let happen. We're all in this mess. Little government, local, state, and federal. There is just no accountability and we are all part of it. Greed and fear--the dominant forces of the market--are the dominant forces of much of our current human condition. It's time for all of us to change. Read CD's series, if you haven't already. He's shedding a bit of light here that is very much needed. 

Tue, 06/15/2010 - 09:41 | 414451 Insert witty title
Insert witty title's picture

Thanks for taking the time to answer. I will have to print out and think about what you have written but again thanks for taking the time to reply.


I wrote above to another of your posts that i believe the small state and devolved power the way forward. For now I hold on to that view but who knows maybe what you have written above will lead me down a different path.

To going forward with open eyes and an open mind.

Thanks again


Tue, 06/15/2010 - 08:18 | 414269 Howard_Beale
Howard_Beale's picture

I think the Rothschilds and JPM may have issues with that But I agree. Look at the rise of the unions in 1915. There was a reason for that. It was called slavery of labor. It was a war they didn't lose then, but they have now.

For those of you that refuse to believe that most wars are fought for profits, and to save the wealth of the wealthiest, keep your heads in the sand. We sacrifice our youth and children for it in the name of liberty and freedom. Would you send your children or go fight yourself so save JPM from his German risk exposure in 1915?

Would you sacrifice your children or yourself now in the war on the middle class ? There is no difference. It's a financial war this time with the transfer of wealth sucking the life out of every last person in this country.

Tue, 06/15/2010 - 00:48 | 414102 JLee2027
JLee2027's picture

Stolen land?  Since the Indians were nomads, just who owned the land?  Stolen land my ass.

Tue, 06/15/2010 - 04:05 | 414207 AnAnonymous
AnAnonymous's picture

What a stupid comment.

Today, people live in nomadic style. Mostly the wealthiest people on the Earth. Does not mean they dont own land because they live a nomadic life style.

This kind of comment finds their roots in the US citizens inability to cope with their past. They live on a fabled vision of their past and when conflicted with facts from their past, their efforts all are concentrated on finding a way to deny the facts.

In the case of the US, the massive landgrabbing was performed by the US itself and most importantly, in a US law framework. The vision of the Indians themselves is useless as the US cast its own law framework over them.

It is not a matter to know whether or not the Indians respected their own rule of law. But whether or not the US respected its rule of law.

Of course, the true friend of the Indians President Andrew Jackson gave a brilliant answer to that. 

Tue, 06/15/2010 - 14:44 | 415177 JLee2027
JLee2027's picture

What an accurate comment you mean.  Indians had no concept of land ownership. NONE.  

Take your garbage elsewhere


Tue, 06/15/2010 - 12:23 | 414805 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

...and by raising this flag I hereby declare all of these lands to belong to her majesty The Queen...


You can't just come in here and claim this land for your own, this is our land, we were here first!


Oh really?  Do you have a flag?

Tue, 06/15/2010 - 04:16 | 414211 Insert witty title
Insert witty title's picture

I'm about to add teh 20th junk to send this muppet to oblivion, here is what he wrote so the thread makes sense

by downwiththebanks
on Mon, 06/14/2010 - 21:31


'It was always capitalism, even when running on slave labor.

Even though the whole game is built on stolen land.

The whole affair has been about money-making, start to finish.  And that's capitalism.'


Mon, 06/14/2010 - 17:30 | 413402 BlackBeard
BlackBeard's picture

and now...time for a Johnny Cash song!

Mon, 06/14/2010 - 21:29 | 413866 jeff montanye
jeff montanye's picture

ring of fire?

Mon, 06/14/2010 - 21:47 | 413888 boooyaaaah
boooyaaaah's picture

What would have happened to the sub prime morgage industry if Goldman and Michael Burry did not short it

Would it still be cranking out worthless mortgages?

Then GS & Burry did us all a favor

And now for the next Act -- Shorting the State Teacher funds

The truth may be painful but bring er on


Tue, 06/15/2010 - 06:51 | 414277 Howard_Beale
Howard_Beale's picture

What would have happened to the sub prime morgage industry if Goldman and Michael Burry did not short it?

The people would have defaulted because it was a bubble and prices would have fallen due to bullshit no down, HELOCs as seconds at origination,  no doc, no income, interest only and their negative amortization, option arm, and other spontaneously combustable products being originated.

GS and Michael Burry? That is the shortest list (and by far not even close to the largest money makers) who saw it coming. Hell, I sold at the top in Arizona. I saw it coming. No rocket science involved.

Tue, 06/15/2010 - 06:55 | 414280 The Merchant of...
The Merchant of Venice's picture

You offer the closest bid without going over.  Come on down and collect your prize.

The big shorts are the result of an American voting populace that buried its head's in the sands.  Rather than rise up and throw out their elected officials they continued to support them.  In fact, even in spite of near criminal behavior they still supported them.  See, their congressman was a devout christian, an open gay man, a strong black woman.  Their elected official was everything they wanted in representation, as an image.

GS is making voters pay for apathy.  They will not cease in punishing capital markets.  Why would they?  Tomorrow is another day for yet another profitable trading day.

TRS is in bad shape, but TRS nothing compared to the trouble from CALSTERS and CALPERS.  Those two are knee deep in capital investment in the worst performing states in the union.  They own land, property, debt, and corrupt politicians in Illinois.

Tue, 06/15/2010 - 09:00 | 414370 Howard_Beale
Howard_Beale's picture

I guess Morgan Stanley is just going to have to pay up for a few Goldies since they weren't PERFECT in April....Bwahahahahahaha.

Mon, 06/14/2010 - 15:52 | 413172 papaswamp
papaswamp's picture

The govt is going to have to do a little reach around action before they bang me with this bailout...I'm tired of this all going one way.

Mon, 06/14/2010 - 16:24 | 413263 DosZap
DosZap's picture


Yep, how much longer do they think the American people are going to put up with this shit, without bloodshed is beyond me.

We're not talking a 5-10% loss of benefits, we're talking ALL.

Like I stated in prior blogs, Americans are a very sedate, and non violent group as a whole.....but, they will soon come a time, when nothing will stop the tsunami.

355,000 folks on top of the millions already pissed off, is gonna send this bitch over a cliff............

Some folks best have their Passports, and private jets ready to hit it.

Mon, 06/14/2010 - 16:59 | 413340 papaswamp
papaswamp's picture

I think the majority of the sheeple will sit on the couch until the cable goes out..only then will they realize the house of cards came down.

Mon, 06/14/2010 - 17:53 | 413470 Strider52
Strider52's picture

Papa, you hit the nail on the head. As long as people can go home, have a cold beer, sit on the couch and watch their favorite programs while eating whatever Mama got out of the freezer, sheeple are reasonably happy. Sure, many of us know that the entire planet is in major crisis mode, but, who cares? Let them QE to infinity. "It's their job, not mine. And what could I, Joe Sixpack do about it anyway?"

  Yep, wait until "American Idol" goes off the air, along with all cable TV. Then you will see Joe and Jane Sixpack out in the streets throwing rocks at the banks.

Mon, 06/14/2010 - 18:27 | 413556 kingwallop
kingwallop's picture

I call them Ipeople.

Mon, 06/14/2010 - 20:15 | 413765 ebworthen
ebworthen's picture


I'm willing to bet the pension fund managers are waging a war with capitalism by gambling it all; kind of like betting with your Ex's alimony.

Or, the people in charge of the pension fund are getting paid big money on the side to to buy crap with the pension money, kind of like Paulson working at the FED.

Tue, 06/15/2010 - 06:56 | 414281 Howard_Beale
Howard_Beale's picture

The article states they are selling crap. Selling insurance in the form of CDS's like AIG. Paulson was the Treasury Secretary. He did not work "at the Fed".

Tue, 06/15/2010 - 12:30 | 414830 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

He did not work "at the Fed".

He worked at Goldman -- what the hell is the difference at this point?

Tue, 06/15/2010 - 19:48 | 415944 Howard_Beale
Howard_Beale's picture

I concede to your point.

Mon, 06/14/2010 - 22:20 | 413936 Village Idiot
Village Idiot's picture

"I think the majority of the sheeple will sit on the couch until the cable goes out..only then will they realize the house of cards came down."


How about calling that moment of realization, "the big panic."  I plagiarized.

Mon, 06/14/2010 - 18:14 | 413528 ejmoosa
ejmoosa's picture

"Some folks best have their Passports, and private jets ready to hit it."


Possibly true.  The question is what place is in better shape and able to handle the influx of 1 million or more Americans?

Mon, 06/14/2010 - 18:51 | 413604 Hellholeratrace
Hellholeratrace's picture

Yeah, good thing we Americans are so *loved* around the world.

Mon, 06/14/2010 - 19:24 | 413673 DosZap
DosZap's picture


I was refering to the Politicians, and Wall Street group..........their ass is on the block.

Mon, 06/14/2010 - 19:27 | 413677 DosZap
DosZap's picture

dupe, damn slow servers.

Mon, 06/14/2010 - 20:35 | 413798 I need more asshats
I need more asshats's picture

It's not the ZH servers it's all of their embedded bullshit to track their readers.
Nielsen/NetRatings SiteCensus
var pageTracker = _gat._getTracker("UA-11091066-1");(too lazy to look at the js file for this one)

Whatever happened to HeyWouldJaBlowMe?

Mon, 06/14/2010 - 21:58 | 413906 Hephasteus
Hephasteus's picture

That's what all websites have or something similar and they aren't done THROUGH the servers. It's all done through ianna multicast.

Mon, 06/14/2010 - 22:28 | 413945 Village Idiot
Village Idiot's picture

"Some folks best have their Passports, and private jets ready to hit it."


"Possibly true.  The question is what place is in better shape and able to handle the influx of 1 million or more Americans?"



Fantasy Island. "Da plane. Da plane."

Mon, 06/14/2010 - 23:44 | 414053 Tangurena
Tangurena's picture

Well, I have a TWIC and merchant marine credential along with my passport. Since I don't think there will be enough room on planes to escape the doom and collapse (or erupting supervolcanos), I at least have the paperwork to work my way across the oceans. After all, someone has to shovel coal into the boilers while y'all play shuffleboard on deck.


The question is what place is in better shape and able to handle the influx of 1 million or more Americans?

Probably Australia. They're currently hurting for water, are quite anti-gun, but at least they speak something resembling English.  

Mon, 06/14/2010 - 18:15 | 413530 anarkst
anarkst's picture

"Like I stated in prior blogs, Americans are a very sedate, and non violent group as a whole..."

Are you referring to the Americans that live in the United States? If you'll recall from your history, Americans are anything but non-violent.  We have terrorized nearly everybody for nearly three centuries now.

Mon, 06/14/2010 - 19:30 | 413684 DosZap
DosZap's picture


How so?.............yes,of course the US.

Up until the last 35yrs, we have terrorized no one, and saved you from speaking German.Or, Japanese..............if at all.

Mon, 06/14/2010 - 20:53 | 413827 anarkst
anarkst's picture

You don't get to be an empire without  raping and pillaging everybody else.  It's a global version of, "King of the Hill."  And it's just the way that organised humans do things.  All empires have had similar behaviors.

Mon, 06/14/2010 - 22:33 | 413958 Renfield
Renfield's picture

I wouldn't call the US an 'empire'.

Maybe it's the tail end of the British empire...I could see an argument to be made that way. Not on its own, though.

Mon, 06/14/2010 - 23:06 | 413995 Burnbright
Burnbright's picture

I think you are confusing government with citizens. The government is made up of a very small body of individuals.

Mon, 06/14/2010 - 21:38 | 413878 jeff montanye
jeff montanye's picture

i like "the last 35yrs".  1975 was the turning point.  not slavery, not the trail of tears, not the mexican war, not the philippines, not central america, not vietnam/cambodia/laos. 

Tue, 06/15/2010 - 06:59 | 414283 The Merchant of...
The Merchant of Venice's picture

Your blaming the US for the failures of Spain and France?


Mon, 06/14/2010 - 19:36 | 413695 RichardENixon
RichardENixon's picture

Yea, I'm sure Canadians would have felt much more secure with China, Russia, Germany or Japan on their southern border all these years.

Mon, 06/14/2010 - 20:59 | 413832 anarkst
anarkst's picture

For all practical purposes, Canadians are essentially Americans.

Remember, in case our economic terrorism fails to attain its goals, we have 5000 nuclear weapons pointed EVERYWHERE.  The U.S. (and the interests' it represents) will destroy you one way or another.  People in other countries understand this reality.

Mon, 06/14/2010 - 21:48 | 413890 Ragnar D
Ragnar D's picture

Your America-last-ism is nauseating.

The rest of the world isn't filled with enlightened citizens of the world, half of it is a shithole of hardline, oppressive socialist dictatorships, and the rest is stagnant dependent softline socialism.


We've got plenty of problems here, but pretending things are better (or even not as bad) in Venezuela or Egypt or Britain is a joke.

The people there don't understand any "reality" other than the Entitlement garbage they've been fed:  their politicians have told them they're owed everyone else's paycheck, America has never embraced that abyss as fully, therefore America is greedy and terrible and we hate them until they surrender the last of their individual rights and become wards of the Nanny State.

Tue, 06/15/2010 - 07:04 | 414288 Howard_Beale
Howard_Beale's picture

Wow, let's generalize our perception of the rest of the world that pays the real price for petrol, VAT's that hit you 15 cents on the dollar, and very high income taxes to boot. Yeah, what a bunch of ignorant entitled fools. We are all in the same boat now and try not to speak for the rest of the world with Nanny State nonsense. It is what it is everywhere now. We are no different with stimulus, 2 year U/E benefits, state health care systems that are bankrupting them, and the banks raping municipalities and state governments with clever financial "short-term" fixes that are criminal at the very least. 

Yeah, we're way ahead of Europe. NOT. 

Tue, 06/15/2010 - 08:22 | 414329 Ragnar D
Ragnar D's picture

The "real" price of gas consists of a 300% tax instead of a 30% tax?

I think we're arguing the same thing here.  Anarkst was holding the rest of the world up as some superior alternative.


Over here, those of us who work for a living lose nearly half our earnings, and it still isn't nearly enough to pay for all the pyramid Entitlement schemes.  Fedzilla is intruding into more of our lives than ever, and we have massive bloated government unions feeding at the trough.

What's the European counter?  Losing more than half their earnings, to fall short of paying for even more bankrupt Entitlement programs.  Governments even more Omnipotent, individual rights even fewer, economies even stagnant-er, and an even larger portion of the population riding the government-union gravy train.

I never said we were way ahead of Europe...we're following in their footsteps (but we're bigger).  Calling out the US on its problems while holding up the rest of the world as a solution is like calling Barry's Chicago-meets-DC "change".  It's even more of the same.

Tue, 06/15/2010 - 09:15 | 414380 Howard_Beale
Howard_Beale's picture

I guess i have spent too much time in Canada and England that I had my head turned around like Linda Blair in the Exorcist on that blunder on gas subsidation. Thanks for correcting me. But got milk? 3 liters in Canada? $6. Can't drive with it but sure tastes better on cereal and in coffee.

Might I add that we're all kinda phucked here. There's this systemic debt cancer going around, appears to be viral. Definitely pandemic. The 2010-2012 plague. I'll call the CDC and they can request funds to get right on it...only the innoculation will cost billions.

Tue, 06/15/2010 - 12:36 | 414847 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

...only the innoculation will cost billions.

Oh, we can do BILLIONS, thousands of billions, in fact.  Do you really think it will work Doc?

Tue, 06/15/2010 - 19:50 | 415952 Howard_Beale
Howard_Beale's picture

lol. not one bit....:)

Tue, 06/15/2010 - 03:46 | 414194 BumpSkool
BumpSkool's picture

That may be true Tricky ... but how secure do you feel with GS, JPM and Morgan Stanley up your ass all these years .... and  private Federal Reserve above your head???

Mon, 06/14/2010 - 18:16 | 413533 QQQBall
QQQBall's picture

If 2008-2009 didn't do the trick...

Mon, 06/14/2010 - 20:11 | 413757 aerojet
aerojet's picture

Bah, don't tease my cock like that!

Mon, 06/14/2010 - 15:52 | 413173 jbc77
jbc77's picture

My God, reading stuff like this just makes me sick. To think I'll have to pay for some retard's pension fund gambling. This is why I cheer when the system cracks. I scream out with joy at the first sign of a flash crash...This is why I root for an all out rout of the financial system. Because sick bastartds like this deserve to be blown to smitherines.

Mon, 06/14/2010 - 15:58 | 413190 George the baby...
George the baby crusher's picture

You have a point there my good man/woman.

Mon, 06/14/2010 - 16:33 | 413285 downwiththebanks
downwiththebanks's picture

Most people are brainwashed, 24:7, to think the system works for you if you work hard.

Capitalism justifies it's existence in many, many ways.

Mon, 06/14/2010 - 16:39 | 413303 MichiganMilitiaMan
MichiganMilitiaMan's picture

What do you mean "capitalism justifies it's existence?"  Capitalism is an idea, it can't justify anything. Corrupt idiots do the justifying/lieing and spinning. I suppose you believe that communism/socialism/progressivism doesn't justify it's exsistence.

Mon, 06/14/2010 - 17:24 | 413390 DosZap
DosZap's picture


?...Capitalism is an idea?.

I don't think it is, I think it's the best system of how economies work best, and provided the incentives that built America into the greatest nation on the planet ever to exist.

It equaled FREEDOM.

Capitalism, goes back to the founding of civilization............

All other forms of governance are illicit.

Mon, 06/14/2010 - 17:29 | 413397 WaterWings
WaterWings's picture

Agreed. A framework that protects individual effort and punishes those that would corrupt it. Unfortunately the corruptors have taken over. Restore the rule of law and peace will reign.

Mon, 06/14/2010 - 17:39 | 413424 downwiththebanks
downwiththebanks's picture

Don't forget about the necessary triggers for your strange 'freedom':  genocidal land theft and slavery under the guise of a holy crusade abroad.

Mon, 06/14/2010 - 19:12 | 413643 MichiganMilitiaMan
MichiganMilitiaMan's picture

People/ idiots and others trigger genocidal land theft/slavery under the guise of a holy crusade abroad, not capitalism/communisim/islam/chrisitanity.  Write "capitalism" on a piece of paper and throw it on the floor, it wont' trigger anything. 

Mon, 06/14/2010 - 23:09 | 414000 Burnbright
Burnbright's picture

So now capitalism is a holy crusade. You are fucking psycho.

Mon, 06/14/2010 - 17:40 | 413433 downwiththebanks
downwiththebanks's picture

Capital functions in the world, believe it or not.  The method by which it does so, we call . . . 


(wait for it)



Mon, 06/14/2010 - 18:36 | 413571 Ripped Chunk
Ripped Chunk's picture

Actually, they really like it when you work hard......for them.

Working against them is the new way of thinking that the masses need to be instructed in.

Mon, 06/14/2010 - 18:57 | 413608 Al Gorerhythm
Al Gorerhythm's picture

I'm dedicating my life to working against them. My solution is to deny them what is rightfully mine. I don't subscribe to their description or formula of what they think is legally theirs.

Strategy:Drop out of their systems and take posession of tangibles, handing them back their paper derivatives.

Outcome: Debt gone! Not easy but doable.

Mon, 06/14/2010 - 16:54 | 413324 Gold...Bitches
Gold...Bitches's picture

This is why I root for an all out rout of the financial system. Because sick bastartds like this deserve to be blown to smitherines.

I absolutely agree.  I have come to the opinion that there is no 'fixing' it - its broke.  Beyond repair.  It needs to implode and disappear.  Then there might be a chance to start over with some sanity.  From here on out I do nothing but vote for people (local, state, and federal) that I believe are the worst candidates and the most likely to help implode the system from not knowing how things work.  Or just being batshit crazy in general.  Michelle Bachmann?  Please run for president.  Please.  I will vote for you and your batshit crazy ideas.  Probably help with some money too.  4 years of Bachmann, or a similar type from either side of the aisle, has got to be worth at least 20 or 25 years of average crappy candidates moving us closer to implosion.  Has nothing to do with R or D, they both suck.  As I've said many times before, I hold the view that the R's and D's are analogous to the Genovese and Gambino's.  Take your pick of which 'family' you want to screw you.

Mon, 06/14/2010 - 17:01 | 413347 MichiganMilitiaMan
MichiganMilitiaMan's picture


Mon, 06/14/2010 - 17:08 | 413356 island
island's picture

I agree.  So many Americans are clueless.  Most have no idea about CDSs, leverage, derivatives, Fannie & Freddie's black hole that Timmy is doing his darndest to fill in the wee hours of the night, or the entire corruption of government (i.e. the Kleptocracy) which serves the bankster gang by pillaging the rest of us.  So...let's take things down a few notches and vote in the outrageous and incompetent.  Maybe that'll wake up some people.  Beyond that, I just encourage everyone to do their best to avoid paying taxes of any kind - work as little as possible and consume as little as possible.

Mon, 06/14/2010 - 17:30 | 413399 DosZap
DosZap's picture


" So...let's take things down a few notches and vote in the outrageous and incompetent".

Just WTF do you think we have NOW?.Fricken Ali Babba, and his band of 40.

I am of the firm belief, it could not get any worse.............

Bachmann over Obama?.

HELL YES. At least she knows what the Constitution is, was born here, and has no allegiance to the friggin Islamofascists.

Mon, 06/14/2010 - 18:30 | 413561 kingwallop
kingwallop's picture

Yup Bachmann is demonized because she supports the constitution.

Mon, 06/14/2010 - 18:39 | 413575 Ripped Chunk
Ripped Chunk's picture

And she really reminds me of my 8th grade social studies teacher.

She knew the constitution pretty good too. Sadly, she went totally mad and had to be taken away.

Bachman is already totally mad and she is in Congress !!!!!!???




Mon, 06/14/2010 - 18:54 | 413605 Kali
Kali's picture

I like this idea of electing bat shit crazies, what cool entertainment.  However, we would need to secure the nukes first.

Mon, 06/14/2010 - 19:36 | 413692 DosZap
DosZap's picture


IF you prefer what we HAVE now, to Bachmann,someone like her,then there's no hope for you.

Given the option of the two, I KNOW we would be better off, than we are now.

Total oblivion.................

Tue, 06/15/2010 - 03:53 | 414198 BumpSkool
BumpSkool's picture

Anybody stupid enough to believe that choosing the proper elected official and placing them in office will do a fucking thing has learned nothing from the past three years.

Tue, 06/15/2010 - 14:23 | 415104 Ripped Chunk
Ripped Chunk's picture

I am really happy to see Bachman has so many supporters on this blog

Mon, 06/14/2010 - 20:03 | 413740 kingwallop
kingwallop's picture

In your opinion Ripped whats so crazy about her?

Mon, 06/14/2010 - 23:12 | 414006 Burnbright
Burnbright's picture

She, like Palin, are not careful about the words that come out of their mouth. They can be irrational and reactionary. They don't have patience. That is dangerous.

Tue, 06/15/2010 - 14:30 | 415112 Ripped Chunk
Ripped Chunk's picture

She shoots off her mouth with whatever her handlers put in front of her. If you really think this stuff is coming into her mind, I have some lots in Detroit I would love to sell you.

Why don't you tell me what her her great qualities are? What is it the separates her from a Craftsman 15/16th box wrench?  She is a tool, specifically a piece of litmus paper just like Palin deployed to test the waters in order to formulate a platform for the fall.

What is so crazy about her.  Run on your own thoughts and opinions, not those of your handlers. Being a tool is crazy



Mon, 06/14/2010 - 17:35 | 413415 economessed
economessed's picture

Here's another voice of support for your methods -- I refer to it as "monkey wrenching."

Since the system is going to fail, I want to minimize the time we agonize over preserving the status quo (and the cost too, for that matter).  Help it fail faster is a superior strategy. 

Vote insanity -- support Obamacare, support bailout for states, raise defense spending by 3X, reduce taxes a LOT more, spill oil in the remaining major bodies of water, bailout more private companies that made bad decisions, give everyone a housing and new car subsidy, etc.  Let's all fail faster -- no sense dragging this out for years.

Mon, 06/14/2010 - 18:44 | 413589 Calculated_Risk
Calculated_Risk's picture

I'm dogpiling the system.

Why do you think I got a govt job. ;)


Mon, 06/14/2010 - 19:00 | 413617 Hellholeratrace
Hellholeratrace's picture

The bad part is that I don't think we need to even try.  The greedy idiots appear to be doing a damn good job of bringing more and more insanity to the mix.

Tue, 06/15/2010 - 12:46 | 414880 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

So, self-immolation is the obvious conclusion? (if one tends towards over-achievement)

Mon, 06/14/2010 - 19:01 | 413623 Al Gorerhythm
Al Gorerhythm's picture

Is that you Gerald C?


Mon, 06/14/2010 - 22:36 | 413960 Village Idiot
Village Idiot's picture

Ha! love it.

Mon, 06/14/2010 - 17:01 | 413346 island
island's picture

I share your thoughts daily - in fact, many times a day.

Mon, 06/14/2010 - 17:53 | 413471 Let them all fail
Let them all fail's picture

The problem with your comments is that what gets "blown to smitherines" is the savings of all these pension dependants.  And while a DB plan is bound to fail in the first place, the people who are getting screwed here are not the ones who deserve it.  The pension dependants should be suing these people over this.  These managers are beyond negligent to hold this type of portfolio as a pension.  This is beyond stupid, it is absolutely ridiculous for them to gamble with the futures of so many people.  Do not be glad that this has blown up, be glad when people stop taking actions which will inevitably destroy the lives of so many people instead.  At this point though, I as well would love to see our system fail simply in order stabilize our country (in the long run, short term pain is necessary), but an individual pension failure is nothing to root about.

Mon, 06/14/2010 - 18:18 | 413539 ejmoosa
ejmoosa's picture

These pension dependents have had plenty of time to get involved. 


I disagree.  They do deserve it. 

There is no part of anyone's life that they should not take the time to figure out what the hell is going on and what could go wrong.

Mon, 06/14/2010 - 18:47 | 413594 Let them all fail
Let them all fail's picture

I agree they should get more involved, but in theory they have a money manager watching their money for them, not taking insane risks like this one was.  There is a difference between losing money from stock market collapses versus derivatives losses and CDS contracts - they have no reason to understand these complex (to the non-finance person) assets and should have no reason to think that their pension in investing in them.  This is a fucking teacher's pension fund, they do not deserve this.  Even if they have ignored their responsiblility of knowing where their money is, it still is not deserved, simply sad and unfortunate.

Mon, 06/14/2010 - 19:44 | 413705 DosZap
DosZap's picture


Excuse me, you ever been in a 401k plan, or a Pension Fund?.

If yes, all you got to do is choose where you wanted your VERY limited choices of funds to go.

Since 99% of we the people, are not Board Members of our plans/ do you police the THUGS running it?

How do you know WHERE their investing your money?. don't.

In my working life, I was a member of three 401k's.......NOT One, gave me an option of commodities, or PM's.

Never...........bottom line, you got the shit you could invest in, chosen for you................

Mon, 06/14/2010 - 21:01 | 413835 SamThomas
SamThomas's picture

401k plans are self-directed.  Defined-benefit pension plans like this one are not. 

Tue, 06/15/2010 - 03:58 | 414201 BumpSkool
BumpSkool's picture

Anybody whoever willfully chose to be in a Pension Plan is a fool and an idiot. Hey! Give us part of your paycheck and then we match it (Enron anyone) and then we hand it over to some jack-ass trader who churns the living shit out of it for commission and you get a fraction of it back... if at all. Anyone who didn't opt out from day 1 is a sucker looking to be fleeced. It true market parlance - if you didn't opt out - you have no one to blame but yourself. Did you really think these things would pay out??? A fucking 12-year old can see they're Ponzi schemes!

Tue, 06/15/2010 - 22:00 | 416283 Tangurena
Tangurena's picture

Unlike private pensions, public pensions are not subject to ERISA reporting requirements. 

Unlike private pensions, public pensions don't get public disclosure of the information in them on Form 5500 forms.

Unlike private pensions, public pensions cannot get bailed out by the PBGC.


Even your 401k plan is covered by form 5500 reporting. And if you are able to read yours, you can find out just how much the plan administrators (the folks who hold your money, and are financial companies like Fidelity or Vanguard) are soaking your plan for fees. The plan sponsor is the company/organization that offers the plan to their employees.

Mon, 06/14/2010 - 19:03 | 413613 Kali
Kali's picture

Argentina survived it, so can we.  It is gonna happen anyway.  The only money left.  They've already stolen every thing else. I keep prodding two of my friends who have huge pension funds to cash out NOW!  One has 700,000 (!-teacher pension fund), the other twice that (public employee fund), they think Im from outer space when I say they will never collect it.  The teacher only has 3 years till retirement when she turns 50yrs old.  I told her to cash it out and go enjoy life 3yrs ago.  She just avoided layoff around first of this year, still may get laid off before new school year starts.  This woman is teaching kids.  Doh!

Tue, 06/15/2010 - 03:03 | 414167 Gold...Bitches
Gold...Bitches's picture

The problem with your comments is that what gets "blown to smitherines" is the savings of all these pension dependants.

Do you believe those pensions and savings wont be blown to smithereens on the present course of action that has been, and is being, taken?

The point is that by gutting the system now the rest of their productive years may actually go towards something that has some lasting value.  More paying in and propping up is just more good money after bad.

If you're playing hold em and you got a seven two off suit and you matched a large pre flop bet for some unknown reason, you dont continue to call when the large stack at the table keeps betting into you on the flop and every card thereafter.  You fold.  You get out.  You muck it.

This isnt some teamwork cheerleading thing.  Ignoring the problem or not addressing it doesnt make it go away.  I would point you to the statements coming out of Japan recently regarding their debt, Hungary, Greece, Spain, etc...  If you believe as I do that its going down - its just a matter of time - then prolonging the time before bottom is hit is just wasting time, money, and productive capacity of millions of unemployed people.

Considering some people took umbrage over my use of Bachmann as an example let me even it up with a Kucinich on the other side.  Gambino.  Genovese.

Tue, 06/15/2010 - 12:52 | 414900 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Care to share your opinion of Congressman Paul?

Mon, 06/14/2010 - 19:09 | 413636 Geoff-UK
Geoff-UK's picture

Run your own pension fund (says me).  And be your own central bank (says Marc Faber).


As for bailing out other people...well, that's between you and the I.R.S. on what you're willing to pay.  Think we're all about to see a lot more tax fraud.

Mon, 06/14/2010 - 20:05 | 413745 New_Meat
New_Meat's picture

@jbc77--OK, theoretically some of us want a different system.  Maybe it happens because of utter collapse.  Maybe it happens b/c of incremental fault.

Worth your time to read Roth's Depression Diary before being so categorical.

You been in combat?  Might condition your views either way.

- Ned

Mon, 06/14/2010 - 20:19 | 413775 nedwardkelly
nedwardkelly's picture


If it goes belly up, Government will bail it out. So what the fuck do the people running the show care? I'd gamble like a fucking mad man if every time I got close to going broke someone just gave me a lifeline. Eventually I'd hit the jackpot right?

Think of all the fund managers, advisers, consultants, leeches that are making a KILLING running that fund. I'm sure there's dozens of people making salaries that would dwarf liberias deficit, not giving a rats ass about what happens.

When you earn millions of dollars, you're disconnected from reality. Who cares if there's no job for you if the pension fund blows up? You'll just have to suck it up cruising on your yacht in the caymans. Poor you.

Mon, 06/14/2010 - 22:42 | 413969 Village Idiot
Village Idiot's picture

Unless you are, Mr. Hubrus  M. Mouthpiece, and one of your ex-clients is suing you.  Oh so satisfying...

Tue, 06/15/2010 - 01:09 | 414110 JLee2027
JLee2027's picture

I don't see Governments bailing out the 100+ trillion in unfunded obligations and what about the 1.2 Quadtrillion in derivatives?  It can't all happen just to save the finances of 20%-30% or so of the population. I say no because hyperinflation for all of us destroys everything anyway.

yes, there will be riots...either way I think.

Tue, 06/15/2010 - 12:57 | 414915 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Didn't you hear?  Negative interest rates are going to fix everything (whoops, I meant to say 'ignoring the zero boundary').

The real problem is that we didn't think of it before.


Tue, 06/15/2010 - 03:09 | 414169 BumpSkool
BumpSkool's picture

"Seems like ... total destruction the only solution"


-- B. Marley

Mon, 06/14/2010 - 15:54 | 413176 Anarchist
Anarchist's picture

Chickens come home to roost.  It is almost impossible for any non-Federal pension to meet it's long term future liabilities. Many were underfunded for years or bought risky crap so the fund managers could net bonuses, payoffs or both. None can survive making 1-2% that non-risky investments would yield.

Mon, 06/14/2010 - 17:32 | 413407 DosZap
DosZap's picture


WHOSE job was it to oversee these funds, and regulate them?.

The SAME Bstd's now imploding the system..............

Mon, 06/14/2010 - 17:36 | 413417 Rainman
Rainman's picture

haha....those federal employee pension coffers are stuffed with IOUs too.

Mon, 06/14/2010 - 15:55 | 413180 hedgeless_horseman
hedgeless_horseman's picture

Are they one of Leo's clients?

Mon, 06/14/2010 - 16:06 | 413210 Internet Tough Guy
Internet Tough Guy's picture

They have a massive undisclosed postion in chinese solars.

Mon, 06/14/2010 - 20:06 | 413747 New_Meat
New_Meat's picture


Mon, 06/14/2010 - 15:56 | 413182 jkruffin
jkruffin's picture

They must have been using Goldman or JPM for advice to lose money in 2009.  ROFL


Any bets Goldman packaged them some CDS or crap investment, then shorted it to plummet the TRS fund.  I would bet my entire life savings something rotten is underneath the rug.

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