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Denninger Goes On Air, One Minute Twenty Seconds Of Airtime Ensues
Tonight Karl Denninger tried to have a sensible argument with CNBC, even dressed up for it. Unfortunately, it didn't work as expected (by Karl). The only topic covered was bloggers anonymity, on which issue Karl was surprisingly goaded into agreeing with the amusing and lovable host. Karl, and host, we have pointed out before why certain entitites prefer to remain anonymous: I would refer #3366cc;">both of you to one version of the explanation here. As for Karl trying to debunk what passes for analysis at CNBC, that did not quite work out either. Maybe finally bloggers will realize that a sensible conversation #3366cc;">can not occur within the confines of GE's subsidiary. Ever. Probably would be more realistic to discuss exchange server latency at a Goldman sponsored program trading conference with Sergey Aleynikov as keynote speaker and Misha Malyshev and Kevin Mitnick as moderators.
Karl - do what I did, and #3366cc;">invite Dennis or whoever else to Market Ticker. I am still waiting for a response to my personal inviation. Maybe then you will have the opportunity to discuss the issues that truly concern you, and not have CNBC redirect to totally irrelevant concepts such as blogger anonymity, which the host #3366cc;">subsequently spends another segment trying to pin the issue on. No Dennis, that is not the issue, nor is it the soliciation of advertisers, although I am sure you are all too familiar with that (or lack thereof). There is a saying, "when facts speak, even the gods are silent"; alas when most of CNBC speaks, the heavenly laughter is near pain threshold levels.
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I like Karl, he did get in a couple half shots before the punk cut him off. Exactly what you said would happen, TD.But it's not working anymore, I don't think. People are not buying it like they used to.
'People are not buying it like they used to.'
exactly,KD is good on TV when he gets a chance.1 minute 20 isn't much of a slot though.Bet the producers were saying 'cut him off' as soon as he mentioned the hosuing bubble,2007 and CNBC.
promptly cut off as he started to accuse the media networks (cnbc) of market manipulation
Karl was as good as he could be. WTF you can do if the guy who is asking the questions is filling half of the time window with his own bullshitting?
There is no point going on CNBC. Tyler, Karl, keep up the good work and don't bother yourselves about these assclowns. Whoever listens to them deserves to be sheared like sheep.
Agreed. I dont think he could have done a better job with the 4 second responses allowed to his questions in a barely over a minute segment. The Q is, will he REALLY be back on again? If the point was to make him look bad, then no. He held up great to this idiot.
Why is it so hard for people to understand that in order to accurately present the facts GE would have to commit suicide?
Eastern Europe is in freefall. Slovakia and Lithuania, two countries where GE Capital is heavily invested in credit cards have sinking GDPs at double digits. Hungary, Bulgaria and Romania are almost there and getting worse. Anyone heard these brown shoots on CNBC? I doubt it.
For US, the OptionARM horror show didn't even start yet. I guess will save that one for 2010-2013. Oh, and just wait another 6 months for all the folks who lost their jobs late last year to finish their unemployment benefits... jobless recovery... WTF is that, by the way? Anyone knows a country that had an economic recovery with chronic unemployment (U6) at 20%?
Did you see the filing the made yesterday to sell $11B of notes?
Also note their stock has lost almost 30% from the peak of the Great Pump and Dump.
Denninger has posted a follow-up: http://market-ticker.denninger.net/archives/1200-Follow-Up-To-Dennis-Kne...
Another CNBC-style reporting:
"SEC, CFTC to Police Over-the Counter Derivatives"
http://www.cnbc.com/id/31842160
"The $450 trillion privately-traded global derivatives market includes credit default swaps, the financial instrument that nearly toppled insurer American International Group."
Nearly, huh? Well, I guess we have to thank God for creating the taxpayer on the sixth day...
Kneale is spreading intentional disinformation to the sheeple viewers:
1) It those dirty rotten bloggers that manipulate the markets not Goldman Sachs
2) TV provides real facts but the blogosphere never provides any facts
OMG all I can say is what is the target IQ of their intended viewer? 10? Who actually believes this crap?
funny joke video of that interview:
http://www.xtranormal.com/watch?e=20090709014154368
Why does Karl have to make such stupid looking faces?
Sorry can't watch either one of those guys big bird nor plastic face jim carey want a be.
The reason the rest of us are not on TV or visual attention whores is that we don't want to look like those two.
Reason #1001 why my TV hardly ever comes on.
The reason why the globabl financial system is in the process of imploding has nothing to do with what either one of these guys have ever talked about. It happens every time, they blame the last straw instead of the first straw.
US housing peaked in 1927, stock market crashed in 1929, global depression from 1931-1945.
Japan housing peaked in early 1989, stock market peaked in late 1989, recession from 1990-present (on and off)
US housing peaked 2006-2007, stock market peaked in mid-2007, stock market crashed in 2008-present, global depression coming up.
The housing sector creates the largest amount of credit over the largest period of time, in Japan they were up to 100 year mortgages. That isn't the reason they will be collapsing. There is nothing stable about exponential growth... go look at a chart... completely unsustainable for any system to be based on that.
People keep blaming this or that, sorry but there is no way you can have exponential growth forever, yet for the system to survive you have to have it. It's the first straw that got everyone in this situation not the last straw.
http://www.federalreserve.gov/releases/z1/
A flawed system will mean the liquidation of billions this time. Japan was lucky, they had the US consumer to suck off of for 20 years, unless there is another Earth for this Earth to suck off its time for a reset.
The solution is collapse and liquidation that is and always will be the solution to humans using the exponential growth as the model for their basis for their financial system. It's not because big bird or plastic Jim Carey want the solution to be, it's pure Math. You are either expanding at the rate needed to supply the exponential growth equation or you are not, but humans have no ability to supply that equation forever.
Look at population, energy output, food production growth rates. They are all exponential.
"The greatest shortcoming of the human race is our inability to understand the exponential function."
-Einstein
Nice post.
The failure to fuel the exponential growth equation can be either from the supply or demand side.
Although I obviously can't speak for him, I believe Denninger would agree with your thesis. He's talked quite a bit about the unsustainable nature of exponential growth (he caught onto it in the runup of the Tech Bubble) and he seems to agree that default is the only way out from under the massive debt overhang we've created.
Now, if only he could get more than a minute to explain his views...but that obviously ain't happening.
Just read the Manifesto, another good American historical example is Thomas Paine publishing "Common Sense" anonymously:
http://en.wikipedia.org/wiki/Common_Sense_(pamphlet)#Publication_history
I don't get it, I would have thought Karl too smart to play along with their game, their rules, their network etc.. The whole point of his blog post when he challenged DK, was to do it in an unrestrained/unrestricted area as far as topic matter and time go. I think he is pandering/plugging here.
You would have thought, but you were wrong. This is Karl Denninger, after all. He is a little girl with a virgin vagina.
I am Chumbawamba.
Karl made the same dumb mistake that all marginal commentators have to make at least once to learn the lesson. He'll never make this mistake again. It's just a shame he had to blow his 15 minutes of fame on such a poor showing.
Dennis Kneale, you are a worm. You are hated and despised by most sentient beings. Perhaps your mother still loves you, but I suspect that is in question by this point as well. Dennis, not everyone is an attention whore like yourself. Some of us enjoy speaking our mind free of the inhibiting factor of lawyers, bosses, vulnerable family members. Just because our comments are caustic and "mean" doesn't negate the the truth and passion of our thoughts. Anonymity provides an opportunity to express raw, unfiltered emotions. Kneale, you are a despicable worm, and thank god for the anonymity of the blogsphere, so that our true thoughts can be expressed with out fear of reprisal.
Choke on it, Kneale.
Sorry guys, I'm willing to show up on "their" network any time, any place.
GE and CNBC doesn't scare me, and neither does Dennis. They can play their hitpiece game but all they're doing is driving traffic to my site, where I can (and will) shred them in return (see my follow-up video Ticker)
I have extensive experience in this game and the media, having played this game for more than ten years. Controlling the venue gives them an advantage, but you still need a brain.
Anyway, have a look over at The Ticker for my response, and a litany of market manipulation with CNBC as the protagonist.
And... have a great day!
-- Karl
Humans have no ability to fuel the exponential equation forver. I have no idea why everyone is bitching now.
This will be the end result every time humans try to develop compounding interest in transactions.
You fit right in on CNBC. I guess you can tell the audience that you have reinvented Math unless you can do that the system was FUBR from the start.
There is no such thing as stable or stablized growth when using exponential growth as the basis of you system, in fact it unsustainable and it doesn't matter who is running the ship.
My friend, Karl, you are a bag of douche. Nobody cares. Go back to your ticker forum and ban a user for promoting gold. Dennis Kneale p0wn3ed your ass. You have as much charisma as an old shoe.
I am Chumbawamba, and you are Karl Denninger. Enuff sayd.
Mako,
Denniger makes the same points you do and consistently refers to the math of exponents and how the current situation is always an eventuality. He also puts forth the same ideas that the debt has to be brought out into the open and expelled from the system (ie reset) before any recovery can take place. Sounds like you two agree on quite a bit actually.
I have never seen him talk about the destruction associated with the use of exponential rate of growth.
To me all he is talking about is people breaking Rules of the game, the game was flawed to start with... the whole thing is a fraud.
The system is unsustainable not because people are/were/will be breaking Rules.
If you flushed debt from the system you have no system.
Flush $52.9T from the system, start from 0, cool, as long as you are not the one being liquidated.
Dave Narby here (I'm on someone else's computer, otherwise I'd sign in).
Denniger has spoken *vigorously and at length* (both huge understatements) about the impending crash due to the exponential rate of debt growth.
You might want to take a few minutes and search his archives for "exponential". : p
You have not been looking, google "denninger exponential math ticker", he's been talking about it for a long time."The power function is in fact the most important mathematical concept in the universe. It is the factor, standing alone, that dashes all of the dreams of politicians, engineers and the "pumpers" of various schemes alike. It is the reason the housing bubble could have never succeeded. It is the reason the Internet bubble was doomed to pop. It is the reason that Madoff could not maintain his Ponzi scheme. It is why "just a little inflation" always winds up in a deflationary bust. It is the reason that irrespective of what our President, Treasury Secretary or Chairman of The Federal Reserve want, the pain that we MUST take simply gets worse - and at an ever-increasing rate - the longer we delay in taking it."
There is no unicorn that craps skittles. -Francis http://market-ticker.org/archives/711-There-Is-No-Unicorn-That-Craps-Ski...
Thanks Francis.
I am reading the article. He does touch on it but he really seems to think there is a Ponzi scheme which is not sustainable and than another scheme which is.
"Well, perhaps, but eventually it would have been exposed, and the bottom-line reason is not due to the market crash this last autumn - it is the inevitability of the power function that always brings down Ponzi schemes."
Well, I don't know what a Ponzi scheme is? Is he saying the present global financial system is a Ponzi scheme? If so, I agree but that is not what it sounds like he is saying to me. It kind of sounds like to me he thinks it can be managed, if that is the case than I would disagree.
"Your "little" 4% growth rate turns into fifty times whatever you started with, not the four times increase you might (if you're not conversant with the power function) expect. If that's an annual population growth rate for a city, and you start with 1 million people, there are now 50 million people in that city, not four million."
I agree with this but he doesn't say what the result is, is he suggesting no credit system? It doesn't sound like it to me. He definitely has the Math right in his post but what good is it if you are not telling the full story.
I have seen him talk about fraud in the OTC market because the instruments are fraud, well the same could be said for the WHOLE system. Yet, I see him trading in and out of the same system I would think he is saying is a fraud. How is that any different than the OTC dealers? Everyone is pretending like it's sustainable, but it's not.
If he is saying the whole system is unsustainable because of the use of exponential growth to fuel it than I would agree. If he is saying only parts of the system are unsustainable than I would disagree strongly.
He does talk about it, thank you for the post but where's the beef?
I can give you the beef the system will collapse into a heap of a mess before this is all over with and it didn't matter if they had subprime or derivatives or credit cards. It was a fraud in 1929 and it's a fraud in 2009... everyone is pretending it's not.
Is he saying all exponential instruments must go? Heck, I would love that but most people are not going to be too happy.
Beef. I think you're both on the same page. You should check Karl out, He's a trustworthy sort, whether you agree with him or not. One of the good guys. "Remember, everyone seeks a profit. Therefore, those who loan capital out will demand some price above the "risk free" return that can be obtained by simply sitting in the economy and lapping up the growth.
Nobody will take an intentional loss as long as there are alternatives, and unless you steal people's property, there are!
Therefore, there will always be a "spread".
But look at what happens. In the first year, the "spread" between the two - the difference between the economic outcome and the lending price - is 3%. But by the fifth year that spread has grown to 21% and is accelerating rapidly - 21% is much higher than 3 x 5, or 15%.
In 10 years the spread is much worse - 63% instead of the "expected" 30%, and in 20 years its horrifying - 286%!
Why?
Because both functions are exponents (compound functions) and so long as people seek a profit it will always cost more to borrow capital than the rate of growth in the economy, as you must induce them to take a risk.
Left alone the overhang of debt will always "run away" and destroy the economic and monetary systems.
Therefore if we are to avoid a complete collapse of the economic and monetary systems there must be times when the "overhang" of bad debt defaults, lest it grow so much that nobody can make the payments and the economy is choked off.
That is exactly what has happened because our government intentionally prevented the defaults that were NECESSARY in 2000-2003 to restore balance between these two functions.
Now the pain is worse, and as you can see above, the longer you try to put it off the worse it gets. It's bad now (about 10 years in); if we try to "kick the can" for another 10 years it will be catastrophic."
http://market-ticker.denninger.net/archives/712-The-Price-of-Capitalism....
Yes, see "Islamic banking". Those barbarous Muslims might have been on to something after all.
I am Chumbawamba.
Beef. I think you're both on the same page. You should check Karl out, He's a trustworthy sort, whether you agree with him or not. One of the good guys. "Remember, everyone seeks a profit. Therefore, those who loan capital out will demand some price above the "risk free" return that can be obtained by simply sitting in the economy and lapping up the growth.
Nobody will take an intentional loss as long as there are alternatives, and unless you steal people's property, there are!
Therefore, there will always be a "spread".
But look at what happens. In the first year, the "spread" between the two - the difference between the economic outcome and the lending price - is 3%. But by the fifth year that spread has grown to 21% and is accelerating rapidly - 21% is much higher than 3 x 5, or 15%.
In 10 years the spread is much worse - 63% instead of the "expected" 30%, and in 20 years its horrifying - 286%!
Why?
Because both functions are exponents (compound functions) and so long as people seek a profit it will always cost more to borrow capital than the rate of growth in the economy, as you must induce them to take a risk.
Left alone the overhang of debt will always "run away" and destroy the economic and monetary systems.
Therefore if we are to avoid a complete collapse of the economic and monetary systems there must be times when the "overhang" of bad debt defaults, lest it grow so much that nobody can make the payments and the economy is choked off.
That is exactly what has happened because our government intentionally prevented the defaults that were NECESSARY in 2000-2003 to restore balance between these two functions.
Now the pain is worse, and as you can see above, the longer you try to put it off the worse it gets. It's bad now (about 10 years in); if we try to "kick the can" for another 10 years it will be catastrophic."
http://market-ticker.denninger.net/archives/712-The-Price-of-Capitalism....
"Therefore if we are to avoid a complete collapse of the economic and monetary systems there must be times when the "overhang" of bad debt defaults, lest it grow so much that nobody can make the payments and the economy is choked off. That is exactly what has happened because our government intentionally prevented the defaults that were NECESSARY in 2000-2003 to restore balance between these two functions."
There is no "overhang" that is what the problem is, there is no such thing. You either expanding at the rate need to fuel the equation or you collapse. Now go compare 2007 with 1927, anyone living today would have a hard time saying those people had an "overhang"... there was no "overhang". You either supply the fuel needed or you collapse... when you are collapsing you don't get to pick where you fall to.... see what is presently known as The Great Depression, they couldn't get out of it... well without 100 million people dying.
What he is saying is that you can have mini-collapses that can than refuel the system, very true.... we had one in 2001-2003. The whole system didn't deleverage though, if it did you be in a middle of the Next Great Depression since than.
All the debt is "bad debt defaults" when the WHOLE system is unable to supply the need credit to service itself. Currently, the $52.9T US total credit market debt system is being sustained with only $1.484T, it's unsustainable... it doesn't matter what kind of business you have. The WHOLE system is credit/debt it's not just going to stop at housing, credit cards and autos.... it will eventually wipe virtually all sectors out.
There is no stablized rate of growth and when you can't supply what is need you collapse. This time there is nothing left to pick up the slack where IT credit creation nosed dived in 2000. It's not one sector, it's the whole system.
You just don't call time out when the whole system starts collapsing, you don't magically get to pick up where the system completes it's bottom. What he is saying sounds good when you are talking about it, but in practice it doesn't work like that... and never could... we are not talking about one small sector that is collapse... the whole system of supply and demand is collapse... why? unsustainable.
When the whole system starts to collapse you have no magic spell to pick the bottom... it doesn't happen like that... why? Well, you still owe interest and nobody wants to create it for you.
I think you are being a bit semantical. Anyway, I don't intend to argue with you over it.
I wasn't arguing with you in a mean way... we are only discussing. I am not being "semantical" at all. That is the way it is.
- Either the use of the equation is sustainable or not.
- Either the use of the equation is fraud or not.
- Either the equation is somehow able to pick a bottom or not.
I don't think Karl and me are on the same page. Yes, it appears he has talked about the equation but has not put it in context of how the system actually operates. Yes, I agree individual sectors can be deleveraged see Tech Bubble but the system as a whole can not without collapse... since housing is such a large portion of the system when that went everything else went with it... there is nothing to fill the gap. Now you are approaching a death spiral where the effects of the exponential equation works against you.
If Karl or anyone can show me a time between now and 1944 were deleveraging or cleaning out of "bad debt" has happened system wide, actually you can back as far as you want... go back to 1929 or even back to 1776... every time that has happened the system collapsed in one state or another.
The present system is not able to generate the need credit to service itself, it doesn't matter what sector you are in or how "overhanged" or not you are in. The system does not care what sector you are in, it has no idea. There is only half the amount of credit needed to service the prior, that is it.
Sigh. His point (and he could make it better than I, you sould read his tickers) is that there is a 'natural' amount of value destruction that occurs as a part of capitalism. When the fed injects easy money into the system via abuse of the interest rate (greenspan put), it puts that off and makes the correction worse and the longer this is done the worse it is. Here we are today. Ok?
The whole purpose is to delay the conclusion that has been the function of the system from the start. The conclusion has always been know, the only question has been WHEN.
The Fed could easily raise short term rates to 10% right now, let me know if they do it because I will need to get a army helment because you won't have a system in the morning. The fed does not set rates the market does.
http://investing.curiouscatblog.net/images/30_year_rate_fed_fund_rate_20...
The market told the Fed if you want to see a nuke go off go ahead and raise rates by Fall of 2007 that was it.
This is what happens at the conclusion of the equation, rates are low but they can never be low enough.
This is not going to be a correction, you are either supplying the need credit into the system or you are collapse... you can have slowdowns of a quarter or so but that's it... a slowdown... this is not a correction.
What you are saying is exactly what Karl is saying... that there is some stablized rate of growth... no there is not... the system is built on exponential growth by Q3 2007 the system was generating $5.2T(annualized) to sustain itself... where is that going to come from? They didn't have an answer, you are not going to have an answer. It's called the end of a system, you hit your peak and now thats that.
What I am saying is exactly what happened to the world in 1929 and Japan in 1990, as you will see with Japan they didn't get to pick their bottom, the only reason they are not in chaos for the last 15 years is because they could suck off the demand from the rest of the world.... now the rest of the world has peaked and now they will continue their 20 year journey... it's not a choice.
DOOOOOMED? Maybe so, that it was inherent and inevitable, Im sorry, I just don't think so. That was me posting Steve Keen's article. Check it out... -Francis
Francis, thanks for the article I will take a look at it.
Well, it's unfortunate for me to tell you, yes the system is eventually DOOMED, but that is not my fault. Humans believe they can out game the exponential equation and has history and the present situation shows is you can't out game it. The Math never works out in the end.
I wish we could just call time out when it starts collapsing, but it just doesn't work like that... Japan has been trying to call time out for 20 years, yet they are nowhere even close to a bottom.
It's only "inevitable" in this form because humans keep using an equation that is flawed over time or more like a fraud, humans don't have to, of course that produces a whole other string of issues/problems but it is a choice. It's seems like it's "inevitable" that we will one day not walk the Earth but that doesn't mean we don't have choices while we do walk on the Earth.
2009 to future I would imagine global depression and complete reset where as the 1930s was only a partial reset
2007-2009 stock market crash
2006-2007 house peak then crash
1931-1947ish global depression (multiple waves within the wave) Germany was in and out of depression/recession from 1923 until the late 1940s.
1929 stock market crash
1927 housing peak then crash
1873 - Known as the Great Depression before 1930s depression
1807 - Depression probably known as the Great Depression before the 1873 depression
Also. You might find this interesting. http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
Beef. I think you're both on the same page. You should check Karl out, He's a trustworthy sort, whether you agree with him or not. One of the good guys. "Remember, everyone seeks a profit. Therefore, those who loan capital out will demand some price above the "risk free" return that can be obtained by simply sitting in the economy and lapping up the growth.
Nobody will take an intentional loss as long as there are alternatives, and unless you steal people's property, there are!
Therefore, there will always be a "spread".
But look at what happens. In the first year, the "spread" between the two - the difference between the economic outcome and the lending price - is 3%. But by the fifth year that spread has grown to 21% and is accelerating rapidly - 21% is much higher than 3 x 5, or 15%.
In 10 years the spread is much worse - 63% instead of the "expected" 30%, and in 20 years its horrifying - 286%!
Why?
Because both functions are exponents (compound functions) and so long as people seek a profit it will always cost more to borrow capital than the rate of growth in the economy, as you must induce them to take a risk.
Left alone the overhang of debt will always "run away" and destroy the economic and monetary systems.
Therefore if we are to avoid a complete collapse of the economic and monetary systems there must be times when the "overhang" of bad debt defaults, lest it grow so much that nobody can make the payments and the economy is choked off.
That is exactly what has happened because our government intentionally prevented the defaults that were NECESSARY in 2000-2003 to restore balance between these two functions.
Now the pain is worse, and as you can see above, the longer you try to put it off the worse it gets. It's bad now (about 10 years in); if we try to "kick the can" for another 10 years it will be catastrophic."
http://market-ticker.denninger.net/archives/712-The-Price-of-Capitalism....
Jeezus, Sorry.
I just want to know what CNBS is really up to. Karl's point in the follow up vid is awesome. He does not call it front running or insider trading, but defines them in a conspicuous way. Absolutely brilliant point Karl. Would love to see some historical trading data on guest and host trading vs. their appearances/information discussed. We all know CNBS employs what I believe to be the biggest frontrunner of them all (name withheld cause I vomit whenever I hear it). I believe their is a larger issue at work here with GE working on its mission to discredit their detractors and furthering the war on silencing the blogosphere that is taking revenue away. DK is a weasel working for the man promoting their agenda. Too bad the blogophere will win the battle but the conglomerates may win the war with a little help from our really honest and efficient administration further limiting our Constitutional right to free speach.
I am visitng your site as a small form of protest against Dennis what's-his-name on CNBC. His attack on your right to free speech was horrible.
I hope to be able to find the other two blogsites he mentioned on his show, but have had no luck so far. I will keep trying.
Keep speaking your mind, anonymously or not, and do not be bullied into silence!
TD,
Can you please post the video of KD on Kudlow from last night? I think that segment blew away the one with Dennis Kneal.
There may be some progress being made with CNBC (In light of the GE earnings, they need to do something, apparently).
Thanks,
Szoke