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Druckenmiller Calls Out The Treasury Ponzi Scheme: "It's Not A Free Market, It's Not A Clean Market", Identifies The Real Bond Threat

Tyler Durden's picture


We hadn't heard much from legendary investor Stanley Druckenmiller since last August when he decided to shut down his Duquesne Capital hedge fund. Until today. In a must read interview, the man who took on the Bank of England in 1992 and won, says that he join the camp of Bill Gross et al, making it all too clear that all the recent fearmongering about the lack of a debt ceiling hike by the likes of Tim Geithner, Ben Bernanke and, of course, all of Wall Street, is misplaced, and that the real threat to the country is the continuation of the current profligate pathway of endless spending. From the WSJ: "Mr. Druckenmiller had already recognized that the government had
embarked on a long-term march to financial ruin. So he publicly opposed
the hysterical warnings from financial eminences, similar to those we
hear today. He recalls that then-Secretary of the Treasury Robert Rubin
warned that if the political stand-off forced the government to delay a
debt payment, the Treasury bond market would be impaired for 20 years. "Excuse me? Russia had a real
default and two or three years later they had all-time low interest
" says Mr. Druckenmiller. In the future, he says, "People aren't
going to wonder whether 20 years ago we delayed an interest payment for
six days. They're going to wonder whether we got our house in order." Which begs the question: if interest rates are so low today, is the market not appreciating the current path of "financial ruin"? And here is where Druckenmiller joins the Grosses and the Granthams of the world. Asked if the future is not so bad judging by today's low bond rates he says, "Complete nonsense. It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week." Of course, there is another name for this type of arrangement and so far only Bill Gross has used it: Ponzi Scheme.

More from the interview:

The moment couldn't be better to consult Mr. Druckenmiller, who almost never gives interviews but is willing to speak up now because he thinks that fears about using the debt-limit as a bargaining chip for spending cuts are overblown—and misunderstand the bond market. "The Treasury borrowing committee letter speaks about catastrophic financial crises, comparing it to Fannie and Freddie. That's not what we're talking about here," he says.

He contemplates the possibilities for bond investors if a drawn-out negotiation in Washington creates a short-term problem in servicing the debt but ultimately reduces spending:

"Here are your two options: piece of paper number one—let's just call it a 10-year Treasury. So I own this piece of paper. I get an income stream obviously over 10 years . . . and one of my interest payments is going to be delayed, I don't know, six days, eight days, 15 days, but I know I'm going to get it. There's not a doubt in my mind that it's not going to pay, but it's going to be delayed. But in exchange for that, let's suppose I know I'm going to get massive cuts in entitlements and the government is going to get their house in order so my payments seven, eight, nine, 10 years out are much more assured," he says.

Then there's "piece of paper number two," he says, under a scenario in which the debt limit is quickly raised to avoid any possible disruption in payments. "I don't have to wait six, eight, or 10 days for one of my many payments over 10 years. I get it on time. But we're going to continue to pile up trillions of dollars of debt and I may have a Greek situation on my hands in six or seven years. Now as an owner, which piece of paper do I want to own? To me it's a no-brainer. It's piece of paper number one."

Why the efficient market would mcuh rather the government take its medicine and actually offer people like him a viable investment option instead of merely a Fed frontrunning scheme:

Mr. Druckenmiller says that markets know the difference between a default in which a country will not repay its debts and a technical default, in which investors may have to wait a short period for a particular interest payment. Under the second scenario, he doubts that investors such as the Chinese government would sell their Treasury debt and take losses on the way out—"because I'll guarantee you people like me will buy it immediately."

Now suppose, Mr. Druckenmiller adds, that he's wrong. If the market implodes on day two of the technical default, Mr. Obama and Congress would be motivated to finally come to agreement. But he doesn't expect such market chaos. "My guess is that the bond market would rally as long as it believed the ultimate outcome was going to be genuine entitlement reform—that we wouldn't even have to find out about a meltdown because it wouldn't happen. And I have some history on my side here."

On why everyone should ignore threats of untold destruction unless the adminstration and Wall Street apparatchiks get their way:

Mr. Druckenmiller had already recognized that the government had embarked on a long-term march to financial ruin. So he publicly opposed the hysterical warnings from financial eminences, similar to those we hear today. He recalls that then-Secretary of the Treasury Robert Rubin warned that if the political stand-off forced the government to delay a debt payment, the Treasury bond market would be impaired for 20 years.

"Excuse me? Russia had a real default and two or three years later they had all-time low interest rates," says Mr. Druckenmiller. In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order."

The real MAD, Druckenmiller says, is letting the debt spiral out of control. As anyone with half a working brain will realize.

Mr. Druckenmiller is puzzled that so many financial commentators see
the possible failure to raise the debt ceiling as more serious than the
possibility that the government will accumulate too much debt. "I'm just
flabbergasted that we're getting all this commentary about catastrophic
consequences, including from the chairman of the Federal Reserve, about
this situation but none of these guys bothered to write letters or
whatever about the real situation which is we're piling up trillions of
dollars of debt."

He's particularly puzzled that Mr.
Geithner and others keep arguing that spending shouldn't be cut, and yet
the White House has ruled out reform of future entitlement
liabilities—the one spending category Mr. Druckenmiller says you can cut
without any near-term impact on the economy.

Next we move to the topic of the US ponzi and why the Fed is at its core.

Some have argued that since investors are still willing to lend to the Treasury at very low rates, the government's financial future can't really be that bad. "Complete nonsense," Mr. Druckenmiller responds. "It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week."

Warming to the topic, he asks, "When do you generally get action from governments? When their bond market blows up." But that isn't happening now, he says, because the Fed is "aiding and abetting" the politicians' "reckless behavior."

And blow up they will if nothing changes. Druckenmiller's conclusion:

"I think technical default would be horrible," he says from the 24th
floor of his midtown Manhattan office, "but I don't think it's going to
be the end of the world. It's not going to be catastrophic. What's going
to be catastrophic is if we don't solve the real problem," meaning
Washington's spending addiction.

Well that's wonderful. And we are confident Madoff also had comparable thoughts just shortly before his scheme imploded. However, for him, like for the US, it is now too late. The best option is to actually get out of Washington's way so they destroy the status quo as fast as possible and a fresh (and probably very violent) start is implemented.

The rest is rhetoric.


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Sat, 05/14/2011 - 10:28 | 1274141 Mongo
Mongo's picture

Free market, now that is soooo passé

Sat, 05/14/2011 - 18:26 | 1274781 downwiththebanks
downwiththebanks's picture

Yep.  Capitalism's chief ideological weapon exists today to the same degree as it existed during the slave trade, during the theft of indigenous land, during the manufactured famines created by the East India Company, etc.

It's make-believe.  But it's the only thing that justifies the rape by Capital of the planet.

Sat, 05/14/2011 - 23:27 | 1275461 Chuck Walla
Chuck Walla's picture

And just where is this captialism you speak of? Surely not this socialist paradise called the USA?

Sat, 05/14/2011 - 23:44 | 1275474 downwiththebanks
downwiththebanks's picture

Look for those places where money capital and private property dominate social institutions.  In other words, look at planet earth.

Denying the role of private ownership in the world you inhabit doesn't make private ownership go away.  It just makes you appear unaware of the corporate form, stock exchanges, privatization, the bond 'market', derivatives, FOREX, etc.  

Not to mention the wholly owned nature of politics.

I'm sure, as a banker-gangster, you're not unaware of these things.  So what explains your faux ignorance?

Is it just a desire to exonerate capitalism from the world Private Capital has made and the crimes against humanity it has perpetuated in order to do so?

Or is there more to it than that?

Sat, 05/14/2011 - 10:39 | 1274155 oogs66
oogs66's picture

Yes, why have a debt ceiling if its only purpose is to be raised?  Why not keep it and focus on getting our balance sheet in order?  He doesn't mention it here, but the Bernank keeps pointing to tips as demonstrating inflation expectations are low.  Looking at a manipulated market to manipulate public opinion is just plain wrong.

Sat, 05/14/2011 - 10:41 | 1274160 oogs66
oogs66's picture

And btw, his comment about Russia also applies to Argentina.  It would probably also apply to Greece, Ireland, and Portugal if they were willing to stop listening to bad advice from bankers about why its so necessary to save the bankers and not default.

Sat, 05/14/2011 - 14:25 | 1274461 Atomizer
Atomizer's picture

Not really. It implies another system called BRIC. Argentina hasn't been added.

Sat, 05/14/2011 - 18:30 | 1274784 downwiththebanks
downwiththebanks's picture

Yep.  The answer is Jubilee granted by the banker-gangsters themselves to the people they've robbed, raped, and pillaged for the last 5 centuries or so.

Sat, 05/14/2011 - 10:45 | 1274162 The Count
The Count's picture

Remember back in 2007 when Paulson went to Bush and said he needed a blank check pronto? Because Billions were leaving the country every second? Now who might have been the ones transferring Billions out? The banks obviously, just to show Bush who is really in control. If I had been the pres. I would have had Paulson arrested on the spot and had all major bank CEO subpoenaed right away. Then I would have made it clear to THEM that if they did not stop this right now they would get a personal tour of Gitmo. There is a group of people in this country that need a serious ass whipping but I do not see anybody with the bballs to to this.

Sat, 05/14/2011 - 10:56 | 1274172 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

"Decisions by the Secretary pursuant to the authority of this Act are nonreviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."


Paulson should have been summarily executed on the spot for being a traitor because of the above statement.

Sat, 05/14/2011 - 11:00 | 1274176 Mec-sick-o
Mec-sick-o's picture


Sat, 05/14/2011 - 11:09 | 1274190 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

Sorry about that, didn't realize the Word formatting also copied into the comment.

Sat, 05/14/2011 - 11:13 | 1274196 The Count
The Count's picture


Sat, 05/14/2011 - 21:47 | 1274519 Quixotic_Not
Quixotic_Not's picture

Paulson should have been summarily executed on the spot for being a traitor because of the above statement.

You'd have to enforce the Rule of Law to do that, and no one really wants to be held strictly accountable for their actions anymore, do they?

The truth is, 'MeriKa has become a nation of pathological liars and spoiled children.

Free skittles and unicorn rides for everyone!

I was so stupid not to go to Perp school and then onto Ivy League racketeer training - I had no idea you got a license to steal with those diplomas!

Are you ready to receive the eucharist Pancho? Caliph Hussein Obama is gonna put a chicklet in every mouth!

Truth is treason in an empire of lies...

Sat, 05/14/2011 - 11:01 | 1274185 Alex Kintner
Alex Kintner's picture

Well, don't give Bush a pass -- like Paulsen made him a patsy. Bush was in on the looting.

Disclosure: To all the Bush luvers, I think both parties suck, so don't accuse me of singling out your boy.

Sat, 05/14/2011 - 11:03 | 1274187 MikeNYC
MikeNYC's picture

But we saw Obbama kicking ass in bball on TV? Whaddya mean no one has bballs?

Sat, 05/14/2011 - 11:12 | 1274195 The Count
The Count's picture

Ha haaa. When I saw the OBL thing unfold I immediately thought that I was watching a re-run of Wag the Dog.

Sat, 05/14/2011 - 14:11 | 1274440 malek
malek's picture


Good point. I actually have to watch that DVD once more.

Sat, 05/14/2011 - 11:10 | 1274197 NotApplicable
NotApplicable's picture

Surely you don't believe that a US President has the power to do that? JFK disproved this theory long ago.

Sat, 05/14/2011 - 20:02 | 1275023 Ben Dover
Ben Dover's picture

Could not have said it better. Thanks.

Sat, 05/14/2011 - 10:45 | 1274163 Drag Racer
Drag Racer's picture

In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order."

the pretty much says it all. Until the confidence is back, the 'real' economy is nothing but a story to read in the history books.

Sat, 05/14/2011 - 10:45 | 1274165 Mec-sick-o
Mec-sick-o's picture


Fiat *should* be an instrument of exchange.

Inflation is a result of politician corruption and governed population apathy.

Fiat is an invention that will be replaced by another fiat (being FRN or not).

Government is getting greedy and taxing everyone trading with USD, by purchasing Treasuries.

This will surely end Bretton Woods era.

Sat, 05/14/2011 - 10:55 | 1274166 Azannoth
Azannoth's picture

You all fail to see the Forest for the trees, Obama/Congress/etc. know exactly what they're doing and they are doing it quite on purpose, you can't be so dumb/ignorant to drive a country into ruin for over 30 years and don't notice.

Yes some members of congress can't read properly and have an IQ score of less than 80 but still the majority know exactly how the game goes. - See what Obama(and people who put him in power) really want ?

This is an engineered collapse of a Nation, those people want to go back to Feudalism, they got tired of all the freedom the common man enjoys, they want to nominate them selves queens and kings and rule absolutely(not like they're not doing it already from behind the curtains)


If logic and common sense could win you votes we would be living in Paradise, unfortunately the common man(Joe Voter) is too dumb/ignorant/limited to make a choice based on science and logic, people are still more emancipated monkeys than sentient beings, we won't have anything near an optimal society till Evolution brings us there, regardless of how hard we try and what social tool we try to use, what political/economical systems we employ, Paradise(Utopia) is simply beyond the human race right now, we might see it on the horizon in a few thousand years at best

Sat, 05/14/2011 - 11:11 | 1274194 Caviar Emptor
Caviar Emptor's picture

Yup. Just another typical grab for power in the midst of crisis. The techniques are all too familiar to history buffs like us: permanent state of war, looting the public treasure, debasement of currency, erosion of public freedoms, spiraling behind-the-scenes power. 

We will never see truly free markets in the US in our lifetime again. The irrevocable, line-crsossing decisions were made in 08-09. The trend is for increasing centralized control of the economy and we're seeing it already in the bond, stock and commodities markets. It won't stop there as I've been saying: look for capital controls, price controls, tariffs, and eventually confiscation and nationalization. 

Sat, 05/14/2011 - 11:23 | 1274217 uno
uno's picture

how can anyone junk your comment, the date I might argue (Rubin in as Treasury Secretray, repeal of Glass Steagall, 1913)

You summed up alot in a couple sentences

Sat, 05/14/2011 - 12:59 | 1274351 Reese Bobby
Reese Bobby's picture

There has been some douchebag with too much time on their hands who seems to junk everything they have already read.

I am constantly amazed by the rare individual who can fuck up any simple situation.  All it takes is time and douchiness.


Sat, 05/14/2011 - 13:25 | 1274392 Azannoth
Azannoth's picture

How would you know this ? Except if YOU where this guy ? :)

Sat, 05/14/2011 - 12:00 | 1274281 Ricky Bobby
Ricky Bobby's picture


Kudos Caviar.

Sat, 05/14/2011 - 19:11 | 1274834 OldTrooper
OldTrooper's picture

look for capital controls, price controls, tariffs, and eventually confiscation and nationalization.

As good a summary of the future as I've ever seen.  We live in interesting times!

Sat, 05/14/2011 - 13:09 | 1274366 mr. mirbach
Sat, 05/14/2011 - 13:12 | 1274368 mr. mirbach
mr. mirbach's picture

Goodbye Freedom!

Sat, 05/14/2011 - 13:33 | 1274404 Oh regional Indian
Oh regional Indian's picture

So well said Azzanoth, all around.

This definitely has all the makings of an engineered collapse.
But I think the cosmos might have a surprise or three up it's sleeve.
We shall see, eh?


Sat, 05/14/2011 - 15:06 | 1274504 Azannoth
Azannoth's picture

I don't believe in Destiny, Prophecyes, Bible Myths, Mayan Calendar etc., I do think that the people in power do believe in those  things and they will have their 'Rapture' 1 way or the other, why think they are doing 'God's work' and that their action will bring about an 'End of Times' event, they are just crazy, however given their power they can engineer an Armageddon only without any spiritual or religious meaning those  things being pure fantasy

The powerfull have always been 'full of them selves' going back to ancient Shamans that 'could speak with the Gods', priests in ancient Egypt, oracles in Greece, people with power tend to Gravitate to those sort of misconceptions, in the past their actions have 'only' brought down the nation/culture/state their where in 'command of' today those powers are global and as crazy and any Druids from ancient past. Today they have the physical power to bring to an end the culture and civilization of virtually the whole World, that is why we live in 'interesting times' because the crazy have actually enough physical power to destroy the whole world in the name of their crazy archaic superstitions.


Remember those people are not smarter that you or me(especially me :) they are just rich, and because of their long history of inbreeding even more retarted than the average person, that is why they are so dangerous.

Sat, 05/14/2011 - 19:23 | 1274892 hamurobby
hamurobby's picture

I would be surprised to not see a 2012 self fulfilled demise by civilization as a whole. My dog has already stopped chasing the cat.

Sat, 05/14/2011 - 13:40 | 1274413 spekulatn
spekulatn's picture

Great stuff, I think?

Sat, 05/14/2011 - 17:30 | 1274709 MrFriskles
MrFriskles's picture

people are still more emancipated monkeys than sentient beings


So true. So many examples of this in modern society it makes me wonder how long its going to take for everyone to wake up. Thankfully simply being aware of our animal roots gives us some power of them. It's nothing personal against those who have awoken, they are just stuck where they are for this round of evolution =/ Sadly it could not have been at a worse time, technology and weaponry is at its all time high and we may be enslaved before we can experience true freedom and unity. Oh well. Gotta keep trying.

Sat, 05/14/2011 - 17:46 | 1274719 Azannoth
Azannoth's picture

Well good that you see my point, however you can't just wake up from being a monkey, it takes Evolution and many generations to get from point A to point B

Either you're born with IQ 80 or 150 you can't do anything about it, I was speaking of humanity in general not specific groups of people

You are right that Technology outpaced Evolution in the last 200 years, and we are getting dangerously close to possesing technology which implication we don't understand, for example the LFH(Large Hydron Collider) some say it can produce physical anomalies that can destroy Earth! But we do it anyway, and supposedly the brightest minds on the planet are doing this, the Hubris of mankind is bigger than any of his other vices.

Sat, 05/14/2011 - 18:32 | 1274795 downwiththebanks
downwiththebanks's picture

All those words, and in it there is not a word of the banker-gangsters who own the political system and blew up the economy with losing bets they couldn't pay for. 

Sharp analysis.  

You'll make a great Ron Paul voter.

Sat, 05/14/2011 - 18:44 | 1274812 akak
akak's picture

And if you do NOT vote for Ron Paul, or somebody very much like him (but who might that be?), then you are still hopelessly brainwashed, and still part of the problem.

Sat, 05/14/2011 - 19:10 | 1274856 downwiththebanks
downwiththebanks's picture

I understand the nature of profit, unlike Paul.

And I understand that voting for anyone who on the ticket for either corporately owned party solves NOTHING.  

Thus, I won't be voting GOP or Democrat, which rules out a vote for the John Bircher even if I thought he was worth a shit.

In 2008, I voted for Cynthia McKinney.  

Sat, 05/14/2011 - 19:21 | 1274873 akak
akak's picture

Thank you for proving my suspicions about you, in spades.

I will henceforth ignore everything you have to say in this forum, as your credibility here, and your ability to think for yourself and not as your slavemasters would have you think, are both apparently nil.

Your inability or unwillingness to recognize that Ron Paul is effectively NOT part of the corporate-owned two-party political monolith, but in fact is philosophically and practically opposed to them in his every policy position and political action, is quite sad, but quite typical of the simplistic, and false, "My team good/your team bad" political paradigm shared by most Americans.

Sat, 05/14/2011 - 19:33 | 1274895 downwiththebanks
downwiththebanks's picture

Your ability to think for yourself and not as your slavemasters would have you think...

Says the GOP voter.  

Ha HA!

Sat, 05/14/2011 - 22:12 | 1275324 akak
akak's picture

Says the Democratic sheep --- hoist by his own petard!

No, you could not be more wrong; I loathe the Republicans just as much as I loathe the Democrats, as much as I loathe the whole false and hopelessly blinkered left-right political paradigm. 

Sat, 05/14/2011 - 22:52 | 1275403 downwiththebanks
downwiththebanks's picture

I've never voted Democrat; I never voted Republican.  

You're voting GOP while talking shit on the GOP.  That'll show 'em!

Sat, 05/14/2011 - 10:57 | 1274180 Caviar Emptor
Caviar Emptor's picture

It's yet another Matrix moment

Spoon boy: Do not try and analyze the market. That's impossible. Instead... only try to realize the truth. 
Neo: What truth? 
Spoon boy: There is no market. 
Neo: There is no market? 
Spoon boy: Then you'll see, that it is not the market that moves, it is only The Bernank. 

Sat, 05/14/2011 - 11:10 | 1274191 Lucius_Junius_Brutus
Lucius_Junius_Brutus's picture


Sat, 05/14/2011 - 11:15 | 1274203 MsCreant
MsCreant's picture


The blue pill can be intoxicating, even when you have not swallowed it. I have been displaced from my home and thus my routines. Because I am in hotel rooms and interacting with a whole lot of different people in the business world than I am used to (adjusters, contractors, agents, etc.) they all seem to act as if everything is a-okay. I know what the facts of our economy are, so does Druckenmiller and the Zerohege and audience.

I am away from my preps, garden, and easy organic food. I am around television and many invitations to "consume" in my walkable world. The toxins of the world are slowly creeping in to my body and my consciousness. By no means am I "lost" to it, but I have to force my self to get out and exercise and it is work to locate good food vs. easy food where I am. The tv can be ignored. What I am trying to say is that there is a lot of contempt around here for "sheeple." Monopolistic commercial interests have a grip on things that is, IMHO, formidable.

I'm feeling the pull of the normalicy bias. "Everything is going to be okay" "Things are bad right now but we will muddle through." Matrix indeed.

Sat, 05/14/2011 - 12:11 | 1274296 Caviar Emptor
Caviar Emptor's picture

Sadly, the Matrix is about the only thing keeping things quiet. There's not enough confidence to go around

Sat, 05/14/2011 - 13:32 | 1274401 newworldorder
newworldorder's picture


You have identified the only singularity of thought that makes sense for an extreme majority of the population. "Everything is going to be okay" "Things are bad right now but we will muddle through."

Its not so much that people are drinking the cool aid, its that the majority do believe this to be true. As long as some income keeps coming in, the debt bomb stays hidden. Only when a job is lost, or savings are gone does reality sink in.

People are "financially killed," one at a time. The rest do not notice because it is not a mass event.

We here at ZH look at all of this from a mass event perspective. This defines then, what we see vs., what most of our relatives or friends see.


Sat, 05/14/2011 - 14:06 | 1274436 woolly mammoth
woolly mammoth's picture

You framed that well. It helps in understanding why so many are complacent.

Sun, 05/15/2011 - 00:14 | 1275522 Bananamerican
Bananamerican's picture

"People are "financially killed," one at a time. The rest do not notice because it is not a mass event."

True. But the heard is spooked nonetheless....What was that recent poll? 2/3's say things suck.

it's like Auschwitz...."Yea, they put THEM in the gas chamber but I am still useful. I can still work. I am still necessary! I will be alright if I just keep my head down and my mouth SHUT"

Sun, 05/15/2011 - 00:27 | 1275536 baby_BLYTHE
baby_BLYTHE's picture

There never were gas chambers. That is MAJOR revisionist history right there. Just so you know

Sat, 05/14/2011 - 14:21 | 1274455 tired1
tired1's picture

Quote from a Russian woman, husband in the GuLags,  I knew who survived the Red Terror of the 30's "Life in the USSR would have been good if not for all the arrests.

Sat, 05/14/2011 - 13:33 | 1274403 Hephasteus
Hephasteus's picture

"I'm feeling the pull of the normalicy bias. "Everything is going to be okay" "Things are bad right now but we will muddle through." Matrix indeed."

Yes that's an attempt to relax the tensions and ease the needs to explain. People are putting their foot down and it's not making things go well for some. It's better to war with people who don't believe they are in a war. Speaking of war. You mad at having your house bombed?

Sat, 05/14/2011 - 13:33 | 1274406 spekulatn
spekulatn's picture

The astute MsCreant taps out another gem for all to digest.

Hat tip to you madame.

Well done.

Sat, 05/14/2011 - 17:06 | 1274670 Miles Kendig
Miles Kendig's picture


MsCreant, wow, what an impression to process.  Fair breezes

Sun, 05/15/2011 - 00:31 | 1275537 baby_BLYTHE
baby_BLYTHE's picture

+ + + +

Sat, 05/14/2011 - 13:39 | 1274414 spekulatn
spekulatn's picture


+1 Caviar Emptor

Sun, 05/15/2011 - 10:07 | 1275897 doggings
doggings's picture

Matrix moments all over the show lately..

couple of good videos on the Matrix metaphor here


Sat, 05/14/2011 - 11:00 | 1274181 FoieGras
FoieGras's picture

Druckenmiller sounds like he has nothing to add to the discussion. "Ponzi scheme" and "default" are so 2009. He's way behind the curve.

Sat, 05/14/2011 - 12:22 | 1274305 i-dog
i-dog's picture

"sounds like he has nothing to add to the discussion"

Bzzzzzt ... wrong. He is adding "weight" to a discussion that must be given much more weight.

Though I do find it "interesting" that he is a Soros protégé.

Sat, 05/14/2011 - 14:09 | 1274438 MikeNYC
MikeNYC's picture

Goldman or JPM posts a perfect quarter and Zerohedge goes apeshit.


"Duquesne Capital Management posts an average annual return of 30 percent without any money-losing year."


But Stanley Druckenmiller is just "good at what he does"

Former President Bill Clinton applauds before speaking at the unveiling of the headquarters of the Harlem Children's Zone. With him are HCZ President and CEO Geoffrey Canada (left) and HCZ Chairman and Secretary Stanley Druckenmiller.

Sat, 05/14/2011 - 18:41 | 1274806 downwiththebanks
downwiththebanks's picture

Well said.  Funny stuff.  

Sat, 05/14/2011 - 11:03 | 1274184 lizzy36
lizzy36's picture

It is interesting that the status quo that preaches confidence is unable to take the necessary steps to ensure confidence.

Lip service, to a notion that has no concrete meaning in the context of the United States political and economic system.

2.5 years ago the US could have had real financial reform, forced banks to write off bad debt, started a future that was different from the past. Instead the status quo circled the wagons, got a blank check, and continued along their merry bonus,sucking the system dry, way.

There is no hope and no change in this system. There is merely talk of confidence, invoking of MAD at 3 month intervals, and enriching the the top 10% at the expense of the bottom 90%. Tyler is right, that is a circling the drain strategy.

Sat, 05/14/2011 - 12:17 | 1274301 cxl9
cxl9's picture

enriching the the top 10% at the expense of the bottom 90%

Uhh, check your math friend. It's certainly not the top 10%. It's the top 1% politically-connected crony capitalists and the millions of government employees who are being enriched at the expense of all the rest of us. A large number of parasites supported by an ever-shrinking pool of real producers.

Sat, 05/14/2011 - 13:44 | 1274417 spekulatn
spekulatn's picture

Winner by a nose  cxl9.


Sat, 05/14/2011 - 18:42 | 1274808 downwiththebanks
downwiththebanks's picture

Crony Capitalism is redundant.  Capitalism DEPENDS on cronyism.

Sat, 05/14/2011 - 18:44 | 1274816 akak
akak's picture

What are you, the world's last true-believing Marxist?

You can twist and torture the definition of "capitalism" as you will, but FREE ENTERPRISE is what I support, and it most definitely does NOT depend on cronyism, which is in fact antithetical to it.

Sat, 05/14/2011 - 19:19 | 1274859 downwiththebanks
downwiththebanks's picture

Free enterprise is another fantasy.  And you can argue semantics all you want, but a material definition of Capitalism (i.e., not an ideological one) is a system, or sector of a larger system, dominated by the trade of money capital and private property.  

This is what we have today, and it has been the economic system that has come to dominate a larger and larger part of the economy for the better part of 5 centuries.  That you don't like the outcome hardly makes the phenomenon less real.

Such a system (or sector) has ALWAYS relied on government support (and most often welfare) to accomplish anything. And by "accomplish", I mean generate profit. Things like the theft of a continent, the slave trade, the occupation of India, engineering a global heroin trade - all these 'gifts' Capitalism has provided required a MASSIVE state role.

Sat, 05/14/2011 - 19:22 | 1274897 akak
akak's picture

There is no value in trying to argue with a blowhard such as you who is hopelessly blinded by ideological labels which are fundamentally just distractions placed into the debate by those disingenuous and sociopathic elites who profit and capitalize on such confusion and counterproductive infighting among the populace.

Your words are gibberish.

Sat, 05/14/2011 - 19:35 | 1274902 downwiththebanks
downwiththebanks's picture

Words, words, words.  

Just another banker-gangster who doesn't even understand the con game in which he is a bit player.

Go vote for your corporate party and shut up, White boy.  

Sat, 05/14/2011 - 19:27 | 1274898 OldTrooper
OldTrooper's picture

Bitch, bitch, bitch.

You sound like my ex-wife - too busy going over the grievances of the past to do anything effective to make a difference today or create a better tomorrow.

Either get over it or get lost.

Sat, 05/14/2011 - 19:37 | 1274909 downwiththebanks
downwiththebanks's picture

You're so right.  

Because there's just nothing to criticize about how the private owners of wealth loot the planet today, is there?

My mistake:  things have REALLY changed for the better.

Sun, 05/15/2011 - 02:14 | 1275602 OldTrooper
OldTrooper's picture

At least now you're ranting about the looting of the planet today.  That's a step in the right direction in my book.

Sun, 05/15/2011 - 00:02 | 1275495 StychoKiller
StychoKiller's picture

Such a system (or sector) has ALWAYS relied on government support (and most often welfare) to accomplish anything. And by "accomplish", I mean generate profit. Things like the theft of a continent, the slave trade, the occupation of India, engineering a global heroin trade - all these 'gifts' Capitalism has provided required a MASSIVE state role.

Conclusion:  You're in favor of Anarchy, then -- welcome aboard!  If not, then you're either a Hypocrite or an Illogical idjut!

Sat, 05/14/2011 - 11:05 | 1274186 Mec-sick-o
Mec-sick-o's picture

Ironically the German translation of Druckenmiller would be "printing press"

I guess Ben "Druckenmiller" Bernanke would fit better.

Sat, 05/14/2011 - 14:01 | 1274431 citta vritti
citta vritti's picture

+1 helicopter

Sat, 05/14/2011 - 11:10 | 1274192 docj
docj's picture

I certainly hope Mr. Druckenmiller either purchases and cooks his own food or has the services of a loyal army of food tasters at his disposal. And drives his own car.

People who espouse such heresy are likely to end-up having "an accident".

Sat, 05/14/2011 - 12:07 | 1274291 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

If the person is well known, he/she may have that "accident". As for the rest of us, we are just quacks and nuts.

Sat, 05/14/2011 - 11:08 | 1274193 Silver Bug
Silver Bug's picture

Its going to be a scary time, when this whole nonsense finally implodes. Regarless, it is going to happen one way or another.

Sat, 05/14/2011 - 11:14 | 1274202 Lucius_Junius_Brutus
Lucius_Junius_Brutus's picture

The scary times always are the shortest because they make us react promptly. The longest periods are the ones of decline. 

Sun, 05/15/2011 - 00:10 | 1275510 Milestones
Milestones's picture

Interesting thought!! Well done.         Milestones

Sat, 05/14/2011 - 11:15 | 1274198 topcallingtroll
topcallingtroll's picture

Clowns On Acid could unite us.

He wrote out a simple manifesto that seemed agreeable to everyone. When he comes back around i would like for him to re post what is likely a zero hedge political platform.

Socialists, communists, populists, libertarians, and gold bugs do have something in common. Political parties have started from much less than this.

First we break up the oligarchy and the corruption that sustains them.

Sat, 05/14/2011 - 11:29 | 1274226 Hunch Trader
Hunch Trader's picture

Choose your company better; the socialists only want to substitute themselves for the oligarchs.

What you really want are people who are for FREEDOM. Socialists are never for freedom, except in rhetoric (as in 'freedom from capitalism', 'freedom from oppressing class' etc).

But they're really good at confusing people about their real goals. Even the North Vietnamese thought they're fighting for independence and freedom...





Sat, 05/14/2011 - 12:32 | 1274313 topcallingtroll
topcallingtroll's picture

Politics makes for strange bedfellows, even anarchists would agree with what clowns on acid wrote.

First we get rid of the oligarchy and their moral hazard at our expense.

Then we can divide up into our usual camps.

Sat, 05/14/2011 - 18:47 | 1274817 downwiththebanks
downwiththebanks's picture

Actually the North Vietnamese were fighting to stop a genocide of their people with chemical weapons and drug-addled, village burning maniacs.

Sat, 05/14/2011 - 16:25 | 1274618 tip e. canoe
tip e. canoe's picture

"Clowns On Acid could unite us."

i've been thinking the same thing ever since i took my 1st dose ;~)

curious to see the a link?

Sat, 05/14/2011 - 11:12 | 1274204 Smiddywesson
Smiddywesson's picture

No country that has ever done this has "gotten their financial house in order."  It's over, and it isn't going to take six or seven years either.  Collapsing tax revenues and the increasing needs of cities and states, combined with the utter failure to get the economy to take off, means that the end is accelerating towards us, not approaching at a steady state.  The last 4 years have been incredible, but they unfolded slowly.  The next chaper will be even more remarkable, but it will seem to come out of nowhere to people who don't follow the issues.

Sat, 05/14/2011 - 12:03 | 1274285 Ricky Bobby
Ricky Bobby's picture


Sat, 05/14/2011 - 13:51 | 1274425 The Profit Prophet
The Profit Prophet's picture


Sun, 05/15/2011 - 00:23 | 1275529 Bananamerican
Bananamerican's picture


Sat, 05/14/2011 - 11:17 | 1274207 MikeNYC
MikeNYC's picture

Here's a thought experiment:


Would Druckenmiller be as blunt and direct if he were still running a fund, or would he STFU, bend over and open wide, the next in an endless line of rapacious 'Lucky Pierre's' taking and giving amongst themselves, enthusiastically and endlessly?

How come all these guys get so blunt, honest and straight-talking once they hang up the three-piece, wing-tip burglar's outfit and no longer have skin in the game?


Thanks for nothing, captain cowardly obvious.

Sat, 05/14/2011 - 11:29 | 1274225 lizzy36
lizzy36's picture

Did you read the article or just comment?

Druckenmiller's personal net worth (which he manges) is north of $5 BILLION. I am going to guess he has more skin in the game than the majority of 2/20's.

Just a tip from me to you, next time try INFORMED commenting.

Sat, 05/14/2011 - 11:36 | 1274238 MikeNYC
MikeNYC's picture

So now he's got his own pile of 'Fuck you' money and opens his mouth.


Your comment simply reinforces mine.


He's earned enough that he's rich forever and now starts speaking out.


I didn't miss a thing. But thanks for the idiotic ad hominem response, anyway.

Sat, 05/14/2011 - 11:36 | 1274242 MikeNYC
MikeNYC's picture

You do understand what 'Fuck you money' is, don't you?


Boot licker.


You're another Lucky Pierre in that line, aren't you?

Sat, 05/14/2011 - 11:53 | 1274272 TomJoad
TomJoad's picture

Let me get this straight Mike. You accuse someone of an ad hominem attack (incorrectly I might add, might want to look up those big, fancy Latin words before using them in a sentence next time), then you commit an actual ad hominem against said person. Priceless. 

For the record Mike, what have YOU done lately?

Sat, 05/14/2011 - 11:58 | 1274276 MikeNYC
MikeNYC's picture
Ad hominem From Wikipedia, the free encyclopedia "Personal attacks" redirects here. For the Wikipedia policy, see Wikipedia:No personal attacks.

An ad hominem (Latin: "to the man"), short for argumentum ad hominem, is an attempt to link the validity of a premise to a characteristic or belief of the person advocating the premise"

"Abusive ad hominem (also called personal abuse or personal attacks) usually involves insulting or belittling one's opponent in order to invalidate their argument"


incorrect, how?


So, Tom Choad, when you get punched do you not punch back?


I made a comment on the content of an article and an internet fuckwad countered with a personal attack. The rest is just a street fight, princess.

Sat, 05/14/2011 - 12:12 | 1274287 TomJoad
TomJoad's picture

Sure looked to me like lizzy was commenting on your premise, not your person. 

To me though you just seem like an ill-tempered, moronic fuckwit, one with extremely limited reading comprehension skills, so your opinion is valueless. (ad hominem attack example)

Sat, 05/14/2011 - 12:15 | 1274295 MikeNYC
MikeNYC's picture

The entire premise of Lizzy's post was an accusation I had not read the article. Not about whether my point was accurate. That's a pretty clear shift from Druckmiller to me.

Sat, 05/14/2011 - 14:32 | 1274467 malek
malek's picture

She pointed out that Druckenmiller has 5 billion reasons to keep quiet (or "bend over" as you put it) instead of speaking out.
You have not responded to that, nor clarified if you were aware of that fact before Lizzy pointed it out.

Everything you wrote afterwards sound like red-handed excuses.

Sat, 05/14/2011 - 14:40 | 1274478 MikeNYC
MikeNYC's picture

It's his own money. He doesn't need to make a number running someone else's. How much private money he has is not the point. He has zero skin in the money running business.

Once you have to make a nut each quarter, year, the whole world changes. As do your 'friends' and how you curry favor with them. He wasn't screaming this stuff when he ran a fund. He was quietly buying congressmen and bonds.

But hey, how nice of you to 'white knight' for the little lady.

Sat, 05/14/2011 - 14:50 | 1274483 malek
malek's picture

Aha, so he has stuffed his 5 billion under his matress.

And I will write my opinion as I see fit, if you like it or not.

Sat, 05/14/2011 - 15:20 | 1274524 MikeNYC
MikeNYC's picture

Bully for you. You do that.

It doesn't matter where he stuffs it. He has enough to say what he wants and nothing anyone can do will affect his position in life. That's the definition of Fuck You Money.

That's what 5B lets you do and if you think little Timmy can touch the guy you really have no idea.

Sat, 05/14/2011 - 12:00 | 1274280 lizzy36
lizzy36's picture

Well in Druckenmiller's case "fuck you" money would be the $700m he gave away in 2009 ALONE.

But don't let facts get in the way of a decent ad hominem attack.

As for the Lucky Pierre.......

Sat, 05/14/2011 - 12:14 | 1274293 MikeNYC
MikeNYC's picture

Which facts are you referring to?


Extravegant charitable  donations and huge financial gains, fraudulent or not, have always gone hand in hand.


Succesful criminals have always used their gains to polish their images. I have no idea if that is the case here, but giving away millions proves nothing about the source of billions.


"Stanford Financial Group is joining with The Golf Channel and the PGA TOUR on a charitable investment program that provides a donation to St. Jude Children's Research Hospital for every eagle made on the PGA TOUR in 2007. "

"Thousands of people - men, women, and children - would've starved during the
Depression (in the 1930s) if it weren't for Al Capone.  He set-up "soup kitchens"
and donated food and drinks.  No one was turned away, and the food was free!

*  If Al Capone heard about people in the hospital unable to pay for their medical
bills, he personally paid their bills for them!

*  Al Capone donated large sums of money to catholic churches each time he
received a large amount."

Sat, 05/14/2011 - 12:36 | 1274319 ElvisDog
ElvisDog's picture

You seem to have a simplistic view of good-vs-evil. So, the good things that Al Capone did don't count because he was Al Capone? Whether he was good or evil depends on your point of view. Who did he kill? Mostly other gangsters. Who did his charitable measures help? Mostly poor people unconnected to his gangster activities. And how do know that he didn't pay those hospital bills out of a genuine sense of charity?

Sat, 05/14/2011 - 14:19 | 1274452 MikeNYC
MikeNYC's picture

No, Dog. My point is that charity does not correlate to business ethics. That's the correlation being made above.

I don't care if Capone did things from the 'good'ness of his heart. I bet the people he killed and whose money he gave away cared a bit.

Your view that whether Al Capone's goodness or evil "depends on your point of view" is however, a wretched piece of moral equivalence, and pretty much a symptom of the ethical and moral cliff over which our society has driven.

Capone stole and killed. Some of what  he stole he gave away. You see room for a positive view of that?

We are a completely fucked country.

Sun, 05/15/2011 - 01:54 | 1275618 OldTrooper
OldTrooper's picture

Your description of Capone reminds me of our government:

I bet the people he killed and whose money he gave away cared a bit... Capone stole and killed. Some of what he stole he gave away. You see room for a positive view of that?

Put that way, I see nothing positive about it at all.

Though, I do kinda wonder how much of Capone's money was made the old-fashioned way - by providing goods (booze) that people wanted.  Just a thought.

Sat, 05/14/2011 - 12:48 | 1274338 lizzy36
lizzy36's picture


You asked if i knew what fuck you money was. I provided evidence that in fact i do.

As for the Lucky Pierre, i provided evidence that suggests, well you can deduce what it suggests.

I appreciate the lecture on Al Capone.

The entire premise of my initial comment was that Druckenmiller did have skin in the game. And dismissing his comments based on the notion that he didn't have skin in the game was therefore INACCURATE.

That is called refuting your thesis based on the underlying premise being incorrect.

As for whether you read the article or not, that was merely deduction. Perhaps i was wrong and you did read it. Oddly you may have just skipped the paragraphs where it clearly states that Druckenmiller has skin in the game and gives the dollar value of said skin.


Sat, 05/14/2011 - 13:21 | 1274379 MikeNYC
MikeNYC's picture

He's closed his fund. He's running his own money. Now he's bravely publicly slapping the string pullers. Wow. Join the club of those who leave the club and get brave.


And no, fuck you money is not what you give away. You kind of showed you DON'T know what it means, actually. It was so obvious and embarrasing for you that I didn't think I needed to point it out.


Fuck you money is what you have when you are rich enough to say Fuck You to anyone. He's got it and now he is. Big deal. So brave.


He doesn't need a to hit a number next quarter, so now he can say whatever the hell he wants. He no longer needs to bend over and open wide, he says the obvious and the neo-sheeple, the ZH-sheeple, stand up and bleat 'He's rich and thinks like me. How smart and bold.'


And I really don't care whether you know what a Lucky Pierre is. I know it, in the financial sense, when I see it.


Washington Monthly, 1997:

"Managing, for Druckenmiller, does not involve looking for good rates of return on bank deposits. It involves taking the millions of Soros or his clients, borrowing even more, and then making enormous bets on the direction of stock, bond, and currency markets worldwide. He is, in short, a speculator of leviathan proportions, part of a small elite of money managers with such large stakes in the markets that their decisions to buy or sell can move those markets.

Or move Congress. After the Republicans took Congress in 1994, Druckenmiller wagered that the GOP would curb spending and force a balanced budget deal. For Druckenmiller, a bet was not a ten-spot with some friends; it meant buying millions of dollars in Treasury bonds. As James Glassman subsequently reported in The Washington Post, Druckenmiller speculated that the market would react favorably to a balanced budget deal, because as the government needed to borrow less, bonds would become rarer and thus more valuable. If the market bid up bonds in anticipation of that happening, he would make a killing.

"His perfectly spun plan snagged on Bill Clinton, however, who resisted the Republican cuts and started warning of the dangers of a default because of the GOP refusal to raise the debt ceiling. The Republicans seemed poised to let a balanced budget deal slip away. So Druckenmiller began telling his Republican friends in Congress - and as a man who had given $250,000 to the Republican National Committee in 1994 he had a lot of friends - that the financial markets would tolerate any means to the end of balancing the budget, including a default. The cost of a "train wreck," Druckenmiller insisted, would be minor compared to the benefits of balancing the budget."


This is not a new theme from him. Only he apparently used to buy Congressmen, not just personal Op  Ed peices in the Journal.


Lucky Pierre, indeed.

Sat, 05/14/2011 - 14:18 | 1274449 The Profit Prophet
The Profit Prophet's picture

Very nice defense of your original post Mike. Any way you slice it, Lizzy's reply was launching a personal attack - you were either guilty of making an uninformed post, or you were guilty of simplistic article analysis.  There are better ways to say you disagree with someone, but apparently Lizzy is a lot like my wife.

I also fully agree with your premise about the hypocrisy of the formerly guilty trying to make amends now that they are formally out of the game and can see the coming collapse.  What's his faggot from the trickle-down Reaganomics scam squad is another tool trying desperately to save himself from the pitchforks now that it's too late.

T.E.I.N. everyone! 

Sat, 05/14/2011 - 14:23 | 1274460 MikeNYC
MikeNYC's picture

"Duquesne Capital Management posts an average annual return of 30 percent without any money-losing year" for 10 years.

Hey, he's just good at what he does. We should all just shut up and listen.

Sat, 05/14/2011 - 18:50 | 1274822 downwiththebanks
downwiththebanks's picture

And should we do the same for JP Morgan?

Since, of course, making money is the be-all and end-all of existence.

Sat, 05/14/2011 - 14:56 | 1274493 Rick64
Rick64's picture

  You contradict your statement of whether he would speak out if he was still in business or would he STFU. As you point out he has and it is nothing new. I do agree that a lot of the elite that have benefitted from the policies that they supported at the time often grow a conscience when they are out of the game, but I don't know if that fits Drunkenmiller. As far as donations to charities, I share your views.

Sat, 05/14/2011 - 15:15 | 1274512 MikeNYC
MikeNYC's picture

He was saying that stuff, but privately, to bought and paid for congressmen. He was hoping to profit off a bond short squeeze that would occur if the budget balanced. He didn't give a fuck about a balanced budget for the good of the US.

And he certainly wasn't mushroom slapping the secretary of the treasury while running $20B.

(love that phrase and plan to use it often. thanks whoever.)

Sat, 05/14/2011 - 16:12 | 1274587 Rick64
Rick64's picture

 You may be right about speaking out after retirement, OTH he has rarely (I can't find any before retirement) given interviews, and his viewpoint hasn't changed.

Sat, 05/14/2011 - 18:49 | 1274824 MikeNYC
MikeNYC's picture

And I bet neither has the killing he hopes to make in the resulting (expected by him anyway) short squeeze in bonds.

Anyone rapacious enough to put $5B in their own pocket has room for more, especially if it's based on his principle thesis, which has not quite yet played out.

Nah. He's just giving that rare interview because he suddenly cares. It just 'happens' to be the same thesis upon which he was reportedly buying Congress, that's all.


Jesus. I thought the ZH crew was supposed to be smart enough to see through all this bullshit. Instead, some here, not neccesarily the poster to which I currently reply, seem instead to be eating it by the handfuls.

Sat, 05/14/2011 - 23:37 | 1275466 Clinteastwood
Clinteastwood's picture


Excellent post.

Lizzy, you and all your junky friends lose this argument.

Sat, 05/14/2011 - 12:37 | 1274326 topcallingtroll
topcallingtroll's picture

He has no real skin in the game. Beyond a hundred million or two it doesnt affect ones living standard much.

These types do try to become do gooders, but only after the make their wad. I respect do gooders who were that way before they got rich

Sat, 05/14/2011 - 13:19 | 1274381 MikeNYC
MikeNYC's picture


Sat, 05/14/2011 - 14:36 | 1274475 malek
malek's picture

If they are real do gooders how could they ever get rich?

Sat, 05/14/2011 - 18:30 | 1274786 Calmyourself
Calmyourself's picture

Thanks TCT for clarifying the clusterfuck above.. Gross, Druckenmiller etal, all have "skin" in the game but when your skins number in the billions truth telling becomes so much less risky.. Pretty damned obvious if you think about it..

Sat, 05/14/2011 - 11:45 | 1274254 nope-1004
nope-1004's picture

Maybe some grow a conscience.  Not everyone is willing to be ruled by satan disguised as a Wall Street banker engaging in corruption, greed, theft, and white-collar crime their whole life.

More and more bankster thugs over time will grow a pair and leave the criminal cult as this unwinds.  Of course, it won't happen until maximum theft from taxpayer coffers has been achieved.


Sat, 05/14/2011 - 11:51 | 1274264 MikeNYC
MikeNYC's picture

Why is it always "leave game, grow conscience?"


That helps us how?


It just looks like balm for a guilty conscience, a little reputation polishing after the fact.

Sat, 05/14/2011 - 12:50 | 1274335 chindit13
chindit13's picture

engaging in corruption, greed, theft, and white-collar crime their whole life.

Drunkenmiller was head trader at a hedge fund.  He neither asked for nor received bailouts of any kind.  He didn't steal from taxpayers.  He did not steal from anybody.  Yet because he was extremely good at something many people do in one form or another (manage their investments), he is guilty?  Success is now a white collar crime?

There are plenty of people out there who abused the system and made the innocent pay.  It is hard to make an argument that Drunkenmiller was one of them.


Sat, 05/14/2011 - 13:32 | 1274402 Sophist Economicus
Sophist Economicus's picture

He's got a little pee-pee.  That makes him testy...

Sat, 05/14/2011 - 13:45 | 1274415 MikeNYC
MikeNYC's picture

Not hard at all.


"as a man who had given $250,000 to the Republican National Committee in 1994 he had a lot of friends"


In September of 1995, Senator Pete Domenici (R-NM), the chairman of the Senate Budget Committee, flew to New York for a dinner at Seagram House with a dozen contributors, mostly large fund managers. Druckenmiller was among them. He told Domenici that the market would trade around a default if there were a balanced budget agreement. Domenici carried that message back to Capitol Hill. Newt Gingrich began broadcasting the same message, telling a meeting of the Public Securities Association - the bond industry trade group - that a balanced budget would be worth the price of a default. Druckenmiller and another big investor also bought a full page ad in The Washington Post that said, "let's not allow fears of temporary `market instability' to serve as an excuse for equivocating on spending cuts ... If the markets believe the chaos will finally lead to decisive action, they will rise. If the markets believe decisive action will not be forthcoming, they will decline" In November, Druckenmiller took the same message to an ad hoc Republican hearing, where he testified.

To Congress, Druckenmiller was not just another private citizen giving his opinion: He became "the voice of the market""


Same shit, different decade.

It sure must be a little easier to be extremely good when you can buy friends like that.


Sat, 05/14/2011 - 14:33 | 1274469 The Profit Prophet
The Profit Prophet's picture

Yep! Just another former member of the Kleptocracy that moved with the wave of the invisible hand of hedonic, evil, GREED.  Same stage - different players.  I'm glad that he seems to have grown a conscience now that he can buy his own island.  I'm waiting for the likes of Gates and Buffet to join the sanity brigade, but unfortunately there are some people who can't put down the champagne glass long enough to smell the stench of their own shit.

T.E.I.N. everyone!

Sun, 05/15/2011 - 00:10 | 1275514 Clowns on Acid
Clowns on Acid's picture

Mike - are you dso surprised that pols seek financiaql market policy advice from hedge fund managers, bankers, et al? (There's gambling in Casabalanca !??)

You quote one meeting and then condem DrukerM.

Who where the pols listening to when they actually began/ begat their unconscionable / unconstitutional spending programs? Perhaps they are more deserving of your ire?

At least Drucker gave fiscally responsible advice It is an imperfect world.

Sat, 05/14/2011 - 12:37 | 1274320 topcallingtroll
topcallingtroll's picture

I agree he has enough fuck you money stashed away that he really doesnt care what happens in the market.

Beyond 100 million anything more is just an abstraction. So he has no real skin in the game.

Sat, 05/14/2011 - 11:29 | 1274221 mayhem_korner
mayhem_korner's picture

But we're going to continue to pile up trillions of dollars of debt and I may have a Greek situation on my hands in six or seven years.

Six or seven years?  I'll take the under on that.  Confidence in the USD is gone in large segments and growing every day.  One of two scenarios is virtually assured by Q4 2011:

1) Bernank holds his bladder on QE3 as long as possible...yields rise and bring the Dow and real estate markets down catastrophically (> 25%).  Pandemonium will be on the streets with the sheeple seeing neither of their two wishing wells of borrowing out the window...

2) Bernank presses Print no later than Independence Day, and despite all the anti-inflation stops being pulled, Au goes to $1,800+, Ag to $80+, WTI to $140+, and the Agriculture complex behaves similarly.  The low-grade fever of chaos picks up until we have a very MENA Christmas...

The Druk is in pretend-land as far as timeline.

Sat, 05/14/2011 - 12:38 | 1274327 ElvisDog
ElvisDog's picture

See, I think Bernanke, Timmy, et al. do have a plan, and that plan is to control the unwinding of the ponzi U.S. economy. Their objective is to avoid outright collapse (which a balanced budget would cause) and ensure that when the economic adjustment is over that their banker/hedge fund overlords have maintained as much of their wealth and power as possible. What they want (in my opinion) is a gradual but steady inflation, so therefore the QE, whatever it will be called, will continue.

Sat, 05/14/2011 - 13:20 | 1274385 AndrewJackson
AndrewJackson's picture

Completely on Target Mayhem. Lets see, we have an organization which has not taken in more cash than it pays out in 40-50 years. Even with this incredible track record, interest rates are virtually at zero. To add more salt to the wound: we are running deficits north of 1.6 trillion / year, debt is over 100% of gdp, and our entitlements (which amount to +50 plus trillion) will start becoming cash deficits in the next couple years. And finally, if interest rates go go 10%, over 66% of tax revenue will go to interest payments. There is no option which doesn't require intense amount of pain. Prepare accordingly and buy some gold/silver.

Sat, 05/14/2011 - 18:35 | 1274800 Calmyourself
Calmyourself's picture

I like your thinking as a reset gives people a new chance. However, people would have to realize approximate causes to enact chaos. The American people are nothing if not brainwashed sheep. Met a lady today who can not stand to know her food is killed before she eats it.. I told her every meal is preceded by a funeral, ha, her face was precious.. No, these sheep will sit in their hovels if need be until they starve..

Sat, 05/14/2011 - 11:28 | 1274224 Urban Redneck
Urban Redneck's picture

Druckenmiller ignored the very real Door #3, which is the most likely outcome of a delayed payment scenario.  Behind Door #3 are the three stooges (Harry, Barry, and Johnny) who put on a 30-minute comedy routine which roils the bond markets, but at the end of the show, the audience's outlook from the bond markets on US debt's long-term viability remains unchanged.  Without a balanced budget and a mechanism to reduce the outstanding public debt- the debate is nothing more than theater.  It only alters the timing of the final curtain drop.

Sat, 05/14/2011 - 11:35 | 1274231 Quinvarius
Quinvarius's picture

Unless we go to a gold standard and do some serious banking reform, they might as well keep printing.  Our system doesn't work when you step outside and look at it.  It is like watching a monopoly game.  But while you are playing the game, these are the rules of the game.  If the Treasury market looks bad, the Fed will buy more.  Pimco and other people with access to your investment dollars will be the first in line to join them.

Sat, 05/14/2011 - 12:07 | 1274286 breezer1
breezer1's picture

the system does work unless you try to stop using it then you become a terrorist sponsoring state and need to be embargoed or invaded to find WMDs.

Sat, 05/14/2011 - 15:01 | 1274494 tired1
tired1's picture

Firstly - privately held CB must be destroyed. The very thought that any sovereign nation would pay interest on its' own money is beyound absurd.

OK, suppose there's a gold standard. What's to keep the value of Au stable considering that the  bulk of it is in private hands? I'm not against Au but I think combined precious metals might be a better solution. At the heart of all this, it seems to me, that manipulation by cornering the markets on money is the problemm. Comments?

Sat, 05/14/2011 - 11:32 | 1274232 augie
augie's picture



I figure if DrunkinMiller's argument didnt get your attention, a less subtle aproach might be in need.

Sat, 05/14/2011 - 15:18 | 1274513 mayhem_korner
mayhem_korner's picture

Death is assured at birth.

But if you're looking for an accelerated plan, one can be arranged for the low low price of 20 oz of gold maples.  8-o

Sat, 05/14/2011 - 18:05 | 1274762 augie
augie's picture

thanks sylvia, I was trying to make light of the sensationalism. But i'll try and get a hold of those 20 maples.

Sat, 05/14/2011 - 13:17 | 1274251 Zero Govt
Zero Govt's picture

The Fed is selling put options on Treasury Bonds to drive down yield rates ...which counters any commercial common sense it should have being the biggest holder of Treasuries ...the Fed are not only certifiably insane they are circle-jerk ponzi frauds 

Sat, 05/14/2011 - 11:47 | 1274258 MCHedgeHammer
MCHedgeHammer's picture

druckenmiller just mushroom slapped geitner and BERNANK in the face.  shut the f up about raising the debt limit, if its so catastrophic why doesnt bernanke and geitner force the dems to cave. 



Sat, 05/14/2011 - 11:46 | 1274260 alfred b.
alfred b.'s picture


  the only thing free about the so-called free markets is the crappy drivel coming of washington and wall street !!!



Sat, 05/14/2011 - 12:32 | 1274317 Captain Planet
Captain Planet's picture

not the only thing alf....if you happen to be a primary dealer, money is free too...just go to that little window where a man hands you pallets of bennybux

Sat, 05/14/2011 - 11:58 | 1274265 bob_dabolina
bob_dabolina's picture

Drunkenmiller nailed it. 

I thought this was a a good article by ZH and duly appreciative that Drunkenmiller gave the interview. 

I feel like, for a while, I've been saying the same thing.

Sat, 05/14/2011 - 12:09 | 1274288 Sudden Debt
Sudden Debt's picture

If only playing kicking the can wasn't so much fun...


Even kids like to play it! Just throw a cola can in front of a kid and I can assure you he'll kick it.



Sat, 05/14/2011 - 12:07 | 1274290 Catullus
Catullus's picture

Druckenmiller’s proposal is slimey. He’ll take a delay in interest payments on his bonds if that means the government defaults on entitlement payments. I’ve got a better idea. Repudiate the debt, Mr Druckenmiller and the rest of his boys take a giant haircut, and then cut spending back to cash balance with revenues. They’ll have to do the last part because no one would be foolish enough to loan them money again. It’s not immoral to default on the national debt, I didn’t contract it, someone else did.

This is the slimeball banker approach to the national debt. Fuck them. When you contract debt with the government, you’re contracting to a get a portion of the tax loot. Don’t be surprised when these thugs stiff you.

Sat, 05/14/2011 - 12:40 | 1274306 bob_dabolina
bob_dabolina's picture

We can't afford the entitlement spending we have. I travel a lot and talk to as many people as I can. I have talked to some people who are living comfortably not working.

You can be unemployed for 99 weeks (how many weeks in summer vacation in highschool?) and receive a check. During this time period, you can get government sponsored healthcare. You can receive social security benefits (even if you're not at retirement) You get food stamps on top of that, which are surprisingly quite generous. And if you get section 8 housing guess what? You DON'T EVEN HAVE TO PAY RENT!

I met this big fat black chick who was working a part time job getting all of the above. I asked her if she was having trouble finding a full time job. Her response. No, she didn't think she needed to find a full time because she was making it fine with all the benefits the government was giving her. That is no bullshit, that is what's going on in this country right now and we can't afford it with 14.3 trillion in debt with Obama asking for 2 trillion more.

We need tax increases across the board and we need MASSIVE spending cuts from everything from the military industrial complex, to subsidies, to everything. We need to crack down on the illegal immigration and not even think about amnesty to illegals...all of which would immediately have access to programs Americans pay into for their entire lives. And we drastically need to change the course in where we're at as a country particularly in regard to regulations on business caused primarily by environmental Nazis and hyper vigilant health hypochondriacs

Here's the new American way represented by the latest hit in pop culture: 

The Lazy Song

32 million views.

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