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Guest Post: Goldman Sachs is a Symptom. The Fed Is Like AIG On Cocaine Or A Two-Faced Mutant Pig
Goldman Sachs is a Symptom. The Fed is like AIG on Cocaine or a Two-Faced Mutant Pig, Submitted by JM
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there i was being a smug canadian.
then i checked the c.v. of our central bank chief.
damn!
Flaherty sure knows how to pick'em!
ManBearPig?
The Plunge Corruption Team riding to the rescue one more, striving hard to get that 1,200 back. The world of make believe and the markets. Let's pretend everything is ok because the markets are good see.
I've been saying for a while now, it's going to take a major crisis on the level of war to pull the market back. Otherwise, it keeps going higher. Yesterday and, if today holds up as it appears, are major bullish technical victories for the market.
Make mine Grape flavored please.
http://en.wikipedia.org/wiki/Drinking_the_Kool-Aid
Certainly not drinking any Kool-Aid here - just watching the technicals of the market. There has been a ton of news thrown at the market recently from Greece to the volcano. Yet it's hardly batted an eye.
Whether it's disconnected from reality isn't an issue. When you get that much news and shake it off at key levels, the market will continue higher. Especially on days when you dive and buyers come in to pump on dips. Adds to the euphoria and excitement leading to others chasing after it. Again, another sign the market will continue higher.
OK, if you don't have Grape, I'll take Cherry. Or Lemonade.
BTW, I drink the ZH Kool-Aid so I'm just as guilty. But I admit it.
http://en.wikipedia.org/wiki/Drinking_the_Kool-Aid
Try an Arnold Palmer. They are now selling in jugs at the local grocery.
Mid-long term, larger and larger swings. Waves within waves.
The system depends on a functioning credit system to work properly.
The credit system is in backwardization.
Wanger/Borchers,
Aren't you still writing off that position you had in pets.com from 1999?
You know what pisses me off about HARRYWAGNER posting anything about the "MARKET" is you believe there is a market and that there are actual buyers pouring into the market. GIVE ME A BREAK!!!!!!!
To: Harry Wanger
From: The Entire Zero Hedge Community
STFU
Everybody should be entitled to their opinion. I kinda enjoy the perma-bull vs. perma-bear give and take. Lighten up. So, you do not represent the entire ZH community.
Agreed.
CC
I would appreciate your definitions of perma-bull and perma-bear.
I wouldn't consider myself either one. I have ridden this puppy since late April of 2009 and only recently exited. Yet I never felt I was riding a new bull market, but just a rally. I feel that there are cycles that can be played and I should be flexible enough to play them either way. So I can expect a trend to break down or up in contrary fashion to the longer term trend.
Overall, the fundamentals don't support any real growth world wide but that doesn't mean the Ponzi can't control things for quite a long time. So where would that put me?
Just a generalization. More perception than reality. I consider you a quasi-perma bullish-bear.
I agree. Maybe hope does float the market and the magic trick will work. I can't remember who said it, but people are trained to associate the value of the Dow with the health of the economy. If it increases on a regular basis, everyone thinks everything is honky dory.
You: Real Unemployment is 25 percent!
Them: Then why is the Dow at 14,000?
It is like trying to tell a pentecostal that God is dead. It doesn't work.
I agree that you can hypnotize a great many people into believing Humpty Dumpty had a great fall and even that you were able to put him back together again.
But that doesn't change the fact that there's egg yoke all over the carpet and it's starting to really smell in here.
"3.1 Crowded Tades are Inbreeding."
We should check with the Hatfield's and McCoy's for confirmation of this statement. Besides, what's the problem with a little inbreeding between brothers and sisters?
http://en.wikipedia.org/wiki/Hatfield-McCoy_feud
Without the Fed, you guys would already be swimming in dead bodies. Eventually it's going to happen anyway, the system is designed to fail, when humans can no longer supply the exponential growth the system must collapse.
This blog is getting funnier and funnier, blaming the Fed for your failures is not going to solve the eventual conclusion to the equation.
Write down that equation for me.
http://upload.wikimedia.org/math/3/c/6/3c61f664e4b9ae0ea85f89dff6b52548.png
8th grade math if that.
Funny you probably have more education then someone that figured this out thousands of years ago yet you think it's sustainable, and they figure out it's not.
Inflation is the exponential decay not factored in.
Be back tonight to continue if you are willing.
Yeah, inflation of what? Credit.
The only thing I can see inflating is stupidity, that is currently inflating exponentially, one day it will crease to inflate and start deflating.
Sorry, Man has zero ability to expand credit exponentially long-term.
What do you think that "inflation" thing is?
What is not factored in, is stupid humans that think they can "inflate" anything exponentially long-term. Sorry buddy, humans fail every single time.
Inflation is what sustains the equation, until humans can no longer expand that which can't be inflated exponentially long-term. Then it's game over, just like the last time and the time before that and the time before that, etc.
I think you are very confused.
Alright, alright....
Not arguing about the lack of inflation, although I do observe quantities of relative scarcity and price manipulation.
The important point here is that specifying your equation more fully will make you read less like a death-metal concert and more like The Doors. You need to factor inflation into your equation, positive, negative, or zero because it is exponential... even miniscule changes compund over time just like interest accrued and the addition changes the integral curve dynamics from monotonic increase to possible stationary behavior.
Sure, in the long term everyone and everything is devoured by theta. But the end of a pretty existentially superfluous monetary system ain't gonna end it.
No one know when it's gonna happen man, so get your kicks before the whole shit-house goes up in flames.
What planet do you live on that leads you to believe you aren't affected? You speak about "you guys would already be" as if to say you would not be affected as well but we would. The Fed, or more accurately central banks as they are configured today, is a world wide disease.
Most are infected. This blog cracks me up.
Here you go, typically blog posting, all of the problems would disappear IF:
- if we would just lock more people up
- if we had more regulation
- if we had people enforcing laws
- if we allow companies to fail
- etc etc.
None of these will change and would not have changed the outcome, although it could change the exact collapse date.
What you will witness is the final solution to the equation. The choice to use the equation has already determined the outcome.
This outcome was determined before your grandfather's grandfather was even a thought, nothing you will do today or tomorrow is going to change the final result. Billions will have to be liquidated, best case humans don't go the way of the dinosaur.
"There are levels of survival we are prepared to accept."
Thank you but you didn't really answer my question. Why would you use the term "you guys" as if to say you are separated from the rest of us?
You said "Without the Fed, you guys would already be swimming in dead bodies.
Oh, no worries there... I will probably not be safe from the tanks, I am unlike most on the board though, I know the tanks are coming and it doesn't matter what they do.
Don't worry about the coming apocalypse C D, I got you covered. Just remember to bring your push up bra and red lipstick!
Thank you Mako.
"This outcome was determined before your grandfather's grandfather was even a thought, nothing you will do today or tomorrow is going to change the final result. Billions will have to be liquidated, best case humans don't go the way of the dinosaur."
I love a good student of Lao Tzu. You could have just said....
As it ever was, or you could use Robot Traders wash, rinse, repeat.
The interconnectedness of cause and effect splaying out forward and backward into the horizions, each determining the next by what came before, mind bogglingly complex and simple at the same time. In a word beautiful.
What you are asking of people is too much. The comprehension of infinity by beings who believe themselves relative, takes will. A will most do not have because they never see the need or point from their localized perspective.
Is this real? The most profound question only someone who is on the verge of enlightenment or insanity can ask with true purpose.
You are right though, Mako. This situation, this imbalance we are living, will collapse into chaos of its own accord. It needs not our hatred, ire, or action to bring down. To every action a reaction. As you say it was in the cards before our grandfathers grandfather, and on and on back to what the scientists conjecture was the big bang; or is it a steady state system? It matters not, cycles within cycles beyond counting, all the numbers of the universe between 0 and 1, no more no less.
The Buddhists have teachings for infinite perspective and relative perspective, and you would do well to understand that each is right in its way. What you are doing is criticizing the relative from the seat of the infinite. A true waste of time, but you are right. Let the flowers grow and die, let the revolutionaries boil their anger, and the cards fall as they will; they need not your comment to make it so.
If only humans could go the way of the dinosaur, because they were so much cooler than we are.
Namaste
Meanwhile the government is stealing my money.
As it ever was.
Land. Buy farmland that can be productive.
Gold depends upon the willingness and ability of others to buy it.
Gauge the distance of your productive farmland from major cities and highways. Location location location.
Don't want to be farming in the way of a firehose of displaced city folk.
Try to be greater than 1 gas tank away from big cities. 250 to 300 miles away
I regret to inform you Mr. Bernanke that WE ARE ALREADY SWIMMING IN DEAD BODIES and it is BECAUSE OF THE FED. If you hate this blog so much, why not stop reading it you moron.
It's not because of the Fed, it is because all you hairless monkeys keep on thinking you can attach compounding interest to your medium of exchange and then think you can beat the equation. The Fed is just setup up for all the stupid hairless monkeys to be more efficient at marching down the road of doom.
I never said I hate this blog, I said it was "funny". It is, priceless entertainment watching the rats jumping from the ship thinking if we would have just built an unsinkable ship.
The entertainment is priceless.
You are not going to get out of this, it doesn't matter if the Fed never existed... you don't need a central bank to lend and borrow with compounding interest. These pyramid schemes have been blowing up since before a thing called a bank even existed.
"There is no out, there is only in"
How long till Chinese tanks are enforcing real estate liens? I know that's kind "duh" because noboby really knows when, but what do you think?
Chinese tanks are their to keep their own people in line. You think it's going to be a mess here, wait till you see the mess over there.
I really could care less about "usury" in a free market. Individuals and companies blow up all the time, for all kinds of reasons, and it doesn't have a systemic effect. What I care about is being forced to participate in a systemic usury. This is where the Fed comes in, with its fake money and selective regulation, and to suggest there is no difference between a centralized authoritarian system and a distributed free market is glossing over some important distinctions. How would a free market be able to support a system-wide, continuous exponential expansion of credit?
Where else does the exponential credit expansion come from? To my limited understanding, it's a result of arbitrary paper currency backed by nothing, fueling fractional reserve banking. How is that my/our failure, aside from the fact that my great-great^x grandfathers helped elect a set of spineless Congressmen who passed the Federal Reserve Act?
Sorry but you don't have to create paper to add substance to the transaction.
Gold was lent from A to B with compounding interest attached, eventually millions or billions are using the same pyramid scheme. Eventually, humans can no longer supply or demand from the equation what is needed to sustain itself.
Actually there is no lending, you are exchanging a right to property for an obligation to perform increments of a periods of time.
You ran out of gold to support the system at the current fix rate a hundred years ago. If you used dirt you will eventually run out of dirt. Unless humans have unlimited power and are God or god-like the system will fail using such an equation.
But who is lending gold with compounding interest?
Same thing with oil. The whole interior of the planet could be filled with oil, and it would only take a thousand years or so to burn through it at the current exponential increase in consumption....
excelent analysis
Yo, JM: Howzat long GS position workin' out for ya?
Really sucks, baby. Just like sugar #11.
Next time stick with BKX. Individual hogs get slaughtered, but the herd just keeps on surging. Or so it seems. UFB (You're not really long sugar, are you?)
I stopped out with a gain. No worries.
Oh wow, 1:00 pm today. The PPT guys came back from lunch early today ...
+100....back from lunch and all coked up...HOT DAMN LET'S BUY SOME SHIT!!!!!
And of course there is another solution called BANKRUPTCY--but nooooo, we don't want that either because the "evil banker" will then "buy low and sell high" so because we're greedy Americans who want to "take it to the man" we instead devise a "clever scheme" whereby....THE GOVERNMENT buys low and sells high. Of course like some moron on ZH "we're the government and we've never lost money on an investment. EVER." And like some moron on ZH "we're not losing money now either!" So go ahead and scream "BANKSTERS!" and "CORRUPT GOVERNMENT" and then take a look in the mirror. BECAUSE YOU SOUND LIKE THE GOVERNMENT TO ME.
Some cells in the human body are programmed to grow constantly - no matter what the surrounding environment demands.
They are called cancer cells.
Madcow:
True. Once upon a time and probably still today, petri dishes of nutrient media were used to grow cells from a single cell for experimentation.
Normal cells will spread out over the media one cell thick until they touch the wall. Then they will stop growing. Cancer cells pile up over each other and actually try to climb the wall until the get to the point where sufficient nutrient media cannot cannot diffuse up to support growth.
Good analogy.
From BO's speech today, presented without comment:
"But what is not legitimate is to suggest that we're enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it's not factually accurate."
"But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don't doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass ..."
He really is an asshat sock puppet.
BO is a Harvard trained lawyer under extreme pressure. It is what we should expect
He's the Manchurian candidate, dude, shrewdly cast by the plutocrats to exploit their enemies guilty preoccupation with political correctness. Brilliant strategy. But it will only work up to a point -- which may already have been passed.
When I get BO, I think it is time to take a shower.
There are two possibilities. Either he is a psychopath/sociopath or he really does believe what he's saying. Which is worse?
Obama is a guy who gets up every morning, looks in the mirror, and tells himself, "You know the country is doing okay. We have a new President, committed to change. We're going to be alright"
Which really then means, what I've thought all along, is that he is an idiot intentionally ruining this country.
An arena of social activity in which we can discern the need for illusory weavings is the law and its sister profession, politics. For here is the decided need to persuade, cajole, convince, wheedle, seduce, or inveigle a certain group of individuals (a jury), or a mass of people (the electorate) into accepting a particular point of view, or adopting a course of action. It is a fact that scarcely needs mentioning that lawyers and power politicians are masters of deceit, distortion, and misrepresentation. Perhaps that is why these gentlemen are forever swearing oaths, taking affidavits, and impugning the honor of others while upholding their own. We can witness this same attempt to persuade, delude and misrepresent in the subliminal techniques of modern commercial advertising as well the propaganda and news campaigns of modern political regimes. And here we can discern another important sphere of social activity, the business and commercial sectors, which depend upon the often unscrupulous, cynical, and subtly coercive methods of advertising to sell a dubious bill of goods to a suggestible populace.
it depends on whether or not he builds castles in the sand, just lives in them, or collects the rent.
The evidence is in. The Obama Administration, an administration that reappointed Ben Bernanke and lined its cabinet and financial advisory group with Bob Rubin protégés, is not approaching the problem, it is at the core of the problem. To follow any of their leads is to repeat the wealth transfer cycle over and over again
What Obama is saying is, “We’ll fix it; but the way to stop it is to pass this little piece of legislation I have here for you.” This is getting so old that I’m getting tired of seeing this same pony run around and around the same track, over and over again, performing the same little setup trick every time. It’s getting to be too much.
Instead of having Obama suggest the legislation, why not have Bob Rubin--because that’s exactly where it’s coming from
My prediction of Dow 15K by October still stands. Steve Schawartzman's interview today adds weight to my argument. He stated that Blackstone's primary focus going forward is developing economies. He sees anemic growth for developed nations. Heart of the matter. If Wall Street and the Fed fail this mission to pump the market above the record highs then it will be difficult to attract foreign capital as the perception of a Japan scenario becomes dogma. Bad for the economy and Wall Street, worse for the Fed and US Treasury as the cost of funding calamitous debt becomes unsustainable and a "game-over scenario" becomes a question (like Greece).
We'll top the Dow record this year and the Nasdaq next year.
Schawartzman ??
This guy's name is going on the NYC Public Library, right? I hope they spell it this way, too. LOL
Oh and the stock market mega pump is a killer to the real economy as inflation creeps into a deflating economy. See today's PPI numbers: Food prices rose 2.4%, the fastest clip in 26 years. Just scratching the surface of what will be poison to consumers and small business.
But Obama sees no dividing line between Wall Street and Main Street
That'll get rid of all the fixed-income elderly that would've sucked health-care like Debbie doing Dallas. See, the health-care cost curve is bending right before our eyes!
It will be spun positive, 'The Government has decided to thin down America, just think how much healthier you will be! ....and nabisco stock prices go parabolic....
IF inflation starts to get out of control, how can we stop it this time? raise interest rates to 15%?
The new $100 bill is very nice, are we really going to trade in the old ones, one for one?
There is ONLY one way to protect yourself from all of this: Physical Gold.
No way. You'll have gold, but not be able to do anything with it. Then someone might think that it's valuable, and they'll shoot you and take your gold, and then someone will shoot them, and take their gold....etc.
Food, clothing, shelter, natural energy sources, water, natural medicines. These will be the only resources that can endure, and that you will need.
And then, we'll all die anyway.
Without gold you will die sooner.
Bury the gold, and have food storage first. Dig up the gold when you can buy a house, horse, or Julia Roberts without roving gangs trying to take it. It might be a while before they starve themselves out of existence so have bullets to protect your food.
Food, guns, gold. In that order. Gold is for the loooooong term. If you have a shit-ton of money then you can but all three, in quantity!
but where can I bury Julia Roberts?
If you're brave, apply for many many credit cards first and then take the checks and cash them (into cash) and buy gold and silver (with the cash) and bury it. Then let the cards float and pay them off with one oz of silver :) (after hyperinflation.)
Send me the location of where you bury it *just in case* something happens to you so I can manage it for you...
It's in the nature reserve so condo developers don't find it accidentally:
+43° 10' 47.08", +61° 2' 42.27"The Uzbek version of Julia Roberts is waiting there for you so hurrrrry!
Matrix is glitchy today. Double post.
Beans, bullets, band-aids and booze.
If all those people are going to be wanting his gold, that means it's worth something, and therefore he'll be able to do something with it.
This Just In From The Deep THoughts of Jack handy:
Does the two-faced pig snort cocaine through all four nostrils?
Babe blow
Hey I gotta mention! Damn wish I could figure out how to get a long term subsidy. But..being single middle aged and no dependents (none that I am paying for anyway) I guess I will continue to pay for the bullshit that liars, cheats and people who don't have a solution but want to (necessarily cos I dont have enough) leverage my pool of "cash on the sidelines" 1 billion times.
The solution is obvious and palatable. Nothing to be scared of. Simply cut government spending by 30% over 5 years and put all the toxic debt into a recovery fund and let people trade toxic units in that fund that pay income whilst in wind up.
Can do this as "death by a thousand cuts" or admit that this is happening and will continue to happen so we may as well get it over with and everyone take a 30% cut in income and adjust living standards accordingly.
We choose the speed at which the inevitable happens. I would like to keep hold of 70% of my income and I am willing to do that if the load is shared my way.
Of course I have conditions, I don't want this democratic system and I don't want the Federal Reserve system either. I think the tax system can stay, but I only want people who pay taxes in the private sector to have a vote. No-one in Government or employed by Government. I don't want a military that is active overseas.
I also want democracy that is based on a jury system of decision making for all policy. 11 randomly selected tax people who pay more than 50,000 in taxes a year to decide from the best of (pre-qualified) policy issues.
So there you have it. :)
In the long run, we disperse back to the cosmos and an earthbound hedge is way too limiting.
What about the CAT bond idea? Sell the toxic debt at a negative price, give people the freedom to fail, and maybe some retrocessionaire can make a fortune.
cats have 9 lives and puke furrballs tho? help me out here..whats a CAT bond? I think all government bonds are sold at a negative price, we just don't think past 0.000000001 , zero is a big problem, negative is conceptually just way past comprehension. Me if you go up 50 and fair value is 30...-20 isnt an issue (thinks GDP).
You know, I started off as an actuary, and everybody thinks it is the most boring job in the world. Ok, it largely is... a CAT bond is like a catastrophe swap. You use them to reinsure hurricanes, tornadoes, hail storms, and such.
You issue a bond that yields positive based on auction to investors. If an event is triggered like a hurricane, or the toxic crap on the fed balance sheet triggers some loss threshold, then the invetsors have to pay out of bond prinicipal to cover.
It's a high yielding swap that carries a lot of risk. People buy them because in the case of weather, they are uncorrelated to anything else. And then Lehman blew up.
One can get you great return if you are lucky. Pricing is everything.
ohhhh a CAT bond. I get it now, I know these bonds. That's a good thought. Sounds like a CDS, but then I do believe that options are a first derivative and bonds (reducing premium) and equities (undated option/perpetual option) are a second and third!
Let's see, we are dealing with toxic debt, which equates to the aftermath of the natural disaster. So along the way someone was paying insurance and has had the pay off. I guess somewhere the catastrophe pay-off didnt get paid to the guys who were in charge of the reconstruction.
I think the Fed should think outside the box and float a CAT bond on their balance sheet crap. At least there will be a way to price their risk. Nobody will touch it without a massive premium. Scary thought.
Single and want a dependent? This screams Bangkok vacation, bro. ;)
But..being single middle aged and no dependents ....
You lucky bastard! Try going through this with a wife, girlfriend, and kids!
"the 'credit crunch' wasn’t about liquidity at all. It is about solvency.
Insolvency can’t be fixed by short-term subsidies. You need liability reduction, asset
appreciation, or greater long-term equity cushion."
Ehhh wrong. Its about debt. The problem is all of their paper assets are actually worthless and thus a liability. You can't make something that is worth nothing worth something by just printing money and inflating prices. If the paper assets had REAL VALUE then they would be worth something, but that is exactly the problem.
The banks balance sheets will never be made whole because a majority of the assets are paper.
Debt and leverage in moderation is like a Jamaicaweed hit off a twelve foot bong.
Debt and leverage in excess is like PCP. The withdrawals can kill you, and the addiction is hard to shake.
I think everyone agrees that the world economy is more like the latter at this point.
Yarr?
Yarr?
By the time Obama knew what was going on, it was too late. He taught the constitution and did local politics. He grew up under the leveraging. That brief moment of clarity in 2008 just didn't seem right to him. Had he a little more biz experience or even read one Buffett book on "real valuations" in his youth, he might have said in 2008...."wow, average P/E's". But, their answer was....ever heard of swaps? He never had a chance, then. Years later, he has a chance. Now, he owns it.