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As Spain's Socialists Lose Local Elections, The Bond Vigilantes Stir

Tyler Durden's picture


A year after an insolvent European continent realized it is long overdue to implement fiscal consolidation, aka tightening, also known as 2010's keyword of choice: "austerity", the political regimes who have supported fiscal prudence are one after another falling victim to the general population's dissatisfaction with the gradual elimination of a myriad of socialist policies. Following recent electoral losses in Germany, not to mention the overthrow of the Portuguese government, which like Belgium, continues to be in limbo, today we move on to the second to last domino in the PIIGS chain: Spain (and Italy is next: S&P took the time at 6pm on Saturday to remind everyone about that particular unpleasant fact). Per Reuters: "Spaniards began voting on Sunday in local and regional polls expected to deal heavy losses to the ruling Socialists, who are blamed for widespread unemployment that has off a wave of pre-election protests. Tens of thousands of Spaniards demonstrated in the past week in city squares around the country against austerity measures that have kept a fiscal crisis at bay but aggravated the highest jobless rate in the European Union. [as a reminder a webcam of the Madrid protests can be found here]. The protesters have called on Spaniards to reject the Socialists and the center-right Popular Party, the main two political options in Spain." The problem is that when you overthrow socialists, it is unlikely that you will get more socialism down the road. Which, however, is what everyone in this country of 21% unemployment, and nearly 50% joblessness in the 18-25 age group really wants.

More from Reuters:

Polls show the Socialists could lose strongholds such as the Castilla-La Mancha region, where they have controlled the regional legislature for decades, and the city of Sevilla, where they have been in power for 12 years.

If forecasts hold true, the outcome will be a rebuke for Prime Minister Jose Luis Rodriguez Zapatero, applauded abroad for his fiscal discipline during the euro zone crisis but unpopular at home as the economy stagnates.

The Socialists, in power since 2004, are also looking likely to lose the next general election, which is scheduled for March 2012, but could come earlier if big losses on Sunday spark a leadership crisis within the party.

After the euro zone debt crisis forced Greece, and later Ireland and Portugal, to take bailouts, Zapatero implemented round of measures to tackle a huge public deficit and persuade financial markets that it has the budget under control.

He is expected to maintain unpopular economic policies whatever the outcome on Sunday.

"Unless the government wants to run the risk of another episode of financial distress and the debt spreads sky rocketing again, it will have to implement another austerity package before the next elections," Fernando Fernandez, an analyst at Madrid's IE business school, said.

In the past Spain has been relatively timid and accepting, even as its economy has continued to contract, and as the threat of the Cajas true debt exposure is finally put to the table (first discussed on Zero Hedge in July 2010). Those days are over.

Until now Spaniards had been remarkably patient with the economic crisis, as joblessness has been cushioned by traditionally strong family ties and by under-the-table work. But the patience seemed to run out this week.

"We need a change and I'm not surprised people have risen up, albeit belatedly," said one of the protesters, 38-year-old Robert, who works for an advertising production company.

Robert had brought along his three-month-old daughter "so she can start learning young," he said.

At the end of the day, the only thing that matters is what the bond vigilantes says. Should the socialists be swept and be replaced with a far more anti-austere party today, then one can be certain that the Spanish €3.5 billion auction of 3 Years on June 2 will be the worst of the lot, and that breakout in Spanish yields predicted by Goldman, is about to set off a firestorm of selling pushing Spain into the vigilante blender.


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Sun, 05/22/2011 - 10:21 | 1299916 plocequ1
plocequ1's picture

Bond vigilantes...  Wasn't that the movie starring Roger Moore and Charles Bronson?

Sun, 05/22/2011 - 10:26 | 1299921 Alex Kintner
Alex Kintner's picture

You, my friend, are simply Shaken, not disturbed.

Sun, 05/22/2011 - 11:25 | 1300002 ??
??'s picture

MISH Attacks Zero Hedge  (Could Mish be looking for traffic?) 


to that end the attached link is to a PDF image of the article and comments as opposed to linking to his useless site - as in "No Traffic for you MISH"  (No value in going to his site to comment as he moderates the comments)



Conspiracy Garbage on Zero Hedge





Sun, 05/22/2011 - 11:41 | 1300024 Arius
Arius's picture

who is Mishka?

Sun, 05/22/2011 - 12:07 | 1300050 Fish Gone Bad
Fish Gone Bad's picture

Take a look at the 19th entry (Global Economic Analysis) on the column to the left, entitled: Zero Hedge Reads.  For the life of me I have no idea why people have this Love/Hate relationship with various people who post.  It is impossible to be right on every single topic, 100% of the time.  If readers had all the answers, then they certainly would not need to waste their time on financial websites.

Sun, 05/22/2011 - 11:41 | 1300028 Atomizer
Atomizer's picture

Fuck Mish. His manifesto has been discovered long ago.

Sun, 05/22/2011 - 13:00 | 1300114 Confuchius
Confuchius's picture

He's being deported back to the bogs (not blogs) in Ireland.

The little people (with little minds) are missing him.

Sun, 05/22/2011 - 20:44 | 1300850 Re-Discovery
Re-Discovery's picture

Should be named Mush for the crap on his site.

Or Miss for the number of times he's been wrong.

Sun, 05/22/2011 - 12:22 | 1300070 Landrew
Landrew's picture

I have to agree, when Mish started attacking working people in favor of more bailouts for the rich he was doomed. However, I still agree with he and Prechter's  assessment of a stronger dollar. How sad, what could have been another voice of sanity became just another Cock brother inspired hate of working people.

Sun, 05/22/2011 - 12:34 | 1300088 JR
JR's picture

The power of Zero Hedge is its courage to present all credible avenues in a debate, plus opinions.  In this irresponsible charge from Mish, his one example of “conspiracy garbage” goes a long way in discrediting himself. Was Strauss-Kahn set up to destroy the dollar?  Who knows?  Not the least of who knows is Mish.  Now, a new French opinion poll (CSA/Le Parisien) shows that 57% believe that DSK was “certainly or probably” set up.  Was it Sarkozy?  Mickey Mouse? Or the dollar?

I would like to read the endless possibilities, in that the IMF is one of our financial world’s most dangerous subjects.

And before we leave the topic, Mish’s poison pen attack gives one column he didn’t like (“Was Dominique Strauss-Kahn Trying to Torpedo the Dollar?”), and one author he does like, Bruce Krasting.  IOW, in the few minutes before you check the posts on ZH, make a quick review of their standing with Mish.

Sun, 05/22/2011 - 13:03 | 1300123 Tyler Durden
Tyler Durden's picture

It would behoove Mish to actually realize that Zero Hedge has about 40 contributors (yes, there is a CONTRIBUTOR section for a reason) whose opinions we post unedited, and none of which we necessarily agree with or preapprove (or predeny for that matter).

Sun, 05/22/2011 - 13:20 | 1300143 ??
??'s picture

Maybe Mish should apply to become a Zero Hedge contributor (on a probationary basis that is) and then he could test his mettle against the steely critique of the ZH comment community.  My guess is Mish wouldn't dare though  traffic to his site  would likely increase by many orders of magnitude.

Sun, 05/22/2011 - 13:26 | 1300150 Eally Ucked
Eally Ucked's picture

Mish likes edited versions posing as independent articles. Here we have plethora of different views and we decide what is junk not him! Now he wants to fight diversity of opinion on ZH? Let him do it and when he succeeds we all be MISHLIKES.

Sun, 05/22/2011 - 14:38 | 1300251 Biff Malibu
Biff Malibu's picture

Mish is a fat loud mouth who provides (unlike Tyler et al.) absolutely no actionable market intelligence.  Do not even bother to visit his page, like the above said, obviously an attempt to boost page views.


Sun, 05/22/2011 - 15:34 | 1300339 WaterWings
WaterWings's picture

I did visit his page...and I agree. Mish cannot differentiate between "contribution" and "aggregation". Furthermore, like most sensationalists, Mish is not very specific about his beef with Mike Whitney (Mish would prefer to self-aggrandize by taking on ZH, rather than the author):

Everyone deserves a fair trial. However, "fair trial" does not mean trumping up sheer idiocy and conspiracy nonsense in his defense.

We would all appreciate a little more detail, Mish, because using big words like "idiocy" and "nonsense" is cheap.

Mish sez, "Enough is enough."

Can we expect to hear that repeatedly, the same way the Teleprompter sez, "Let me be clear."?

Sun, 05/22/2011 - 10:31 | 1299925 ipud
ipud's picture

All my favorite movies feature the gold vigilante:

Sun, 05/22/2011 - 11:03 | 1299976 JW n FL
JW n FL's picture
by ipud
on Sun, 05/22/2011 - 10:31


All my favorite movies feature the gold vigilante:


THIS IS FANTASTIC!!!! if you want to smile on a Sunday Morn or any other time.. let this wash away the crap outa your head and just enjoy it!


Thank You for bringing a Smile to my ugly angry face, Sir! You are a Grande' Human Being for making something ugly fun and funny!

Sun, 05/22/2011 - 11:49 | 1300033 Atomizer
Atomizer's picture

His other site is the beehive., hasn't been updated in awhile. My Ipud favorite is this one....

Sun, 05/22/2011 - 11:58 | 1300040 Narcolepzzzzzz
Narcolepzzzzzz's picture

Great set of vids ipud. Love Episode 18.

Sun, 05/22/2011 - 11:28 | 1300015 Long-John-Silver
Long-John-Silver's picture

It was the Good, The Bad, and the Socialists. Starting as the Good is Ron Paul, The Bad as Obama, and the Socialist is (was) head of the IMF DS-K.

Sun, 05/22/2011 - 12:14 | 1300064 mr_T
mr_T's picture

I was at the Plaza del Sol last night. It was amazing to see a true democratic peaceful protest in action. I was very impressed with the organisation. They even had volunteers cleaning the plaza, food and water was donated by local resteraunts. The best part was hearing the speeches and reading all the signs, and quotes from many political leaders past and present. This type of protest would never have taken place back in the USA currently, it would be considered unpatriotic. Our founding fathers would have been proud to see this protest in action. Most of my friends back home when they think of protesting the government and making some change, they run out the local gun show and stockup... thats not how your get err done... I pitty those fools.....

Sun, 05/22/2011 - 12:50 | 1300069 Zero Govt
Zero Govt's picture

Mr T   "..Our founding fathers would have been proud to see this protest.."

Yes your corrupt Founding Fathers, like these delusional peanut brained protestors, were wrong on all counts too. The State is the shit hole of humanity, they helped found this rotten monopolists institution in your country

Meanwhile the Spanish protestors are protesting about what? Not enough free money coming their way down the State zombie drip feed? Oh dear!

Not enough of other peoples money being taxed and siphoned out of the private sector? Cue the violins

What the fuk do these protesting socialist zombies expect? Socialism (the State) is bankrupt yet again, as it has bankrupted every country in history (Doh!). They are all out of other peoples money/wealth to rob and then piss away on themselves. What's honourable about this protest peanut brain?

What's not to easily understand about suicide socialism and yet another bankrupt, corrupt, State failure???

Sun, 05/22/2011 - 13:00 | 1300113 IndianDancer
IndianDancer's picture

Meanwhile the Spanish protestors are protesting about what? Not enough free money coming their way down the State zombie drip feed? Oh dear!


Since long before the times of the Roman Empire, they want free bread and circuses. Oh, now they want also free cars, free fuel, palaces, i-Pads and personal aircrafts. For some reason they don't want the jobs that the Romanian gypsies and the Africans are doing in Spain. Lazy and greedy people.

Sun, 05/22/2011 - 13:49 | 1300183 ciscokid
ciscokid's picture

Thats exactly correct,the Spanish are
lazy people.

Sun, 05/22/2011 - 15:29 | 1300337 mr_T
mr_T's picture

I'm American by the way dipshit... You socialist bashers do not have a f'n clue. If you have a job, keep your fingers crossed you don't lose it and your health insurance. I think thats great you don't mind paying $600-1000/mo for insurance so they can make 20% yoy profit every year. If you don;t have insurance, your family just dies if something goes wrong. If I owned an insurance companies I would love to have sheep like you grazing on the pasture of mass media bullshit.. Keep eating up until, its your turn at the slaughter house. Now they want to raise education another 30%.. only the rich have the right to an education. Ahh... whatz the point.. I am not going to change anyones mind.. until the ATM's stop spitting out cash and the system comes to a stop.. Remember its unpatriotic to protest, so keep waving your flags.. and don't forget to send your children to the next war  to a theater near you... best wishes.. btw.. I love it out here...

Sun, 05/22/2011 - 17:05 | 1300464 Zero Govt
Zero Govt's picture

Mr T

typical socialist, you didn't answer the direct question, instead you dodged it and spat your dummy out the pram in an emotional rant

here's the question a 3rd time: why are these public sector Spanish zombies protesting about State austerity when the State is fuking bankrupt? What do these public emloyees and students ever imagine in their tiny little minds the State is going to give them when they've spent the State into oblivion?

How many times has the State, and suicide socialism, got to decend into the sewer before people (like you) realise the State is a human shit hole and socialism (entitlements from 'free' school to pensions) is econimic suicide?? The State is shit at everythng it does. It is the most pig ignorant and parasitical institution ever devised. It's all rosy and champagne corks while it lasts pissing away other peoples money and making promises, promises, promises but it always ends in total chaos, lies and bankruptcy because the State is full ofthiefs and frauds

The Roman Empire was destroyed by the exact same State largesse and non-stop entitlements that bankrupted it. They should teach that in ignorant State schools

The public sector can go fuck itself. But we all know it's too bloody stupid to look past its own nose to do anything else


Sun, 05/22/2011 - 20:14 | 1300798 Eternal Student
Eternal Student's picture

Thanks for the link about how Martin Armstrong views the fall of the Western Roman Empire. I have to say though that it's really bad. A surface skimming in order to promote a preordained view. You have to ignore a lot in order to keep his view justified.

In general I find Armstrong to be consistent in his intellectual dishonesty. He wrote a piece last summer IIRC that was pretty much lifted from the newly released "This Time is Different", and didn't bother mentioning where his stuff came from.

You can make the choice of whether you want to follow an intellectually dishonest person. It can certainly serve to make the points you want (and ignore the ones which are inconvenient). But as for getting to the truth of the matter, it's nonsense.

Sun, 05/22/2011 - 21:42 | 1300922 Zero Govt
Zero Govt's picture

Eternal Student

i think the 'intellectual dishonesty' you should address is your own. Start with the financial facts that the State is yet again absolutely bankrupt just as they were for the Roman Empire

Armstrong is pointing to the age-old problem, much repeated, of State largesse leading to very predictibly to State bankruptcy.. he has written about Rome but also previously Venice as well as much on the Wests repeat of this same simply financial and political error throughout history (a history not taught in State schools?)

you are the typical peanut brained spaceman ignoring the weight of the argument and attacking the person (with broken straws). You are the dumbest student in the class, go to the corner and wear that 'D' party hat you so deserve

Sun, 05/22/2011 - 21:58 | 1300952 Eternal Student
Eternal Student's picture

It speaks volumes that your only defense consists of ad hominems.

Sorry, you offer no credibility.

Sun, 05/22/2011 - 14:04 | 1300204 Things that go bump
Things that go bump's picture

Ha! Everyone knows Romanian Gypsies don't work.  

Sun, 05/22/2011 - 14:23 | 1300225 raios_parta
raios_parta's picture

Although I agree with the content of your post, Gypsies do not work. At least in Portugal it's an extremely rare occurrence. Once they found one that actually had a job and everyone was so amazed that he got coverage in the main evening news on one of the main TV channels.

Sun, 05/22/2011 - 13:36 | 1300156 unununium
unununium's picture

Ever stopped to count all the ways in which you would get fucked by the anarchy you so fervently desire?

Sun, 05/22/2011 - 14:12 | 1300218 Rossalgondamer
Rossalgondamer's picture

at least I get to shoot back.

Sun, 05/22/2011 - 14:57 | 1300282 Nathan Muir
Nathan Muir's picture

True liberty comes through law that is applied equally throughout society.  Political discourse should be structured around a spectrum with tryany on one side and anarchy on the other.  The Liberal/Conservative spectrum should be structured around the way one chooses to live their life, free of the pursuasion of the state.  My two cents.

Sun, 05/22/2011 - 17:11 | 1300479 Rossalgondamer
Rossalgondamer's picture

Debate as you like between tyranny and anarchy.

Souls always reserve the right to ignore 'any' writ authority (Even God's). You can ignore them, convince them freely of your logic, or posse up (State solution).

It is highly unlikely (but always possible) a true anarchists blows through a motorway intersection having no stop signs. 


Sun, 05/22/2011 - 19:34 | 1300725 StychoKiller
StychoKiller's picture

Anarchy != Chaos

An Anarchist, having his/her own selfish interests in the driver's seat, would stop if survival deems it prudent; therefore:  Anarchist != "Progressive" Idjut

Sun, 05/22/2011 - 17:23 | 1300487 Zero Govt
Zero Govt's picture

Nathan Muir   "True liberty comes through law that is applied equally throughout society"

Bollocks. Liberty is free, take a look at nature (free birds, fish, buffalo). We don't need no sham written bullshit to give us liberty or bunch of pontificating muppets (judges) and teams of snakes (lawyers) to appoint it

it is the imposition of (State) Law that are the first tenticles of the death of freedom. Fee society is a self-regulating mechanism, just like any natural herd or pack, and it's worked for 2 million years and how we got here

the Law has added fuk all to humanity, it is a huge monopoly authority clown show. It is now fulfilling it's parasitical end, too expensive for the poor to get 'justice' and a stick for the rich and rich corporations to wield to screw, suppress and corrupt competitiors

Human Rights is the stink of the State awarding you rights at its convenience. In order to persue your HR's you need the States decision to give you funding to afford to persue them. HR is a fuking sham of epic proportions

the number of Laws is equal to the level of totalitarism, the more Law the less freedom (check out Hitler, Maos, Stalins and the EU's law writing orgies) 

you only need look at the fraudsters of Wall Street walking around free to see how 'effective' the Law is. The Police and the dozens of regulators and the warehouses full of laws have done sweet f.a. all sitting on their hands whistling Dixie. The more Law the more lawlessness.. it is a sham 

..a free society and free markets have their own justice system

Sun, 05/22/2011 - 17:28 | 1300504 falak pema
falak pema's picture

the truth behind the lie in your premise lies in the bollocks of your affirmation :

When two pairs of bollocks yearn for the same piece of shimmering flesh that's when liberty meets head on with its opposite, which is constraint. Not enuff shimmer to feed two pairs. So then how to decide? Man knows only the call of bollocks and that's the bollocking of one pair that results as consequence. That's where law comes in useful to decide who gets first bite. Especially if the lady cannot decide. It's never an ideal world and Utopia is like equal numbers of bollocking pairs to those of shimmering fish...

Sun, 05/22/2011 - 19:37 | 1300728 StychoKiller
StychoKiller's picture

"There's no way to rule innocent men.  The only power any government has is to crack down on criminals.  Well, when there aren't enough criminals, one makes them.  One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.  Who wants a nation of law-abiding citizens?  What's there in that for anyone?  But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted--and you create a nation of law-breakers--and then you cash in on guilt.  Now that's the system, Mr. Rearden, that's the game, and once you understand it, you'll be much easier to deal with. -- Dr. Floyd Ferris

Sun, 05/22/2011 - 22:08 | 1300945 Zero Govt
Zero Govt's picture

StychoKiller  -  absolutely right. The last tragic Labour Govt, the worst bunch of scum in British history, introduced 2,600 new Laws in its 14 bankrupt shambolic vandalising years. It is now estimated that at any time over 50% of the British public is now 'criminal' being in breach of one of 1,000's of these petty laws which in effect is the State turning on its people and nannying/bullying them (as they do drugs, tobacco, alchahol, speeding, fatty foods etc)

You can draw a graph line in any nations history between the increasing volume of Law and the increasing rise in Lawmakers (the States) own lawlessness

This is due to my simple human theory (evidenced and proven beyond argument) that you've got to be a complete asshole to tell other adults how to behave, even more so to give them 100's of rules to 'obey'. So the more laws the State makes the bigger the assholes running the State (see Stalin, Mao, Hitler, George Bush, Blair & Brown, Frank & Dodd)

The Theory that Only Assholes Make Law is a working theory with huge historical evidence and new current evidence growing by the day (see Homeland Security, EPA, the EU, the UN et al) and it follows that Law never enhances freedom but is designed to suffocate it (because Lawmakers are the adult worlds biggest assholes)

Sun, 05/22/2011 - 22:29 | 1301006 Zero Govt
Zero Govt's picture

Falak -  i've never read such a pile of bollocks, great effort though

Sun, 05/22/2011 - 13:04 | 1300120 Confuchius
Confuchius's picture

With the creatures from the underworld that you have telling you what you must do; the only solution remaining is from Chairman Mao. "Political power grows out of the barrell of a gun"

Sun, 05/22/2011 - 16:58 | 1300467 Things that go bump
Things that go bump's picture

Mao had a wonderful way with one liners.  


Sun, 05/22/2011 - 13:01 | 1300118 Popo
Popo's picture

Bond vigilantes?  LOL.  Wake me up when they get here.  

Will they be riding unicorns?

Sun, 05/22/2011 - 10:22 | 1299918 achmachat
achmachat's picture

Damned if you do
Damned if you don't...

Sun, 05/22/2011 - 12:27 | 1300078 Zero Govt
Zero Govt's picture

Damn the State . . . and about damn time what's coming for the public sector

Sun, 05/22/2011 - 10:32 | 1299927 oogs66
oogs66's picture

The can is getting harder and harder to kick down the road.  The citizens of the countries providing the bailout don't want the bailout to happen.  The citizens of the countries receiving the money don't want the bailout with all the austerity.  So the masses don't want the bailout, it is only a few people who support the bailout because it is in their own best interests.  Screw the people, save the rich and powerful.

While DSK literally raped one woman, Trichet is figuratively raping nations.

The bailouts must end and we must move on.

Sun, 05/22/2011 - 10:51 | 1299959 A Man without Q...
A Man without Qualities's picture

If governments refuse to push ahead with austerity, there will literally be nobody willing to fund the governments, and what will happen will be cuts far more severe than discussed.  The suffering will be borne by the lower and middle classes - those who need the public sector to provide their healthcare, education; those who's pensions are tied up in funds heavily skewed to risky assets; those who's homes represent their largest single "investment".

The rich have moved funds to safe places, bought gold, diversified and sit in cash.  They would like nothing more than to see prices plunge, in order to buy in more cheaply.

The outlier to all of this are the banking community, who desperately need the bailouts in order to preserve their positions, or would like soft restructuring, so they can push their bad investments onto the ECB, as was done in the US.


Sun, 05/22/2011 - 12:02 | 1300047 sun tzu
sun tzu's picture

If governments refuse to push ahead with austerity, there will literally be nobody willing to fund the governments, 


There's your problem. The government should not have to borrow outside money to fund itself. You fund yourself with tax revenues. 

Sun, 05/22/2011 - 12:24 | 1300071 RockyRacoon
RockyRacoon's picture

Miracle of miracles, we agree on something.   Government is not a business.  Whereas, it makes sense for a business to borrow for growth, a government is not an entity that borrows for "growth".   Growth in government means that it borrows to "produce" dependence and a degenerative populace.

From the article:

The problem is that when you overthrow socialists, it is unlikely that you will get more socialism down the road.

I've corrected the quote to read in a U.S.-centric way:

The problem is that when you overthrow DEMOCRATS, it is unlikely that you will get more socialism down the road.

To paraphrase an old adage:  Be careful what you VOTE for.

Sun, 05/22/2011 - 13:07 | 1300124 Confuchius
Confuchius's picture

The "state" is an idea whose time is long past.

Past time you obedient sheep put it out of it's misery.

Sun, 05/22/2011 - 10:33 | 1299929 zippy_uk
zippy_uk's picture

New Spanish Govt: You know these budget figures you were told about - we have found some "anomalies"

Spanish Voter: How do you mean "anomalies"

New Spanish Govt:  You know all that nasty debt you have to pay off when you get jobs again - well, there is a bit more than we thought

Spanish Voter: MORE ??? How much ?

New Spanish Govt: Unfortunately, its so much, you don't want to know. Thats how much.

Spanish Voter: Who should we ask for help with this - I have no more money to help ?

New Spanish Govt: Spanish Voter, what ever you do, DO NOT TELL ANYONE ANYTHING - if the bond vigilantes find out they will bankrupt us for real.


Sun, 05/22/2011 - 10:31 | 1299934 Biff Malibu
Biff Malibu's picture


I trust you with my life.  However, how do you reconcile the fact that S&P F'd-us-in-the-A throughout the financial crisis for their own manipulated gains and now are turning around doing "factual" ratings?  I have a hard time trusting them, and can only feel that once again whatever they are doing is manipulated and for their own handler's interests.  Is S&P now trustworthy???



Sun, 05/22/2011 - 10:58 | 1299972 A Man without Q...
A Man without Qualities's picture

The weakness of the ratings agencies is that for all their bluster and attempts at scientific analysis, they heavily rely on precedent.  The analysis of sub investment grade corporates for example, is pretty good, because there have been sufficient defaults to test the methodology.  With mortgage linked assets, they never knew what they were doing, because it was all so new, and they hoped there would be a trickle of defaults to allow refining of their techniques, but it was such a massively correlated market that the trickle became a tsunami in a blink of an eye.  

How correct are they on European sovereign and local government?  Not too bad, but they still don't appreciate all of the off balance sheet liabilities (contingent payments, derivatives, leases, public private partnerships etc), so it's a bit worse than it looks.

However, the ratings agencies are the lapdogs of the US government. The current highlighting of Spain and Italy may be true, but the timing is all about distracting from the downturn in the US, the debt ceiling chaos, the housing double dip etc.  All that they say is tre, but the purpose is nefarious.

Sun, 05/22/2011 - 12:14 | 1300058 riley martini
riley martini's picture

 Bull shit the ratings agencies knew exactly what they were doing when they rated MBSs. The were paid to help committ fraud and theft against the American people. A first year intern would know those fraudlent mortgages would fail. 

Sun, 05/22/2011 - 12:32 | 1300086 11b40
11b40's picture

The very same point I was about to make it a double Martini.

If these guys did not know, then why not?  What exactly do they get those high salaries and big bonuses for?  Aren't they supposed to be the best an rightest of the financial world?  There were plenty of others who saw the whole mortgage farce for what it was.  There are plenty of more who have been beating the drum on European debt problems.

This is not a case of not knowing....this is fraud.

Sun, 05/22/2011 - 12:34 | 1300089 A Man without Q...
A Man without Qualities's picture

My own experience tells me that there were examples towards the end of rubber stamping the models provided by the banks, but this was partly because they lacked the ability to even understand what they were looking at.  What certainly happened is they got caught totally flat-footed by how big the market got and how quickly, until they were totally trapped in a mess of their own making.  Towards the end, the entire financial system was complicit in a massive fraud - lawyers, accountants, ratings agencies, regulators, banks, money managers - they all realized that the thing was fucked, but nobody knew how to stop it.

I don't think the ratings agencies knew the extend of the fraud being committed by the originators or how it was being supported by the bankers structuring the pools.  They should have done, probably, but their models assumed assumed the mortgages conformed to the terms of the trust and they did not factor in the fraud.


Sun, 05/22/2011 - 19:59 | 1300765 StychoKiller
StychoKiller's picture

I suggest you read "The Big Short", ISBN - 978-0-393-07223-5:


Whatever rising anger Eisman felt was offset by the man’s genial disposition. Not only did he not mind that Eisman took a dim view of his C.D.O.’s; he saw it as a basis for friendship. “Then he said something that blew my mind,” Eisman tells me. “He says, ‘I love guys like you who short my market. Without you, I don’t have anything to buy.’ ”

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football:  When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create
another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”


The ratings agencies relied on computer algorithms to gauge the risk in an MBS/CDO/etc.  The sellers were able to re-arrange the credit-score contents of these to pass through the ratings agencies and receive AAA ratings -- READ THE BOOK!


Sun, 05/22/2011 - 13:14 | 1300132 Confuchius
Confuchius's picture

We say "Leopard does not change spots".

Sun, 05/22/2011 - 10:34 | 1299937 magpie
magpie's picture

Now, who can outsocialize the socialists...

Sun, 05/22/2011 - 10:41 | 1299947 falak pema
falak pema's picture

Oligarchs disguised as socialists...and laughing their butts off as main street buys into the "trickle down" economy paradigm, smoke screen diffused by all including the notational companies like S&P.

Sun, 05/22/2011 - 10:43 | 1299950 IdioTsincracY
IdioTsincracY's picture


Sun, 05/22/2011 - 18:13 | 1300595 sun tzu
sun tzu's picture

Your socialists failed and you conclude that they weren't socialist enough.  Maybe the Nazis failed because they weren't fascist enough. 

There is no hope for you.

Sun, 05/22/2011 - 18:47 | 1300628 sun tzu
sun tzu's picture


Sun, 05/22/2011 - 10:43 | 1299948 IdioTsincracY
IdioTsincracY's picture

Corporations and low-cost labor countries ...

blame them for unemployment ... unless, of course, we all decide to work for $154 a month.

The wonders of 'free'-trade!!

Sun, 05/22/2011 - 11:22 | 1300008 tired1
tired1's picture

In many  countries a good wage is $500/mo but stuff cost much less and things like real estate taxes and infrastructure costs are not born by the local municipality. It's much different from what Americans are used to. This country is being bled dry by all these social costs locally and I don't see any remedy. Spain is screwed because folks have come to rely on govt services which have for decades been sustained by borrowing, I suspect that most of the EU is in the same condition, most of these govt structures have been in place since after WW part II, courtesy of the Allies and the events which evolved from  the World Bank, IMF et al.

Sun, 05/22/2011 - 13:16 | 1300137 Confuchius
Confuchius's picture

You ignore, for reasons you keep hidden, the low cost of living that goes with the $154 per month.

Sun, 05/22/2011 - 15:37 | 1300348 WaterWings
WaterWings's picture


That's when the mass murderers step in.

Sun, 05/22/2011 - 10:37 | 1299942 IdioTsincracY
IdioTsincracY's picture

"...the political regimes who have supported fiscal prudence are one after another falling victim to the general population's dissatisfaction with the gradual elimination of a myriad of socialist policies."

Nice, Tyler ... WTF?!?!?

What would this myriad of socialist policies be? The one fattening the few at the top?!?!

Dude, they are cutting jobs, cutting salaries, cutting pensions,   ... basically further destroying the middle class ...

Socialist policies my a$$!!

Sun, 05/22/2011 - 10:53 | 1299967 falak pema
falak pema's picture

This semantic aggression that is sustained in ZH is amazing. A private central bank in charge of world reserve currency, pegged on oil, a private "supply side" economy, multinational behemoth led, that has built up the Reaganomics mantra for thirty years, falls foul of its own machinations, and makes public the initial MEGA  private debt mountain. On a massive and world wide basis to avoid that the interlinked dominoes fall. Then continues to protect its interests by its monetary printing press. It is NOW called in post 2008 crisis : "Central planned economy" shenanigans. What is this intellectual sleight of hand??? Can anybody believe that FDR/Keynes would act this way...??

This is the most bastardised presentation of feudal power play by private Oligarchs dressed up through their political surrogates as prime examples of public incompetence. We've never seen such an incredible putsch  since Hitler. And a contrarian financial blog buys this??? Because its in 'socialist Europe', how delusional can it get...

Sun, 05/22/2011 - 11:05 | 1299978 Re-Discovery
Re-Discovery's picture

Hitler was a Socialist, Dude.

Sun, 05/22/2011 - 11:47 | 1300029 falak pema
falak pema's picture

So was Julius is according to you Ben Bernanke. So was Henry Ford and his "all colors as long as they are all black" meme, as was his Taylorist production line...very socialist. So was Rockafella and his oil monopoly, that TR broke down... through anti-trust. So what are you saying? Stick a word, a label, like 'socialist', like they did before...called 'heretic', then 'commie', now 'terrorist' and all becomes crystal clear who the bad guy is? Your reasoning is the most shabby piece of intellectual cowardice and self delusion that we see today. Even the 'kamikaze' has more balls than that. They believe in something in their dogma demented minds. They act on it.

What do you believe in that vaguely looks real in this real world ...except negative slogan mongering. And denying other people's aspirations and reality.

If we believe that human experience is humbling in that it shows that pipe dreams are sterile dead ends that often crown, in cruel fashion, sincere endeavor. Then it also shows that past experience can sometimes show the way, even if its humbling to double back. Once we've lost our intolerant hubris it becomes source of new hope. That way today, in all humility, would be to go back to the FDR mould for the USA. And forget about ruling the world and the monetary/economic system on its own. By sharing power with diverse groups with different social economic agenda on a constructive non belligerent basis. Devoid of all paranoia...However, in the new global village of a reduced sized interdependent world. Unique challenge of this age, as it is now very resource constrained.

Voila, at least that is a premise that has an historical reference. It may be a too tall order for current US recalcitrant "we know what's best, know it alls, and won't budge at alls". Amen.

Sun, 05/22/2011 - 12:02 | 1300048 tmosley
tmosley's picture

Uhhh, how was Henry Ford's decision to limit vehicle production in order to improve efficiency "socialism"?

Do you even know what socialism is?  It means making economic decisions centrally, and enforcing them by force.  Those production lines were private property.  He could do anything he wanted to with them, because no-one was forced to buy his vehicles.

Rockefeller's oil monopoly wasn't socialist either.  Anyone was free to open up another oil company and compete if they wanted to.  Problem was that he had driven prices down so much, hardly anyone could compete and still profit.  10% of the market still belonged to other companies.  If he pushed up prices, that 10% would have quickly become 25, then 50, then 90%.

Labels are appropriate when they are applied correctly.  Just because you don't understand the meaning doesn't mean they don't have any.

Sun, 05/22/2011 - 12:13 | 1300062 Fish Gone Bad
Fish Gone Bad's picture

That last paragraph was a scream! 

Labels are appropriate when they are applied correctly.  Just because you don't understand the meaning doesn't mean they don't have any.

I will have to keep that one.

Sun, 05/22/2011 - 12:17 | 1300063 sun tzu
sun tzu's picture


Sun, 05/22/2011 - 12:29 | 1300081 falak pema
falak pema's picture

What you call sociaiism in these crude terms is NOT the social democracy practiced in other countries. Nobody enforces decisions by force in a democracy with efficient republican/parlementarian type decision making structures supported by an independent judicial system. The FED is not socialist. It is feudalist. Do you know the difference?

Anybody who has a dominant position like Rockafella, was in a position to impose his rule, the very essence of 'socialistic' policy. So de facto monopoly private sector play is similar to socialist government market maniplated play, where price discovery is impossible. This debate is going nowhere 'cos you begin with the premise that only the USA/UK knows what "free markets" are. The historical reality is that the USA since 1945, as dominant economy, has NEVER allowed market forces to play in key sectors. It's been power play designed to fit its OWN agenda and its corporate world leaders. See that Perkins presentation about OIL. It says it all. You are not defining what real international market segment corresponds to a real free market, apart for consumer products...and even there.... like Google there are evident dominant positions.

As you are a PM bug, all your posts indicate that you do not believe that this market exists in your field of specialty. WS is NOT a free market. So this is not about theoretical concepts, its about the real world and how it functions. Your refusal to leave your theoretical world is your own delusion. As far as the rest of the world is concerned they are moving away from this flawed, manipulated, semantically deformed world that you defend in theory called the US economy; and that you crib about as a PM trader, who yells that the ETF main market and the margin hikes are distorting real PM pricing. You are hanging yourself on that very chord provided by your own words when you defend the US as a free market system. It's a mirage in the reality of today's world. Admit it and stop treating other people like they were economic retards. Incapable of understanding the miracle that is the USA.

Sun, 05/22/2011 - 13:01 | 1300115 Sean7k
Sean7k's picture

Could you name the country?

Describe the police function and whether it is controlled by the ruling party? Perhaps describe how the parlimentary factions refuse to collect taxes to support legislation (force)?

Who the independent judiciary is? If they are accountable to the governing structure, paid by the governing structure, housed by the governing structure, adjudicating law according to the governing structure?

The FED is feudalist as is every central government. In feudalism, the landed collected rents and at times, free labor as well. Every government that collects property taxes is doing the same. If the bankers hold the debt, the rents are a pass through- especially if they have worked to create the debt.

Monompolies are only similar to socialism when they are government sponsored and allowed to use the police power of the state to protect their position. Monopolies are free market structures that benefit the consumer if they result in lower prices. As long as the market allows free entry, monopolies are subject to market pricing discipline.

The USA has NEVER allowed free market mechanisms to play in key industries. (By the way, FDR was one of the worst). Banking has always been allowed to suspend specie payments, they have always been given favorable terms. Tariffs have been erected and duties collected. 


Sun, 05/22/2011 - 13:13 | 1300125 falak pema
falak pema's picture

Utopia. By definition a monopoly has NO competition. So new players in these markets never even get a peek in. That's why TR broke up Standard oil and those other steel, rail corporations. 

To get close to utopia, you need strong regulation. By government, who are not players. I know... pipe dream. So Utopia..has to be the answer to your question...lets all become mutants!

Sun, 05/22/2011 - 13:27 | 1300152 Sean7k
Sean7k's picture

Please read my response below. Strong regulation has always been used to protect monopoly positions, though the name was changed to cartels. Since you lionize FDR so much, please read about his development of cartels during the Great Depression.

As all regulation is written by the government, often in administrative committees who rely on private lobbyists for input and even the structure of the regulation itself, it is useless to depend on regulation. 

Sun, 05/22/2011 - 13:13 | 1300135 Eally Ucked
Eally Ucked's picture

"Monopolies are free market structures that benefit the consumer if they result in lower prices. As long as the market allows free entry, monopolies are subject to market pricing discipline." Can you give us few examples? If they are monopolies how the free market works?

Sun, 05/22/2011 - 13:26 | 1300146 Sean7k
Sean7k's picture

If a company holds a dominant position in a market and maintains a price so low that other entrepreneurs are reluctant to enter, consumers are getting the product they want at a good price. If someone could provide it cheaper they would. 

If the monopoly decides to raise the price, then the consumer can choose to not buy. New producers can enter the market and the price return to equilibrium. 

However, if the monopoly is protected by government through a police power (eg troops to break up unions, legal hurdles to create barriers to entry, etc) which we commonly associate with monopoly- then it is no longer subject to market forces. 

You can read a further treatment in Rothbard's "Man. Economy and the State". 

Sun, 05/22/2011 - 13:31 | 1300155 Eally Ucked
Eally Ucked's picture

What happens when monopoly has so much strength that it can lower prices at loss to finish small competitors and then raise prices? Are we living in this world or in some ideal system?

Sun, 05/22/2011 - 13:43 | 1300176 Sean7k
Sean7k's picture

There would be a transition period where new competitors would enter the market. People would choose whether to continue purchasing the product or not. Additionally, substitutes may be found. 

The market is not perfect regulator of behavior. There would always be those that attempt to profit excessively, but the market allows for a correction to take place without the ability to influence the results through governmental interference. An influence that tends to favor the monopolist. 

Sun, 05/22/2011 - 14:04 | 1300202 Eally Ucked
Eally Ucked's picture

Why don't you call for abolition of mergers and acquisitions? Lets be real!

Sun, 05/22/2011 - 14:28 | 1300231 Sean7k
Sean7k's picture

Why would a free market abolish mergers and acquisitions? 

Sun, 05/22/2011 - 15:56 | 1300374 Eally Ucked
Eally Ucked's picture

Just for one reason - creating monopolies which prevent any competition you're talking about. 

Sun, 05/22/2011 - 16:15 | 1300399 Sean7k
Sean7k's picture

Competition is an action, not a goal. You have tagged monopolies to be "bad" without a valid reason. As a consumer, I care not where I get the best price. The freedom to compete is what is important. Monopolies do not endanger competition unless they are protected by the state.

Sun, 05/22/2011 - 17:30 | 1300514 falak pema
falak pema's picture

Monopoly = no competition. There is a problem in your semantics. 

Sun, 05/22/2011 - 18:03 | 1300569 Sean7k
Sean7k's picture

No problem in mine, but then, I understand economics. Monopoly is one seller of a good in a marketplace. As long as sellers are free to enter the market, the opportunity for competition exists. 

Please take the time to study economics, rather than just accept what the mainstream education system has taught you.


Sun, 05/22/2011 - 18:37 | 1300626 falak pema
falak pema's picture

a monopoly means nobody else in the market. Very difficult to come in in reality; barriers to entry are huge. Example : Microsoft in PCs. I'm not talking theory. This is reality! Joan Robinson taught it at Cambridge : dominant positions and market barriers to entry. She should have got a Nobel but she was labelled as 'leftist' (which she was politically) by her contemporaries. So its now even enshrined in antitrust laws both in USA and EU.

Sun, 05/22/2011 - 19:12 | 1300689 Sean7k
Sean7k's picture

You miss the point. There is nothing wrong with a monopoly unless it holds the power to coerce through the state. As long as consumers can choose, the monopoly is a captive of market discipline. 

Example, Microsoft meets Linux, meets Apple, meets a new IBM. Microsoft is no longer the dominant player in the market. Dominant positions cannot create complete barriers to entry unless the state is involved. 

If Ms Robinson can't figure that out, she can't be much of a professor. I'm not talking theory either, it is reality. You should have caught the inconsistencies when you brought up "anti-trust laws" enshrining barriers to entry. 

It is your desire to believe a set of ideas that causes you to interpret the actions of the state in the manner you do. If you didn't, you would have to question the nature of the government itself. Just as Kings were called gods on earth to legitimize their rule, the myth of the rule of law is used to legitimize the abuse of power by a small elite. You want to believe it can be determinate and fair- your faith and emotion betray your rational mind. 

Sun, 05/22/2011 - 21:08 | 1300888 nmewn
nmewn's picture

I have to say, well done sir!

Sun, 05/22/2011 - 23:05 | 1301044 Sean7k
Sean7k's picture

Thanks Nmewn. Hope you had a great weekend.


Mon, 05/23/2011 - 06:28 | 1301313 nmewn
nmewn's picture

I did.

I got a little reading done and some chores done around here that needed doing after my recent medical event, though my dexterity isn't back to where it was.

Again I salute you, my patience isn't what it used to be ;-) 

Sun, 05/22/2011 - 12:30 | 1300083 Eally Ucked
Eally Ucked's picture

I don't think you understand what socialism is, statement like "It means making economic decisions centrally, and enforcing them by force" is absolute falacy, maybe you're talking about communism.

Real socialism is about balance between interests of group in posession of capital and THE REST. Seems to me that many times you voiced your opposition to the power of Bankers and Corporate Clique so probably you are socialist. Of course the boundaries between ideologies are now so distorted that it's very hard to distinguish one from another.

Sun, 05/22/2011 - 12:43 | 1300094 Bob
Bob's picture

tm, good nitpicking on a single inapt analogy.  You serve the larger argument well in that.  ;)

What makes it such an important issue, imo, is that all the socialism-mongering will completely discredit the language and the people who misuse it, leading us to an especially unfortunate Boy Who Cried Wolf lesson when the socialists really come en mass . . . a day which becomes ever more likely as we continue to collectively misperceive the problems that lead us to such an armageddon for capitalism (or whatever goes by that name.) 

Sun, 05/22/2011 - 11:52 | 1300039 Eternal Student
Eternal Student's picture

Which ended up Fascist. Corporate + Political control of the Country.

What we have in the U.S. is Corporate + Political control brought to us by the Laissez faire politics from the Reagan revolution passed down to today. Ironic, isn't it?

Perhaps all roads lead to Fascism when you have Banksters in charge and out of control.

And make no mistake. The root of the problem is the Banksters. Everything else is a diversion from that.


Sun, 05/22/2011 - 12:10 | 1300052 sun tzu
sun tzu's picture

Laissez Faire? What the hell are those 2 million federal government workers doing? What is the FDIC, SEC, OTS, OCC, EPA, DOI, FHA, GSE, FHLB, IRS and the other thousand federal regulatory agencies doing?

You really need to go back to grade school and stay there

Sun, 05/22/2011 - 12:50 | 1300106 Eternal Student
Eternal Student's picture

Ahh, you are all knowing, I see. But I guess you kind of missed the copiously published fact that the regulatory agencies haven't been doing much. Kind of hard to miss, since it's been a key part of the problem. Or are you seriously suggesting that the SEC has been really on the ball?

And do explain how the repeal of Glass-Steagall has improved things. This should be easy for someone who claims to be quite knowledgeable. I'm looking forward to the answers to these questions. But why do I suspect you'll dodge them?

Sun, 05/22/2011 - 12:58 | 1300110 RockyRacoon
RockyRacoon's picture

Hell, I can't even grow tomatoes and trade or sell them with my neighbors without falling afoul of some local regulation or tax.   Oh sure, I might provide them with a product that makes somebody sick, but that's what courts are for, not to regulate the production and sale beforehand.   Preemptive law is not law, it's suppression of free trade.

Sun, 05/22/2011 - 13:32 | 1300154 Eternal Student
Eternal Student's picture

You're equating yourself with Big Business. The goal of the big companies has been to eliminate the small producer. You see this in the food supply chain especially, from dairy to chickens. Heck, we now even have "cow cops" busting small dairymen for selling raw milk to individuals.

At the same time, Big Business is enjoying less regulatory enforcement. Heck, the executives can't even be touched for hiring illegals, even when the "show raids" happen. To say nothing of Wall Street.

You grew up in a more egalitarian time. Don't confuse that with today. Laissez-Faire is not intended for you.

Wed, 05/25/2011 - 00:38 | 1307950 RockyRacoon
RockyRacoon's picture

Family Facing $4 Million in Fines for Selling Bunnies - Big Government
Sun, 05/22/2011 - 12:28 | 1300077 jm
jm's picture

The root of the problem is voter unwillingness to give up their handouts in exchange for responsible living.

Sun, 05/22/2011 - 12:54 | 1300111 Eternal Student
Eternal Student's picture

I'll have to disagree there. Even when voters have voted out the previous parties, the newly elected toe the Bankers line. This has been going on for decades, and was especially noticeable with some of the Tea party representatives lately.

Voters have little impact today. It's the Bankers who are running the show, regardless of how, or whether, people vote.

Sun, 05/22/2011 - 13:05 | 1300126 jm
jm's picture

You could well be right, but notice that bank"sters" gave loans to people and businesses that cany't service them.

If there is no bank recapitalization, loan growth is crippled.  Businesses that run fine as long as they can roll some of their debt fizzle.  They makes even more businesses incapable of servicing/rolling their debt.  Beofre you know it, you have unemployment that looks a lot worse than the 17% U6. 

Banks with no bailouts will also kick squatters out.  One could argue that the bailouts help banks directly, but their purpose is to indirectly give voters a reprieve.

If we hadn't recapitalized banks, people wouldn't be complaining about a weak dollar.  They would be complaining because a loaf of bread costs a quarter, but they don't have a dime.

Bigger picture, many societies are stuck in a largely inscrutible interlocking web of gimmies. Banks get bailouts.  Households get welfare. Businesses get to be tax evaders.  This is a social choice that voters are cool with because they understand the handout but don't get the implicit costs.     


Sun, 05/22/2011 - 15:43 | 1300351 WaterWings
WaterWings's picture

Why can't banks fail for making bad loans? We need some good, old-fashioned failure to get people motivated.

One could argue that the bailouts help banks directly, but their purpose is to indirectly give voters a reprieve.

For a HUGE fee. When do we get our gravity back?

Sun, 05/22/2011 - 15:47 | 1300361 jm
jm's picture

I think they should fail. 

Just be careful what you wish for cause you just might get it.

Sun, 05/22/2011 - 15:50 | 1300366 WaterWings
WaterWings's picture



Sun, 05/22/2011 - 13:14 | 1300131 johnnynaps
johnnynaps's picture

Yep, you're right. It is a sham that the banksters and military industrial complex refuse to not accept their handouts! EVERYONE has received a handout. If you don't believe can give up your manipulated 401k gains you have seen over the last 2 years! Some handouts are just more lucrative than others. And some, are more deserving indeed.

Sun, 05/22/2011 - 13:17 | 1300140 jm
jm's picture

This is not easy to fix because it is so much easier for voters to live in a fantasy of injured innocence and blame someone else's handout as the fundamental problem. 

This is the truth people can't handle.  So they fall back conspiracy theories or hating stuff they don't understand, or blaming the Jews or the Muslims or the Rothschild bogey man...


Sun, 05/22/2011 - 15:48 | 1300360 WaterWings
WaterWings's picture

So they fall back conspiracy theories or hating stuff they don't understand, or blaming the Jews or the Muslims or the Rothschild bogey man...

I hear this kind of lazy attack from people that don't understand the long-run of fractional reserve banking. They typically consider bailouts the lesser of two evils. Why choose evil at all? You need to be more specific - because a lot of people are labelled "racist" and "intolerant" for not aligning themselves with the status quo. 

Sun, 05/22/2011 - 16:04 | 1300390 jm
jm's picture

I couldn't care less about fractional reserve banking and no one else should either.  If you have an obligation (a loan) pay it back, if you can't, man up and don't be a pussy when you default. 

If banks issued loans of no quality then their creditors should get the assets and run the show.

Newsflash:  Blaming Jews, Muslims, and Rothschilds is so common among the dregs that it isn't remotely funny anymore. 

Sun, 05/22/2011 - 16:31 | 1300424 WaterWings
WaterWings's picture

I couldn't care less about fractional reserve banking and no one else should either.

Wow. I do appreciate, however, that with your contributions ZeroHedge cannot be considered a monoculture.

Sun, 05/22/2011 - 16:57 | 1300460 jm
jm's picture



If people want to devote time to this, cool enough.  You won't find me concerned with it because it has no bearing on my obligations.

It is never cool to blame someone simply for who they are, as opposed to what they do.  


Sun, 05/22/2011 - 13:17 | 1300139 Confuchius
Confuchius's picture

What, exactly, do you know about Hitler, and the banksters that put him in power and gave him his "fuel" (money).

Sun, 05/22/2011 - 14:38 | 1300247 Eternal Student
Eternal Student's picture

I haven't looked much at Hitler; my question was more directed towards the modern day control of corporations by bankers, since it's the bankers which provide access to money.

Sun, 05/22/2011 - 19:43 | 1300733 fxrxexexdxoxmx
fxrxexexdxoxmx's picture



political party Hitler led. It was short for Nationalsozialistische Deutsche Arbeiterpartei (or National Socialist German Worker's Party).

I can see how one would not associate socialism with NAZI .  /s

Sun, 05/22/2011 - 20:34 | 1300835 Eternal Student
Eternal Student's picture

I think we're all well aware of where the term came from. But equating what it calls itself with how it acts is absolutely silly. It basically amounts to believing what a Politician tells you.

The modern equivalent example would be equating China's ruling party with Communism. It's far closer to Fascism.

Sun, 05/22/2011 - 11:13 | 1299998 Bob
Bob's picture


It's yankee ignorance that clearly hasn't been remedied by ambitious business school education. Of course, there's also the decades of mindless "cold war" propaganda pumped into the heads of generations of proud American patriots that the Becks of the world have been exploiting and the internet echo chambers have only further amplified as putative socio-political sophistication. Sure it's insane . . . but it's great cover for the continued plunder.  Bring on the austerity, bitches!

Sun, 05/22/2011 - 12:13 | 1300059 sun tzu
sun tzu's picture

Of course your certainly not ignorant and are above all of those people you put down. Hell, you're so smart you might be able to join the elites of the world. I hear the IMF needs a new chief.

Sun, 05/22/2011 - 12:44 | 1300096 ElvisDog
ElvisDog's picture

Head of the IMF would be one sweet job. The unlimited expense accounts, the parties, the beautiful hookers provided to you by those who want a bailout.

Sun, 05/22/2011 - 11:28 | 1300013 Sean7k
Sean7k's picture

Socialism is incapable of success as it contains no pricing mechanism. This was well presented by Mises in 1920. 

The only solution for Spain or any of us is the elimination of central government. Machiavelli was prescient when he decried the weakness of the centralization of power- you only need to conquer a single center. When power is decentralized, it is more difficult to control. 

When power is vested in the individual up through various forms of local, county and state consulting factions, with power flowing from the bottom to the top, it is near impossible for a small elite to takeover and control the market.

Governments are incapable of controlling large masses of people. It depends on the people following the law. Once people decide to actively work against the government through not paying taxes, using alternative currencies, creating black and barter markets, refusing to serve in the military and backing it up with armed self defense policies- the government is dead in the water. 

There is no need to be in violent rebellion to your government, you merely have to choose to not follow the law. When practiced by enough of the population- centralized power structures will fall.

Sun, 05/22/2011 - 11:52 | 1300037 falak pema
falak pema's picture

Sean : who says market economies are out? For christ's sake an Oligopoly is the worst example of a market economy. Let's make market economy possible; but it won't be Ayn Rand type. we are now in a global world and the 'international labour arbitrage' is a redoubtable leveler of social aspirations in developed economies. THAT  has to be fitted in to the new economic paradigm. I don't know how as there is no international agreement today. But it will come...the hard way.

Sun, 05/22/2011 - 12:38 | 1300051 Sean7k
Sean7k's picture

Oligapolies are not free market economies. There are no free market economies. The US came closest in the last half of the 1800's, especially 1870 through 1890.

Ayn Rand is a poor example. Rothbard's Anarcho- Capitalism is a much better choice, however there has been additional work done on these questions- I recommend. "Anarchy and the Law" by Stringham.

The world has always been global. The opportunity to use it against the global community is new, but that doesn't mean it has power outside that given it by the people. You want to depend on law, but law is arbitrary. It is infinitely pliable, therefore infinitely manipulable by those that wish to concentrate power in the hands of a few Elites.

We don't need a new economic paradigm. The free market is old, proven and the greatest bastion for liberty.

Sun, 05/22/2011 - 12:43 | 1300095 falak pema
falak pema's picture

Without a political framework a free market has NEVER existed. Power is the source of all civilization. Markets DO NOT exist in a power vacuum. Never in human history. The day we have no need for political structures we won't be humans any more. But mutants of a different capability. Nice pipe dream. I'll buy into it any day!

Sun, 05/22/2011 - 13:10 | 1300128 Sean7k
Sean7k's picture

You need to study the early Pennslyvania colony. William Penn attempted to re-create government and a system of rents, but the longer the inhabitants went without it, the more they resisted these types of control. The Quakers were revolutionary in that regard. 

The early U.S. west has many examples as well. 

The elimination of central government is not a power vacuum, it is decentralization and diminuation to the point where it is exercised by all. We were human long before political structures (please reference the Xeer). 

Why you see humans as being incapable of making simple decisions and coming to common solutions on the structure of society outside a police power is a severe pessimisim. 

Sun, 05/22/2011 - 13:14 | 1300136 falak pema
falak pema's picture

decentralisation leads to smaller power structures that tend to coagulate...Utopia only lasts so long...

Sun, 05/22/2011 - 13:39 | 1300164 Sean7k
Sean7k's picture

Free markets and anarchy are not a utopia. Never have been and never would be. They are merely preferable to the use of government which allows the concentration of power into the hands of an elite for their own benefit. 

This is my biggest beef with proponents of government: you expect nothing from government and perfection from Anarcho-Capitalism. You are willing to look past the depredations of the oligarchs, or merely complain, but any other alternative must be perfect in conception and reality. 

This would appear to be the defense of a true statist. One who argues to create division to protect the staus quo, rather than work toward better solutions. There are no perfect solutions as we are an inperfect beast. So, it is only rational to work to create the next best system of organization that prefers liberty over control by a small minority. 

Sun, 05/22/2011 - 13:27 | 1300153 Confuchius
Confuchius's picture



and wrong.

The state has grown like a cancer and has now made itself irrelevant.

There is no need whatsoever for a "grand council" of criminal mental defectives (congress, parliament, senates.) since we have passed the horse & cart age.

The people can make their wishes known and have no need whatsoever for any so-called "elections" of obscene, immoral, petty criminals with their hands out to "lobbyists" and mega-corporations for handouts.

Time to shit-can the whole lot and start over without any of that clap-trap.

Sun, 05/22/2011 - 15:35 | 1300344 Imminent Collapse
Imminent Collapse's picture

Step one:  stop politicians from being bought.  Election reform is required.  So what does the US Supreme Court do?  Gives corporations the right to contribute to campaigns.  Wrong!  What a bunch of douche bags.

Sun, 05/22/2011 - 11:25 | 1300016 sellstop
sellstop's picture

You are right, Falak.

I am amazed at the ability of a whole society to have such a mindset as to believe in the gospel that what is good for business is good for the world.

Who is the world?

"What is "good" for business is what business believes is good for business."

And what is good for the world is whatever business believes is good for the world. And business thinks that what is good for the world:

 For business to MAKE MONEY. And business is about using money to make more money. By that simple fact money becomes concentrated.

But, the sheeple can't seem to understand that it is their responsibility to place rules on society and business to make the wealth/money recirculate so that everyone has a chance to share in the prosperity. I didn't say take the  money from those that have it. I said make rules that cause the money to be redistributed in the context of a free enterprise capitilist system.

Rules. Taxes. Public expenditures on education and health care. Librarys, streets, public transit. This is the infrastructure that we all MUST  pay for and that business uses to make their money.

But, don't get me started!



Sun, 05/22/2011 - 13:33 | 1300157 Confuchius
Confuchius's picture

It seems TEPCO was only interested in "making money" with their reactors. And how has that turned out?

Can you picture a large ship run by "popular elections" voted on by the passengers?

A 747 heading around the world with the crew chosen by "popular vote" of the cretinous passengers?

Sun, 05/22/2011 - 12:25 | 1300073 sun tzu
sun tzu's picture

Can anybody believe that FDR/Keynes would act this way...??


We're not supposed to believe that DFR/Keynes would bail out the banksters, but Reagan would? Which banks were bailed out by Reagan? How many were bailed out during the S&L crisis? Those banks were all allowed to fail and bankers were sent to prison. This "private" central bank was created by the government. They certainly aren't independent, but work hand in hand with the politicans to plunder the world. So yes, it is central control and planning of the economy aka socialism. Without so much power concentrated in NYC, DC, and London, this could not happen. 

You are full of ignorance, lies, and bullshit.

Sun, 05/22/2011 - 14:18 | 1300219 linrom
linrom's picture

I am quite impressed with the way you argue your points here.

Sun, 05/22/2011 - 11:01 | 1299971 Re-Discovery
Re-Discovery's picture

Yes, you get it!!  That's what socialists policies are. 

Less of everything apportined to everybody. Decided by committee with equal democratic voting.

Of course, some Everybody's are more equal than others.

Sun, 05/22/2011 - 11:10 | 1299995 Ricky Bobby
Ricky Bobby's picture


Sun, 05/22/2011 - 12:39 | 1300091 ElvisDog
ElvisDog's picture

"Dude, they are cutting jobs, cutting salaries, cutting pensions,   ... basically further destroying the middle class"

And yet, the fundamental question remains how do you pay for all these goodies going foward? The Spanish economy is not going to grow its way out of things. The usual alternative is to tax the rich and corporations, but particularly in Europe where freedom of movement is a right of those in the E.U., the rich and the corporations will simply move somewhere else. So, once again, how do you pay for a long term structural deficit used to pay social benefits???

Sun, 05/22/2011 - 13:30 | 1300151 johnnynaps
johnnynaps's picture

It such a shame that any populace fears that the rich will move out. THEY ARE THE PROBLEM! Let them fucking leave! Where are they going to go anyway? This shit-storm is of global proportions! 

The EU is toast. Without the EU and US China is going to implode. Japan has already been nuked and the land down under survives on Japan and China. Who the hell in their right mind would want to live in India? And, there are 66 dollar-pegged 3rd world countries that will feel the pain 10x worse than the US. That leaves a few South America countries, some in Africa and the poles! 


Sun, 05/22/2011 - 13:16 | 1300138 holmes
holmes's picture


Stretch your timeline out a few years. These socialist policies have been in place for decades, and have bankrupted Europe, UK USA etc. Even now, when the socialists in power know the game is up they continue to lie about meeting budgets, paint rosy scenarios, hide additional off balance sheet debt, all to kick the can down the road a little longer

A good example is big labor boss Richard Trumka who stated "“We don’t have a deficit problem. Every economist in the country knows that.” yeah right. The socialists in Europe and the Lib democrats in the USA helped by the establishment Republicans are sending us right over the cliff.

Sun, 05/22/2011 - 18:47 | 1300648 sun tzu
sun tzu's picture

Socialists have been in charge in Spain since 2004. They fail. The socialists then blame capitalism for their failure.

Why are the socialists cutting jobs? Because they're broke and can't afford to pay for more paper pushers who do nothing all day

Sun, 05/22/2011 - 10:39 | 1299943 RobotTrader
RobotTrader's picture

If stocks don't melt down on Monday on this news, then the bears could be in huge trouble.  I mean, how bad does it have to get in Europe to even dent the S & P by more than 10%???

And don't even get me started on the retail stocks like Foot Locker, Petsmart, and the REITs like Vornado and Simon Property.

Sun, 05/22/2011 - 10:55 | 1299968 Texas Gunslinger
Texas Gunslinger's picture





Sun, 05/22/2011 - 13:02 | 1300121 RockyRacoon
RockyRacoon's picture

Ether might be a good choice for you, actually.

Sun, 05/22/2011 - 16:36 | 1300426 WaterWings
WaterWings's picture

And go to Vegas with all his clownbux.

Sun, 05/22/2011 - 13:38 | 1300167 takinthehighway
takinthehighway's picture

If you require ether to get started, you should either see a mechanic or a qualified mental health professional.

Sun, 05/22/2011 - 11:10 | 1299991 sellstop
sellstop's picture

The proliferation of short ETFs has made it easy to be short the indexes. This has the perverse effect of making a serious decline less inevitable. When many can get short at the drop of a hat, there are too many on the same side of the boat too soon. The shorts have gotten whipsawed over the last couple months or so, and now the real decline MAY begin. When the shorts are off balance, so to speak.

I think this ease of getting short is why the US markets have not declined more despite all of the bad news that is brewing.

And market turns are a "process", not an event. There is a process of "buying the dips" that occurs late in every bull market and then gradually the dipshits notice that they haven't made any money, or their "good buys" are going bad. After they double up and still lose money, then the market gets weak in a hurry.

But, there are little dip buyers, and big dip buyers.....

And then there are rally sellers.

And then there is the sell everything at any cost dip.

But I digress...


Sun, 05/22/2011 - 11:14 | 1299996 sellstop
sellstop's picture


I can't remember the markets seeming so coiled. And they seem soft as mush. No buying interest in the banks. Low buying in the commodity stocks.

Does it really seem probable that the indexes go hard  in an up direction from here??


Sun, 05/22/2011 - 10:41 | 1299945 Dapper Dan
Dapper Dan's picture

It won't matter Monday, we have a new crisis now "the Yemeni hostage crisis of 2011"

Source:  CNN,   U.S., UK and European envoys trapped in Yemen siege.


Sun, 05/22/2011 - 10:39 | 1299949 Re-Discovery
Re-Discovery's picture

"Chicken" Wing Govts . . .Left Wing Gov'ts . . .  Right Wing Gov'ts . . .  thhheeeennnnn

Totalitarian Governments. 

The people will start this thing, then coalesce into two rival factions, and finally one side will end up eating the other.


Sun, 05/22/2011 - 12:34 | 1300085 sun tzu
sun tzu's picture

power corrupts

absolute power corrupts absolutely


Yet the sheeple still want to give more power to the imperial governments. They think that a big government will provide for them and protect them. They think that writing 50,000 pages of laws and regulations will protect them. In reality, the big government is easily controlled by corporations and powerful figures. Some benefits go to the needy, but the majority will go to the corporations through contract. The end result is that we get wars, carbon trading, $10 mercury-filled lightbulbs and other crap forced upon us that only benefit the corporations and PTB. We got Sarbanes-Oxley in 2002. Not one Wall Street crook has been charged under the 25,000 pages of regulations resulting from the law. It did create alot of jobs for lawyers, accountants, and bureacrats though. 

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