Chopshop's blog

Ever wonder why you suck at investing / trading / poker ? Ever wonder why your fleeting relationships / government / humanity continue to repeat the same mistakes over and over again, in a humourous refusal to heed Rita Mae Brown's "The definition of insanity is...," ? Iain McGilchrist's "The Master and his Emissary" doesn't solve today's mortgage meltdown, currency crisis, cyber wars, regulatory capture or dearth of leadership (and certainly won't help you 'breed a unicorn that defecates Kruggerands'), but it does provide an actionable blueprint for how not to repeat them (ever again).

5-min VIX Charts ~ Intra-day Bottom & Close

The US Gov't can show 'profits' ad infinitum by endlessly EFT'ing money from the Treasury's savings account (at JPM) to the Fed's brokerage account (at GSCO) and vice versa. Or better yet, the Fed can pay the Treasury several times more by printing trillions of US dollars, buying companies on Wall Street, and achieving small dividends.

Thus, the so-called "profits" are NOT evidence that the US economy is doing well. Far from it, these profits are proof that the printers are working long hours. Moreover, the state's Dept. of Moral Hazard has taken upon itself Robert Wadlow-sized liabilities, which call into question the solvency of the entire American financial system.

In an often defiant tone, President Obama insisted that as far as he is concerned the era of “Big Government” is not only still here to stay, but needs to be dramatically expanded -- even if some recent elections and public opinion polls suggest that a growing number of Americans are leery of moving further in this direction.

In the face of Obama's determination to push for more “change” down the path of expanding political paternalism, one imagines what Stinky BO might have said in the State of the Union address if he had chosen to propose the type of (Austrian Liquidity Theory) change that really would have meant greater freedom and opportunity for the American people.

(courtesy of Northwood University & the Mises Institute) What he could have said might have been something like the following:

In a theme everyone ought expect hear replayed ad nauseam for the next week, the infallible genii at Harvard's Kennedy School tell us (yet, again) that the US will be the target of an Al-Qaida WMD attack by 2013. (1) What stinky BO will announce during tonight's SOTU, (2) the WMD Commission's Report Card & Full Report and (3) KSG's latest ~ "Al Qaeda WMD Threat - Hype or Reality"

~ Information Technology, Social Media & the Structural Integrity of the Internet in the 21st Century ~ after China got caught with its hand in Google's POP3 Port 995 cookie jar, US Secretary of State Hillary Clinton fired THE first salvo in what will likely prove itself to be the terrain of WW III ~ the digital battlefield. This highlight is intended to set the stage for a short-series that will delve deeper into the multivariate 'strategery' of the issue du jour ~ China, Computers & Freedom in the 21st Century.

It's been about 6 months since we’ve had an extensive discussion of China’s solar market, so let's catch up on the major developments in the space. Before detailing 5 key points that will help crash the Crude Oil market in 2010 ~ let’s kick-off with an excellent video created by ClimateWorks ....

The SEC / DoJ rewrite witness immunity rules 'to protect investors and the integrity of markets' ... yet, just one week after unilaterally 'updating' said rules, Hank Greenberg, AIG, Warren Buffett, Berkshire and Gen Re are each given a cursory slap on the wrist after the SEC charges General Re for its role in AIG and PRU accounting frauds. Protecting the public from egregiously rampant, market manipulating fraud sounds great; essentially letting Hank Greenberg, AIG, Buffett, Berkshire and Gen Re off the hook for egregiously rampant fraud doesn't look so hot.

According to the SEC’s complaint against Gen Re, filed in U.S. District Court for the Southern District of New York, a foreign subsidiary of Gen Re entered into two sham “reinsurance” transactions with AIG in 2000 to improperly allow AIG to reverse the declining reserve trend and falsely report additions to both loss reserves and premiums written. Senior officials at Gen Re helped AIG structure the two sham transactions. The contracts show reinsurance transactions that appeared to transfer risk to AIG, but the transactions did not transfer risk.

1) Data Stream Waves, from Jim Sogi ~ 2) How Music 'Moves' Us: Listeners' Brains Second-Guess the Composer ~ 3) Scientists Map Brain Pathway for Vocal Learning ~ 4) New Computer Vision System for the Analysis of Human Behavior ~ 5) Neural Thermostat Keeps Brain Running Efficiently

This paper considers the potential liquidity risks related to interoperability ~ the issue at the center of the current multi-jurisdictional regulatory review that has temporarily suspended progress toward increased competition in equity clearing. It discusses several options regulators and CCPs could consider to mitigate the systemic risks that could be triggered from liquidity risks in multi-CCP links, and also presents options to minimise the credit risk to CCPs arising from the failure of an inter-operating CCP.

The United States Commodity Futures Trading Commission (CFTC) will hold a public meeting at 1:00 pm EST on Thursday, January 14, 2010, to consider issuance of a proposed rule on energy position limits and hedge exemptions on regulated futures exchanges, derivatives transaction execution facilities and electronic trading facilities. Watch a live broadcast of the meeting via webcast on www.cftc.gov.

- New Study Analyzes The Bill’s 200-Plus Pages Covering Derivatives, Outlines Potential Industry Impact And Gives A Timeline Leading To US Senate Passage
- Says New Competition Lies Ahead For Dominant Major Dealers From New Group Of Smaller, Nimble Tech-Savvy Dealers

excerpted from The Stamford Review, 2009: Volume Two, "Mortgages, Finance Markets, and the Imperative of Growth" by Hugh Kelly

A healthy smattering of today's "news", fit for digital consumption.