ETC

Five Hours Later NASDARK Speaks: Twas But A "Glitch"

  • NASDAQ SAYS WILL WORK WITH OTHER EXCHANGES ON `GLITCH'
  • NASDAQ STATEMENT SAYS 'TECHNICAL ISSUES RESOLVED'
  • NASDAQ SAYS TECHNICAL ISSUES WERE RESOLVED IN FIRST 3O MINUTES
  • NASDAQ SAYS IT COORDINATED WITH OTHER EXCHANGES FOR REOPENING
  • NASDAQ SAYS THAT PRICE QUOTES WEREN'T BEING DISSEMINATED BY SIP
  • NASDAQ SAYS BALANCE OF TRADING WAS DAY WAS FINISHED IN NORMAL COURSE
  • NASDAQ SAYS IT SUPPORTS ANY STEPS NEEDED TO ENHANCE PLATFORM

The Grand Experiment: Offloading Risk Onto The State

From the historical perspective, concentrating virtually all systemic risk into the state is a Grand Experiment. Cheap, abundant oil, expanding working-age populations and rapidly increasing productivity conjured the illusion that the state was large enough and powerful enough to absorb infinite risk with no real consequence. The problem is the state's ability to tax/print/borrow money to cover payouts and losses is not infinite. Having transferred virtually all systemic risks to the state, we presume the state is so large and powerful that a virtually limitless amount of risk can be piled onto the state with no consequences. Offloading risk onto the state does not make the risk vanish; it simply concentrates the risk of collapse into the state itself.

Guest Post: Get Ready For The Death Of The Petrodollar

Even after seven years of writing macroeconomic analysis and bearing witness to astonishing displays of financial and political stupidity by more “skeptics” than we can count, it never ceases to amaze us the amount of blind faith average Americans place in the strength of the U.S. dollar. One could explain in vast categorical detail the history of fiat currencies, the inevitable destruction caused by inflationary printing and the conundrum caused when any country decides to monetize its own debt just to stay afloat - often, to no avail. The dollar is no more invincible than any other fiat currency in history. In some ways, it is actually far weaker than any that came before. The dollar is entirely reliant on its own world reserve status in order to hold its value on the global market.

Private Banker: "Is There Any Good News?"

“Is there any good news?”

You bet.

The good news is that this fraudulent system of unchecked, unbacked paper currency is finally coming to an end.

As Its Currency Collapses, India Doubles Down On Big Brother Surveillance

What’s a clueless government trying to micromanage the affairs of over a billion people supposed to do when the wheels start coming off the wagon? If you’re India, you blame the country’s financial and societal woes on the buying of gold and attempt to prevent people from purchasing it. When that doesn’t work, and your currency continues to collapse, then what? Well, you decide to double down on a surveillance state. That’s precisely what the enlightened government bureaucrats at India’s Ministry of Home Affairs (MHA) have decided to do.

How Phil Falcone Won The Battle Against Goldman, But Lost The War (Or How Not To Manipulate Bonds)

As part of the SEC's consent order with Harbinger's Phil Falcone, we learned that in addition to the previously well-known stuff Falcone was engaging in (using the fund as his taxpaying piggybank, giving preferential gating terms to "friends and family", etc), perhaps what really scuttled the once legendary hedge fund manager is what ended up being an outright war with Goldman, when back in 2006 Harbinger tried to not only take the other side of a short bet put on by Goldman, but literally squeezed Goldman and its clients into absolutely misery with the result millions in profit to Falcone and unknown losses to Goldie. And as one knows, you never fight Goldman and win, without ultimately losing everything.

The Bubble Watcher-In-Chief Speaks: "No More Bubbles"

We have to turn the page on the bubble-and-bust mentality that created this mess,” President Obama stated authoritatively in his weekend radio address... but do not get too excited by the possibility of a real end to the Keynesian experiment and a return to 'free' markets for the President, in his oh-so-not-trying-to-start-a-class-warfare-battle way, blames bubbles not on Central banks (who have done "an outstanding job") but on the skewed distribution of income. As Bloomberg reports, Obama states “When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy." The problem with his way of thinking is best described by the status quo defender Sarah Bloom Raskin who offered up this insight into what the manipulation of market interest rates gives us, "asset bubbles are a feature of our financial landscape." So there it is, a feature (not a bug) that the President wants to get rid of (and yet wants to maintain the illusion that unrealized profit (and debt) is wealth).

Guest Post: "Let Them Eat Credit"

Over the last thirty some odd years, the world has seen an unprecedented level of economic growth and prosperity. That much is certain. However, things are not as they appear when the bullish rose-tinted glasses that most view the world through are removed.

And the issue is debt.

Present Shock And The Fantasy Of Change

Millions of Millennials (born 1982-2004) are pursuing high-cost university educations in the belief that multiple degrees are now essential to being offered a job. Even as evidence piles up that the economy has changed in fundamental ways such that even advanced degrees no longer inoculate the owner against financial insecurity, millions of young people feel they have no choice but to indebt themselves and spend scarce family resources on a questionable-value education. The underlying assumption here is the present will endure, and change will be marginal. The idea that the narrative of history suggests major disruptions of the status quo are cyclical and thus inevitable doesn't register. In this case, the fantasy is that the status quo won't change dramatically, even as it already has changed dramatically.

Michael Pettis On China's Urbanization Fallacy

The latest default bull argument supporting higher levels of growth in China than I believe possible is the urbanization argument. Beijing is planning another major urbanization push, and according to this argument China can resolve the problem of wasted investment by investing in the urbanization process, that is it can engage in a massive investment program related to the need to build infrastructure for all the newly urbanized. Like so many of the earlier bull arguments, however, this new belief that urbanization is the answer to China’s growth slowdown is based on at least one fallacy and probably more - urbanization accommodates, it doesn‘t cause, growth. It is not the act of building all this stuff that creates wealth or real, long-term growth. It is only if building the stuff caused overall productivity to rise by more than the cost of capital and labor employed in building it that a society gets richer.