TedBits - Newsletter
No matter how hard the Washington crowd tries to sell an economic recovery, inconvenient and contrary facts keep rearing up to shatter their mythmaking. Few people any longer believe the claims of declining unemployment or low inflation at least based on purchases they make. The fable of a housing recovery is now crumbling. The recession, declared over in June 2009, never ended. Some wonder how bad the recession/depression might have been had government not acted. Others worry that we will find out when the Fed tapers. For lack of a better term, the process the entire country is headed for is “Detroitification.” At this stage, the damage is done and cannot be undone quickly enough to avoid this crisis. Even if there were time, there is no way that politicians would willingly address the problem.
NSA Spying Directly Harms Internet Companies, Silicon Valley, California … And the Entire U.S. EconomySubmitted by George Washington on 07/31/2013 12:47 -0500
Mass Surveillance Is “Killing Our Most Productive Golden Goose”
The Cypriot deposit confiscation has come and gone (and in a parallel world in which the global Bernanke-put never existed and in which bank shareholders were not untouchable, this is precisely how real-time bank restructurings should have taken place), but fears remain that the country's "resolution" mechanism will be the template for future instances of "resolving" insolvent banks. That may or may not be the case: the only way to know for sure is during the next European bank bailout, but one thing is certain - Cyprus was certainly a template when it comes to how a world full of insolvent sovereigns (all engaged in currency warfare), where easing, quantitative or otherwise no longer works to boost the economy, will approach what is the last chance for monetary replenishment - taxation of financial assets, just as we warned first back in 2011. Specifically, Cyprus showed the "template" for confiscating Russian oligarch billionaire "ill-gotten", untaxed cash, which many in Germany demanded should be the quid for ongoing German-funded quo. And here's the rub. There is more where said "ill-gotten" cash has come from. Much more... $32 trillion more.
The developed world has now become a fully operational Something-for-Nothing society. Once a Something-for-Nothing psychology has been fully implemented the majority of its citizens have become the functional equivalent of LOCUSTS!
Unable and unwilling (they no longer have the skills to make the wages they believe they are entitled to) to produce more than they consume and support themselves they set off the consume those that do to FEED on and SUPPORT themselves. The TAKERS or WEALTH EAT the MAKERS of WEALTH, Cannibalism of the worst sort.
The “shale revolution” has been grabbing a great deal of headlines for some time now. A favourite topic of investors, sector commentators and analysts – many of whom claim we are about to enter a new energy era with cheap and abundant shale gas leading the charge. But on closer examination the incredible claims and figures behind many of the plays just don’t add up. To help us to look past the hype and take a critical look at whether shale really is the golden goose many believe it to be or just another over-hyped bubble that is about to pop, we were fortunate to speak with energy expert Arthur Berman.
Back in October of 2010, when we first exposed Bank of America as massively underreserved for putback, Rep and Warrant and various other forms of litigation, we predicted that once the precedent is set for ever escalating litigation against transgressions banks committed in the Old Normal (the biggest of which was the worst M&A deal of all time: BofA buying Countrywide and with it hundreds of billions in contingent liabilities), very soon banks would be swamped with a tsunami of litigation. And after all, it's only "fair" - the banking industry would not exist if its wasn't for the Fed and government's bailout and backstop of tens of trillions in liabilities at the peak. Now it's time for some "wealth redistribution" - only instead of said government-funded wealth tricking down to the common man, the only social group set to benefit are America's lawyers. Fast forward two years to October 2012, and what we predicted is precisely what has happened. As the chart below shows various "environment charges" aka charges related to mortgage put-backs, legal and foreclosure related issues, have soared to a record 16% of pre-provision earnings. As Goldman calculates, this is reducing EPS and returns by an average 17%! Where it this "profit" going? Mostly to various class cation suit organizing law firms and to pay for $800/hour legal retainers.
Manipulation is the beating heart of Federal Reserve and Central State policies. The centrally planned economy has failed to respond as expected, and so the response is to put more cocaine-laced pellets in the feedbox and encourage the poor starved rat inside the cage to press the bar labeled "debt" to get another pellet of addiction and highly profitable enslavement. Welcome to Manipulation Nation, a.k.a. the unlimited debt experiment. Think rat cage, one bar to press, and unlimited cocaine-laced pellets.
Goldman reported Q4 numbers today and they were ugly. While earnings were in line with expectations (bank EPS has become completely irrelevant as the FASB now affords banks with a practically infinite array of options to game the bottom line), the revenues were more difficult to fudge. And now that the firm finally spreads its revenues in the new method which breaks out Prop (and FICC from Equities as part of client flow), we can see just why prop trading is so critical to the firm. The traditional golden goose for the firm: Fixed Income, Currency and Commodities trading on a flow basis was abysmal, plunging from $2,687 million to $1,636 million sequentially, and from $3,129 million in Q4 2009. As the chart below shows, this number peaked at $6,017 million in Q1 2010. Combined, total revenues by all segments came at a five quarter low with FICC posting the lowest contribution since 2009. Yet the one segment which did post an increase was Prop Trading, also known as Investing and Lending, which increased from $1,797 million to $1,988 million. And as we noted previously, the margins in this group are by far the highest, averaging just under 50%, confirming why as Bloomberg noted earlier, attempts to reintegrate prop into Wall Street trading are ramping up big now that Volcker is gone. But the number everyone is waiting for is comp, which was $2,253 million in Q4 (unlike the negative number posted in Q4 2009 when the outcry against banker bonuses was apparently louder). This was a 26.1% comp margin, and brought the year total to $15,376 or a 39.3% margin on total revenues of $39,161. Based on "total staff at period end" of 35,700 this comes to precisely $430,700 per employee. Surely this is admirable compensation for a Fed-backstopped hedge fund job well done.
When a nation becomes greedy, while not a unique event, it is rarely good for the national long-term best interests of its citizens. There is a case already brewing that will be interesting to watch unfold.
Just another P-H-D clown called Turkey in the Fed...
Paul Farrell On The One Thing Buffett, Gross, Grantham, Faber, And Stiglitz All Agree On: "Bernanke Plan A Disaster"Submitted by Tyler Durden on 11/02/2010 11:39 -0500
By now it is more than obvious except to a few economists (yes, we realize this is a NC-17 term) that QE2 will be an absolute and unmitigated disaster, which will likely kill the dollar, send risk assets vertical (at least as a knee jerk reaction), and result in a surge in inflation even as deflation on leveraged purchases continues to ravage Bernanke's feudal fiefdom. So all the rational, and very much powerless, observers can do is sit back and be amused as the kleptogarchy with each passing day brings this country to final economic and social ruin. Oddly enough, as Paul Farrell highlights, the list of objectors has grown from just fringe blogs (which have been on Bernanke's case for almost two years), to such names as Buffett, Gross, Grantham, Faber and Stiglitz. And that the opinion of all these respected (for the most part) investors is broadly ignored demonstrates just how unwavering is the iron grip on America's by its economist overlords. Which brings us back to the amusement part. Here are Farrell's always witty views on the object which very soon 99% of American society will demand be put into exile: the genocidal Ph.D. holders of the Marriner Eccles building.
This morning our favorite Banksters goosed the EU markets by upping targets on international mining operators Kazakhmys, Lonmin and BHP and that got the European markets off to a flying start out of the gate, despite the fact that UBS had just DOWNgraded the same sector on Friday.
What made America great was her unsurpassed ability to innovate. Equally important was also her ability to rapidly adapt to the change that this innovation fostered. For decades the combination has been a self reinforcing growth dynamic with innovation offering a continuously improving standard of living and higher corporate productivity levels, which the US quickly embraced and adapted to. This in turn financed further innovation. No country in the world could match the American culture that flourished on technology advancements in all areas of human endeavor. However, something serious and major has changed across America. Daily, more and more are becoming acutely aware of this, but few grasp exactly what it is. It is called Creative Destruction. It turns out that what made America great is now killing her!
There is the danger of walking out of today's session with a sense of relief for equity traders, because that insane move was "just" a fat finger or at least it is the word in the media and on the street. There are three things to keep in mind: 1/ the market was down 3% already when the alleged input error happened 2/ we are still in the middle of a major unresolved currency crisis threatening all of Europe and that led to deadly riots already 3/ the financial industry does not need any bad press right now and detractors just got some more ammo to push tough regulation. - Nic Lenoir, ICAP