Dis & Dat

Bruce Krasting's picture


How Big Was It?

By far and away, the worst financial crack-up in history was Fannie and Freddie. That disaster has cost $142 billion. The knock-on effects of the collapse of these two were devastating. F/F went out of biz on September 7, 2008. The next weekend Lehman blew up. F/F put the nail in the coffin at the “Brothers”, and after that, all the dominoes were falling.

With that in mind, I'm amazed that AAPL has blown off nearly twice the F/F losses in six-months, and there is not even a ripple in the water. Last night, in a few seconds of after-market trading, the stock got pasted for more than all of the losses for LEH. By the opening, the overnight losses exceeded more than LEH, AIG, GM, and Chrysler combined.

The market gets smoked for 1/4 Trillion in a single name, and we're trading at the highs. Go figure.



UK to Say "Goodbye" to EU?

The UK will have a referendum in 2017 to determine if it want's to stay in the EU. That's so far away that it has no consequence today. I do think this sets up as a "big deal" at one point in the future.

Looking at the calendar, there is something that will be emerging at the same time the UK referendum is due. The big economies in the EU have all agreed to a transaction tax.





This tax will come to only .01% on turnover of stocks, bonds and derivatives, but it will devastate the domestic markets in France, Germany, Netherlands and Italy. As a result, London will get another boost as the financial capital in Europe.

The folks in the UK will be well aware of the influx of foreign traders, the capital they bring in, and the office space they use. No doubt, the Brits will be laughing at the EU for creating their success.

It just might prove that the EU's transaction tax becomes the reason why the UK votes to opt out. The TT will prove that the EU has no clue how to run an economy. If that is how it plays out, I will get a laugh.


Who's Getting DI?

Social Security pays benefits to non-residents who have lived and worked (and paid payroll taxes) in the US. The info is available for 24 countries. All in, nothing mind blowing, some details:

- 192,000 people, now living in their home countries, get SS benefits. The total benefits paid in 2012 was $500m.

- Canada has the most number of citizens getting SS benefits (53K). Japan has 38k, Germany 22k and UK 18k. The full list (Link).

-Canada has the most number on Disability, number two on the DI list is Germany. (Possibly the layoffs at Deutsche Bank led to back injuries?)


Anyway, what's missing are the numbers for Mexico. My guess is that the bucks SS heads South is larger then that headed North. I think it is larger than the total for all the 24 countries where data is available. I have asked for the #'s, if I get them I'll let you know. Don't hold your breathe for that article.



Hollande To Go After French ExPats?

There is a silly story going on between France and Switzerland. This one has potential to spin out of control.

There are tens of thousands of French citizens who live in neighboring Switzerland. There was a tax treaty set in 1966 between the two countries that established who would pay what - for 47 years there was no problem. On January 1, 2013 the French government published a new rule that completely abrogated the 1966 treaty. There was no prior warning or discussion by Paris. They sneaked it in on New Year's Eve.

The Swiss were insulted. Forget the merits of what was done, it was the tactics that were used. From one Swiss official:







This is about a small group of people (most of whom are well-off) who are getting muscled. It's also about a small country that is also getting muscled. Nobody ever likes to get muscled around; how might "they" push back?

The obvious answer is that a number of those who are affected will take up Swiss citizenship (many have lived in Switzerland for years). Given the circumstances, I think the Swiss would be happy to oblige.

This sets up for more of those embarrassing "Depardieu" moments for Paris. French citizens willing to renounce their passports to get out from under oppressive French taxes.

There is another angle to this that is a potential game changer. The new French tax rules are, in the end, a tax on ExPats. What the French did to their citizens living in Switzerland, could also be done to the French people who live in Belgium. There is the bigger question of what would happen to the income of a French citizen who resides in London or New York. A huge door has been opened, it's not clear what's behind the door.

This could snowball into broader opposition for Hollande. He's running a socialist state, while taxing like a dictator.


Pay Back??

My sense is that EURYEN 120 is the new normal, and it will prove to be the bottom end of the range, not the top.

This sets up for a crisis in the EU. There has already been "noise" from some of the talkers. The question is, "Can they do anything but talk?" I say "no".

Over the past decade Japan has imported deflation with a stronger and stronger currency. They tried repeated to intervene in the FX markets, but they failed. The reason they failed is that the other Central Banks (US Fed and EU ECB) did not want to give the Japanese any support. There was no coordinated intervention. The BOJ had to stand in front of the whole market, and got overwhelmed every time.

Now the tables have turned and we have a run-away weak Yen. The Fed and the ECB can't intervene without the blessings and support of the BOJ, so they can only talk. This sets up as an asymmetric risk profile, it favors a weaker Yen, - at least for the next 10%.

After years of suffering, there must be a number of guys at the BOJ who are laughing at how things are turning out. It's amazing how quickly perceptions change.




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lemarche's picture


EyesWise Shut's picture

"This is about a small group of people (most of whom are well-off) who are getting muscled. It's also about a small country that is also getting muscled. Nobody ever likes to get muscled around; how might "they" push back?"

The Swiss buying fighter jets from Sweden instead the French "Raffale" probably didn't help.

Cast Iron Skillet's picture

There sure are a bunch of Sisyphuses in that picture ... Sisyphus Army!

ebworthen's picture

Ah Bruce.

The biggest crackup was the bailouts in 2008, and the continuing FED/Washington/Wall Street bubble.

Fannie/Freddie is a drop in the bucket compared to the $6 Trillion FED put to prop their Wall Street cronies at the expense of the citizenry.

No reason for people NOT to go on SS Disability, SNAP/EBT, Welfare, Unemployment, etc. - since the banks, insurers, and corporations have been on it for what, two decades?

I know that a free market with the rule of law and ironclad backing of the Constitution is the way to go; but that ship sailed a LONG time ago.

The U.S.S.A. has no room to speak when it comes to France or Europe.

The global Western Kleptoligarchy marches forward, central banks and bankers driving the column, the average citizen with the yoke on their shoulders.

The best plan for a majority of Americans is to hide their money, convert it to untraceable assets, milk the system for every last drop they can get because the past five years have proved one thing unequivocally; if you are responsible, work hard, save, and invest - you are the mule that will get whipped and bled all the way to the glue factory - and what you think is yours they will take from you one way or another.

Clowns on Acid's picture

Bruce you state "By far and away, the worst financial crack-up in history was Fannie and Freddie. That disaster has cost $142 billion."

Really? Surely you mean Trillion. Otherwise why has your buddy Ben decided that he has had to spend approx $3 Trillion (not including the X Trillion in FX swaps to the clowns on acid in the EU).

Then...in addition, add in the cost to the US economy price discovery process as the Fed totally obfuscates perhaps the most valuable "tradition" making up the socio-economkic fabric of the US.....the price of money.

The rest of your article lacks cred just based on this faux pas.

willwork4food's picture

Excellent example of 'begging thy neighbor' with the classic Dante analogy, Bruce!

Niven did a great composite years ago- " Why do you keep rolling the boulders up the hill (forever)?"

"Because we need to kill those dirty ungodly Liberals!!"

"But don't they just roll down the same boulders at you?"

"Yea, why?"

"Then why do you keep doing it?"

"Because this time will be different!!!!"

Umh's picture

Apple a one name dotcom bubble.

AGuy's picture

What about Amazon and Google? Not an apple fan nor do I own Apple Stock, but at least Apple made money.


joego1's picture

Are things beginning to snowball or am I just imagining it?

TPTB_r_TBTF's picture

Have your doc check your dosage.


A promise from a politician is nothing more than a snowflake in the sunshine.

But do watch out for shitballs.  Shit rolls down hill.

eddiebe's picture

Great Britain leaving the E.U. doesn't jive with the whole New World Order/ one world currency/ government idea, so I would be surprised if that somehow would be implemented politically

WTFUD's picture

Could anyone who is not British pease refer to us as British as there is very little that is Great about us!

Orly's picture

"...as there is very little that is Great about us!"

Typical Brit...

joego1's picture

The new world order requires cooperation or current pop - 1 billon.

pashley1411's picture

The 21st will the age of border arbitrage.  

tom a taxpayer's picture

Is "border arbitrage" a new sexual picadillo?

LongSoupLine's picture



"How big was it?"

Not as big as the Fed's fucking money shitting operation that's leveraged to the fucking gills by PD's into the "market".

Great article Bruce, thanks.

Lord Peter Pipsqueak's picture

Cameron fought the last election on a vote to leave the EU,and along with a multitude of other broken election promises will certainly never be trusted by the electorate to stiff them again.

Cameron and everyone else with an IQ bigger than their shoe size knows he will never serve a second term,either leading a coalition or as head of the Conservative party.Labour will win the next general election by a landslide,and will never give the British people a vote.

The number of people directly or indirectly who depend on the state for their livelyhood has now grown to such an extent(remember Romney's speech anyone?), that Labour will be in power so far in to the future it is impossible to see any party removing them.So "Call me Dave" can promise what he likes,it's a totally worthless empty promise from a totally worthless empty politician.


Rustysilver's picture

Bank guy for Brussels,

You see conspiracy and some long term plans. There is no such thing. Communists, Socialist and (might add) capitalist are fukkin fools.

People ascribe to them so thoughtful ideas; none exist. Euroland and UK are so screw up, it beyond description. From U.S. prospective, we are not any better. Only months behind.

TPTB_r_TBTF's picture

The Black Nobility, Catholic Church and Zionist Bankers

all have "long-term plans".

But you are right, this is not a "conspiracy", rather a fact.

Big Ben's picture

The spirit of Robespierre lives in Hollande. Vive la France!

Joe moneybags's picture

It's comforting to learn that the level of integrity, intelligence, and sense of duty of statesmen in the U.S. is matched by those in the E.U.

lolmao500's picture

Cameron's promise of a referendum is BULLSHIT.

If he was for real, he would have scheduled it for this year.

HardlyZero's picture

Maybe...but its just a trial baloon.  If there is the will then the door is cracked open now to push for it IMMEDIATELY.  If the political will is flaccid, then it will be an ongoing subject of debate and building years.

bank guy in Brussels's picture

David Cameron's actual spoken speech about leaving the EU, per John Ward's The Slog ... quite hilarious:

« ... Hundreds of thousands of British people now take for granted their right to work, live or retire in any other EU country given that life in the UK is so hopelessly sh*t. So we need to weigh up very carefully the consequences of no longer being inside the EU ...

The fact is that if you join an organisation like the European Union, there are rules….even though the general French approach is to ignore them, the general Italian approach is to misreport them, and the Brussels approach is to change them according to the prevailing wind ...

Let me finish today by saying this. I have no illusions about the scale of the task ahead, because the vision I have outlined will be impossible to achieve: there is no way our partners will co-operate, the British people have set themselves on a path to inevitable exit, and it’s all tits-up. »

More from this rather brilliant 'transcribing' of David Cameron's remarks:

« ... After the Berlin Wall came down, I visited that city, and I will never forget how the abandoned checkpoints gave me a sense of excitement about spending quality time with randy Osti women while scoring some cheap coke. And although we must never take cocaine for granted, the first purpose of the European Union is not to help me sniff cheap lines, but to secure prosperity for we in the elite, in what is going to be a race for the wealth and jobs of the few at the expense of the many ...

we have helped to write European history, and Europe has helped us to write off ours by subjecting us to membership fees of £130bn per annum. ...

Let there be no doubt that we are open for business: especially funny business ...

I speak as the British Prime Minister with a positive vision for the future of the European Union. A future in which Britain wants, and should want, to play a committed and active part in screwing every last citizen into the ground ...

First, the fiscal problems in the Eurozone are doing my f**king head in ... I can’t be arsed with it any more, ... I want the European Union to be a relationship between Britain and the EU that keeps us Establishment Johnnies in the pink, behind closed doors, and well pensioned ...

That is why I am here today: to acknowledge the nature of the challenges we face, to identify and analyse them….. and then run as far as possible away from them ...  yet more of this bollocks is going to cost me my job, so that is why we need fundamental, far-reaching change ...

in Britain quite a few awake people have spotted what an undemocratic, illiberal crock the EU is. In fact, disillusionment with the EU here is at an all time high ...

And if I have my way, we won’t leave the EU either, because it is the only chance we have of continuing to wank about without people like me having to genuinely do something ... »

(Above was Satire of course ... but with some 'truthiness' from the pungent Mr Ward)


bank guy in Brussels's picture

Hollande's conduct in France, and his rudeness re Switzerland as BK so well describes above, is indeed bizarre, and somewhat inexplicable ...

Sabotaging the French economy so comprehensively ... a conspiracy meme here, is that Hollande is actually a Trojan horse to destroy the French welfare system

Couldn't be done from the right wing, per Sarkozy, French workers' general strike would stop it ... so the more devious plan was to elect an über-socialist extremist, destroy the economy to destroy the welfare system

Actually makes a kind of sense, what Sarkozy couldn't do, the pseudo-leftist 'stupid socialist' might do


Cameron in the UK is setting the stage for the big explosion in the EU ... my guess is that when Spain or Italy starts the southern dominoes leaving the euro, and the German and French banks start collapsing as a result, that is when the UK exits too ...

As Bruce Krasting suggests above, Brits don't want Brussels, Frankfurt and Paris regulating the UK financial casino ... transaction tax has to be universal or it doesn't work

Moreover, the UK knows the euro currency is going to split into at least two pieces (and probably several, with the southern countries all exiting after the first one breaks the taboo) ... leading to German and French bank collapses, and Britain will be asked to help pay

And Brits don't want to be around to help pay for the mess after the euro-currency break-up

Also, with the harder economic times coming, the Brits want to send back home, the million or so Eastern Europeans who have moved to Britain who would like to get the more generous Brit welfare payments

And they already trade more outside the EU than within it

The writing is on the wall, so -

As Ambrose Evans-Pritchard has pointed out, Britain has already really begun leaving with its actions and opting-out of EU policies ...and

« David Cameron's pledge for an 'in-or-out' referendum on Europe will be overtaken by internal events long before we reach 2017. »


andrewp111's picture

A transaction tax could be imposed worldwide if the UN Security Council imposes it. That requires Obama, the UK, France, Russia, and China to agree. The UK part is probably the hardest because of the City's influence. If Labor wins the next UK election, Obama might just do this.

Bear's picture

The EU will never fail until all the financial dominoes are in close proximity ... the BoE, BoJ, FED, and the EU will certainly perform a coordinated restructuring of their own obligations and those of their respective banks. It will probably happen in the 2016, the last year of BhO's reign and usher in a coronation and move to a more 'coordinated' global governance system ... for the 'good' of all he folks

knukles's picture

"Hollande's conduct in France, and his rudeness re Switzerland is indeed bizarre, and somewhat inexplicable ..."

Huh?  Having dealt with the French (actually, specifically those powerful within the City of Lights who are likewise not held in great esteem throughout the rest of the country) extensively, I find his arrogant, self centered, all knowing bluster rather par for the course.

(Folks, these are the people who really and truly believe themselves to be a world military power without the ability to transport men and material further than the banlieues and needed to raid other country's military supplies 3 days into low level activities in Libya.... Jesus!)

disabledvet's picture

and of course Hollande will take that as a compliment. Listen this guy is no Trojan Horse. What he's doing in Mali shows this guy's got some balls. The story i heard today from the Mali folks living in France is "where's Obama?"...and that's a damn good question actually. We're already slow walking back any involvement in Syria. No counter-attack for assasinating the US Ambassador to Libya? Not even a WORD?!!! And now you have so called "terrorists" dressed in Algerian military uniforms killing all sorts of "non muslims" (including Americans) and getting away with it...hell we're even making APOLGOGIES for it. This is the stuff that "gives people ideas"...none of them good. Needless to say if you order the US military to stand down don't be surprised if they follow that order. Of course "that would cause all hell to break loose." Last time that happened was '73. Know very few people alive these days who remember that one...and of course "that was a far easier war to get out of than this one...

Freddie's picture

Libya was a gun running for Mus Brotherhood which is the Saudis aka Al Qeada.  This was gun running like Fast and Furious.  Ditto Algeria and now Mali.  Those U.S. fund Libyan weapons are all over N Africa and Africa now.   This is all our mullah doing this.  Amb Stevens was CIA.

Same guns used in Egypt and Syria as well.  Lots of innocents killed in mexico, the Middle East and N Africa with those OBam weapons.

Our Mullah should be impeached for this.

It is all archived here.  Weird site but he or she knows what is going on.  They write almost in code.