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The Tumblin' Default

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The Tumblin' Default

From Tumblin’ Tuesday – Keep on Rolling

By Phil of Phil's Stock World 

Got to roll debt baby, call it the tumblin' default

That's the theme for the week as Greece gets yet another final deadline extension to come up with more and more concessions so it can borrow even more money that it will never be able to pay back.  "Honey, got no money" is the line that should be obvious to EU Stones fans as the IMF's chief economist insisted that Greece must cut wages to boost competitiveness and pull the country out of its economic quagmire.  "Either you basically increase productivity growth a lot and quickly, and you keep wage growth moderate, or you decrease wages," said Olivier Blanchard. 

"It is a pretence that the measures are taken to forestall bankruptcy," Communist party leader Aleka Papariga told the gathering crowds at today's National Strike. "On the contrary, they will lead the people to misery to benefit the plutocracy and capital," she said.

Sadly, only the Communists are telling the people the truth in Greece - the people are being sold into decades of wage slavery as a population that has already voluntarily accepted 25% wage cuts is now being forced to accept additional 30% wage cuts while the ECB and IMF shove another $192Bn worth of debt down their throats that is ONLY to be used to pay off bondholders who took advantage of them in their time of weakness to force them to roll over their debt at record high rates.  

Sacrifices MUST be made, says the former VP of the ECB - who is now the Prime Minister of Greece (unelected as Papandreou was forced out) - but he's not talking to the creditors, but the Greek people, who will still, even if they work for 1/2 wages for the rest of the decade, be 120% of their GDP in debt by 2020 (down from 160% today).  So the Greek people are being asked to sacrifice their own retirement and their children's future rather than telling the Banksters to take a hike.  

And people wonder why we can't get a deal passed?  As I said in yesterday's post, either Greece passes a debt deal and Athens will be in flames (strike began at midnight) or Greece will not pass a debt deal and Europe will be in flames (DAX down 1% at 8:05).  That simple logic allowed us to go short on the Futures in Member Chat this morning as the Dollar tested 79 and my 4am comment to Members was:  

Dollar bouncing off 79 is going to be bad for the indexes.  Looks like fake pumping to me and Greece not even fixed yet.  I am literally scared to short these days but 2,525 is a good line to watch on the Nas (NQ) and 825 on the RUT (/TF) and $1,725 on gold (/YG) should be good for a little ride down if the Dollar can get over 79.15 (now 79.12) so let's call that the bear line with 79.20 confirming Dollar strength although not meaningful until over 79.50. 

Already the Nasdaq is down to 2,517 and, at $20 per point, that's a quick $160 per contract.  The Russell is down to 822 but that one pays $100 per point so $300 per contract there and gold is our star, with a drop to $1,715 at $33.20 per contact, edging out the RUT shorts with gains of $332 per contract - not bad for a morning's work, just in time to pay for 200 Egg McMuffins.

Percentage-wise, we did better with our TLT trade, also detailed in the morning post as I said there (also in conjunction with my prediction of strife in Greece: "I am liking those TLT longs (we picked up the weekly $115 calls for $2)!

As you can see from our chart on the left, even those late to the party in the morning were able to get in on the fun as TLT dropped down to $1.85 and didn't get back over $2 until after 10 and continued on to our initial $2.50 target (up 25%) and made it all the way past $2.80, for a 40% gain in a day.  This was a great start for our new virtual $5,000 portfolio as we picked up an aggressive TLT spread in the morning.  

As long as we can keep making quick, little, hit and run trades like this - we really don't care which way the market goes, nor do we care if the VIX wants to pretend that this market isn't volatile.  In fact, in this trade, we took advantage of the low VIX to buy a relatively low-premium call (the $115 for $2) which gave us tremendous leverage on this 10% move in TLT.  Generally, we prefer to be sellers of premium but, when the premium is so cheap it's not attractive for us to sell - we know how to climb over to the other side of the table and make a few bets for ourselves.  

If all goes well, we'll get a chance to reload on TLT this morning as we get the usual Dollar dump into the morning's open as they pump up the Futures to bring in the next round of suckers.  Of course, we are now those suckers as well as we're doing our best to be more bullish as long as the technicals hold up and this morning's little dip is NOT capitulation by the bulls.  

Both of our other trade ideas were bullish ones yesterday, one on CSTR and one on AMX.  The CSTR trade was at 9:27, just ahead of the bell and made for an easy entry as the stock traded to lows of $48.66 at 10:20.  My trade idea was just to sell the Jan $42.50 puts for $6 and we also discussed adding the Jan $45/60 bull call spread for $6 as well as a riskier way to go for a $15 profit, rather than $6 but we felt the numbers justified $60 ahead of earnings.  It seems the markets already agree with our assessment as CSTR is already at $60 this morning.

We're trying to ignore the news but: "You could sell your home, owe nothing more on your mortgage and get $30K," goes a letter from JPMorgan to a delinquent homeowner. With the foreclosure process gummed up, banks are finding it less expensive to allow short sales, forgo their right to pursue unpaid debt, and even offer cash. This should really piss you off if you're paying your mortgage like a good little drone but the same bank (Chase) won't refinance you at 4% because - for whatever ridiculous excuse - "you don't qualify." 

What we need in this country is for some Communists to come over and teach the people how to organize themselves to stand up to these Corporate Monsters but, oh yeah - just the mention of the word Communist puts most of you into a Pavlovian frenzy as you've been conditioned your whole life to think anything Communist (ie. anti-Capitalist) is somehow evil.  I guess bending over and taking it IS our only option - Yay Capitalism!

If the people in this country had any balls (or actual leaders of their own and not just the Corporate puppets we're allowed to vote for), we'd have a mortgage strike and simply not pay this month.  That would choke off about $200Bn in monthly mortgage revenue from the Banks and I'm pretty sure it would only take one month before the banks capitulate and come back to the table with a reasonable way to share the 0.25% borrowing rate they get from the Government with those of us they are currently squeezing for 5% and higher loan payments.  

Ireland is currently trying to organize a Mortgage Strike: "The nuclear weapon is for borrowers acting in concert and to say that unless proper and sustainable solutions are put in place which are fair and reasonable, then we should not continue to pay under these current conditions," says Ross Maguire, of the New Beginning Trade Union. "It is radical but it is where we are going if things don't change. It's the last option but it is better that people like us have control over it because the danger is that if that kind of people power was misdirected it could wreck the financial system. New Beginning doesn't want to smash the financial system; we merely want to reform it and re-balance power between banks and borrowers."

This is the tightrope being walked in Europe, and this is the fire that may fan the flames of Global revolution.  What's going on in Greece is a practice run by the power elite to see how far they can push the masses into servitude before they show a little backbone and rise up.  

So far, the Greek people have been surprisingly docile as their retirement programs, health care, current wages and Government Services have been slashed, even as their tax rates have risen by over 30%.  In the US, the middle class sheeple are also dying the death of 1,000 cuts with thousand more yet to come.

Should this make us bearish?  Of course, not - it's a huge victory for Capitalism as getting back to free labor has been our goal ever since Lincoln screwed it up in 1863.  This time, there won't be a war to defend the Capitalist's right to own slaves - this time we will get the people of nation after nation to "volunteer" to spend the rest of their lives living in squalor and servitude as our children and our grandchildren will pay for our excesses.  

Because, after all, it was our own fault for buying that couch on layaway, right?

 

Try out Phil's Stock World here.  

 

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Tue, 02/07/2012 - 17:12 | 2135399 Zero Govt
Zero Govt's picture

Ghenghis Khan was a scary motherf*ker ...it appears his Governors were maybe not so much

In 1291, Rinchindorji Gaikathu, who was a spending retard to match todays suicide socialists, tried to fleece his herd by replacing heavy metal coinage with worthless paper (you've heard this story somewhere before yes?)

The sheep were having none of it and refused point blank. It worked (brilliantly). Maybe we could learn something/alot from this little piece of history repeating:

http://mises.org/daily/5886/Withholding-Consent-from-the-Khan

Tue, 02/07/2012 - 16:27 | 2135172 Count de Money
Count de Money's picture

"Sadly, only the Communists are telling the people the truth in Greece - the people are being sold into decades of wage slavery as a population that has already voluntarily accepted 25% wage cuts is now being forced to accept additional 30% wage cuts while the ECB and IMF shove another $192Bn worth of debt down their throats that is ONLY to be used to pay off bondholders who took advantage of them in their time of weakness to force them to roll over their debt at record high rates."

The poor Greeks. They were forced to borrow all that money so that they could suffer the agony of getting paid to sit around all day drinking coffee and retiring at 50. If that's the slavemaster's whip, then start swinging it my way.

Boo F'n Hoo.

Tue, 02/07/2012 - 16:47 | 2135264 Stuck on Zero
Stuck on Zero's picture

Yeah.  Wasn't it their communist/socialist government that decided everyone should work for the government?

Tue, 02/07/2012 - 16:26 | 2135169 Everybodys All ...
Everybodys All American's picture

twisted logic ...

Tue, 02/07/2012 - 16:19 | 2135141 chunga
chunga's picture

35K Cash for Keys! Fuck You!

What the hell are they afraid of??

Neil Garfield nails it right here:

Price of Signature of Homeowners Rises to Avoid “Title Crash”

 

EDITOR’S ANALYSIS: The race is on. Homeowners are sitting on an asset — their signature — that has gone up in value 35X thus far from $1,000 to $35,000. The REAL STORY is that the Banks and servicers need to find a way to get the signatures of homeowners through any means possible, including payment. The amount of the payment is rising and will continue to rise like the last holdout of a property owner on a parcel where some big developer wants to build a giant stadium. People are starting to realize that the longer you hold out the higher will be the payment.


The reason is simple. With the current Missouri indictment clarifying that this was no accidental paperwork problem, the realization is dawning on almost everyone that plain old property law is going to be the basis of the solution to the title crisis enveloping this nation. Without solving it, title insurers, banks, servicers, and other parties could be liable or indicted for stealing millions of homes.


The logic is both simple and compelling. The Banks and services employed “outside servicers” to fabricate documents containing false declarations about the chain of title, their authority to execute documents. Those documents “established” that the forecloser “pretender” was the creditor and that the original loan documents were perfectly fine — and now transferred to a stranger to the transaction — something we call a break in the chain of title if it shows up in the title records. 


If the documents consisted of false declarations (and forged too), and that point is accepted as a fact proven in court, there remains no discretion for the Judge but to invalidate the title chain from the time that the break occurred forward. This means title reverts back to the way title appeared in the title chain before the fabrication of documents. That means the homeowner is still the record title owner, entitled to both the title and possession of the property.


The fact is that all the foreclosed homeowners who were the victims of wrongful foreclosures are most probably still the legal owner of the property that was “foreclosed” and “sold” to “creditors” at a false “auction” claiming false credentials. There is only one way to be sure that the title chain can be fixed — get the signature of the homeowner(s) who were involved in the title chain. But the banks and Servicers know that if they simply come right out and ask for the signature they will be met with a negative answer and a barrage of lawsuits which now bear substantial  likelihood of success.


So they are concocting various excuses for why homeowners should sign documents that contain releases and ratifications of title. THAT is why they are getting more lenient on modifications short-sales, and now bonuses that raise the standard amount of “cash for keys” from what was $1,000 to over $35,000 so far. See an attorney who is knowledgeable in real estate transactions before you agree to sign anything and bargain hard for your rights and compensation.


They made a fortune deceiving you into signing onto loans that were unworkable based upon prices that were just plain false. You might as well get your piece of the pie — or up the ante and file a quiet title lawsuit. Lawyers should be careful when advising their clients or prospective clients. Many lawyers are still saying the old “you owe the money, you have no rights” mantra. This could be the basis for a malpractice suit later when the client realizes that he did have rights and he lost them as a result of the attorney’s bad advice.

 

Tue, 02/07/2012 - 16:16 | 2135132 Dick Gazinia
Dick Gazinia's picture

Greece is the word.

Tue, 02/07/2012 - 16:15 | 2135128 lasvegaspersona
lasvegaspersona's picture

Liberty yes, 'the 'safety' offered by the State (often called 'freedom' from want)...no

Tue, 02/07/2012 - 16:13 | 2135126 Dermasolarapate...
Dermasolarapaterraphatrima's picture
What’s The Point of Financial Aid? By Simon Grey, on February 6th, 2012 Therefore, if you aren’t going to a prestigious university, the best course of action is to acquire a college education as cheaply as possible. And if you can’t a get a cheap college education, you are probably better off skipping college. http://www.citizeneconomists.com/blogs/2012/02/06/what%E2%80%99s-the-poi...!+Mail
Tue, 02/07/2012 - 16:13 | 2135122 Conax
Conax's picture

 Tom Tuttle from Tacoma Washington falls for the party line:

http://www.youtube.com/watch?v=6qLzQ4uOvio

Tue, 02/07/2012 - 16:15 | 2135120 Offtheradar
Offtheradar's picture

The first hint of a coordinated effort to lead the masses to default on their debts would mean a bullet in the head.  Good luck with that one... 

Tue, 02/07/2012 - 16:08 | 2135101 tony bonn
tony bonn's picture

"...rather than telling the Banksters to take a hike.  ..."

that is exactly what the greeks need to do and do it fast.....they should have a public defaulting party and create a giant middle finger larger than the parthenon remains and tell the rockefeller-mic-yale-cia cabal to go fuck themselves....otherwise they will become another wall street colony of serfs....

except for the public sector, how the fuck is taking a wage cut supposed to help????

Tue, 02/07/2012 - 15:54 | 2135047 Conrad Murray
Conrad Murray's picture

"What we need in this country is for some Communists to come over and teach the people how to organize themselves to stand up to these Corporate Monsters but, oh yeah - just the mention of the word Communist puts most of you into a Pavlovian frenzy as you've been conditioned your whole life to think anything Communist (ie. anti-Capitalist) is somehow evil. I guess bending over and taking it IS our only option - Yay Capitalism!"

Communism is evil you piece of shit. How many millions of people died because of the extreme leftist ideas of Statist scum? If the 20th century taught the world anything, it was that Statists are the most vile and evil of creatures the world has to offer.

Tue, 02/07/2012 - 16:47 | 2135260 Totentänzerlied
Totentänzerlied's picture

Don't pay any mind to people who are still of the delusional opinion that capitalism had anything to do with this. They're just angry Marxists trying to stir up class warfare so they can get themselves into the very same centers of power occupied by "the capitalists" (who are in fact far better socialists than the pathetic wannabes who call themselved communists, socialists, marxists, etc. could ever hope to be) they claim to detest and then repeat all of the same crimes "the capitalists" commit on a much shorter timeline until inevitably their monstrous system devours itself and they can get back to blaming "the evil capitalists" for sabotaging their Glorious Workers' Paradise and begin the cycle anew.

And none of it has anything whatsoever to do with capitalism.

The Greeks were fine with stealing the benefits of other nations' productivity and the wealth of their children and grandchildren all these years since they joined the EU. Funny, now that the bill comes due, instead of realizing how incredibly stupid and despicably greedy they were, they balk at the notion of giving up a single entitlement or paying 1 red cent for all the largesse they vaporized. No one even mentions that perhaps the entitlements were the problem all along, that unless they want to live under the yoke of debt slavery to their government, EU, and bank masters they will have to renounce all such entitlements and actually become productive, that they never would have had a debt problem if they hadn't gorged on the fiat+welfare cocktail. They are no different from any other western nation today.

But nooo it's all the big bad bankers' and governments' faults for giving the people exactly what they asked for in each and every case.

The people could stop this shit overnight if they had any desire to, but that would mean the gravy train comes to an abrupt halt as well. At some point you have to stop feeling sorry for the fool who refuses to pay the piper but continues calling the tune(s).

Someone mentioned this quote by Robert Heinlein in a recent thread, "Once the monkeys learn they can vote themselves bananas, they'll never climb another tree."

Tue, 02/07/2012 - 16:16 | 2135136 johnQpublic
johnQpublic's picture

"Communism is evil you piece of shit. How many millions of people died because of the extreme leftist ideas of Statist scum? If the 20th century taught the world anything, it was that Statists are the most vile and evil of creatures the world has to offer."

 

how many millions?

well, less than have died for religious reasons, but more than have died in iraq

next question...

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