Jim Grant: Heads Bankers Win, Tails Taxpayers Lose

Tyler Durden's picture


Interest Rate Observer, Jim Grant, played an important role as explainer-in-chief in the forthcoming movie "The Bubble" - a documentary that interviews the experts that predicted the 2008 crash and asks what happens next. The brief interview embedded below provides a smorgasbord of Grant's thoughts on topics from Fannie and Freddie as government-sponsored titanic hedge funds, his concerns at the unintended consequence of the debt-sustaining mortgage interest deduction, why MBS are not the root of all evil, and how the federal government is socializing risk for bankers. As usual, the ever-so-erudite Grant sums it all up superbly: "American bankers, based on the experience of 2007-8-9, don't know much about banking, but there's one institution that knows still less and that institution is the United States Congress." Adding that the past two or three years have all been about the unintended consequences of federal "spending, promising, and intervening" in finance and banking to delay a day of reckoning, Grant believes a correction is coming but again warns (in as succinct an eleven-word-sentence about our real world as we have seen recently), that "Bankers get the upside and we - the taxpayers - get the downside."


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Tue, 01/15/2013 - 17:44 | 3155538 mikla
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The worst thing that can happen to any human comes when government "partners" with "big business".

Tue, 01/15/2013 - 17:49 | 3155557 Kitler
Kitler's picture
Pecuniam vincit omnia. (money conquers all)

Unfortunately it has always been the Achilles Heel of all democracies.
Tue, 01/15/2013 - 18:36 | 3155652 francis_sawyer
francis_sawyer's picture

It would take 'Bill Nye the Science Guy' to convince me otherwise...


To wit: "Interest Rate Observer, Jim Grant"... What's that?... Like ~ a dude who watches grass grow?... "Inform me when it hits an inch & a quarter & I'll notify the Lawnmower Man..."

Tue, 01/15/2013 - 18:45 | 3155769 Careless Whisper
Careless Whisper's picture

Jim Grant is so legit. Thanks for posting.

Tue, 01/15/2013 - 19:28 | 3155876 Fedaykinx
Fedaykinx's picture

agreed, the list of topics and the clarity that he brings to them is priceless.  there is not much new here (to me at least) but it's nice to see it summed up so well.

Tue, 01/15/2013 - 19:33 | 3155897 Thomas
Thomas's picture

Jim Grant--revered by bears and feared by bulls. I know of nobody else who can cause the CNBC crowd to shut the hell up and listen like Jim can.

Tue, 01/15/2013 - 21:35 | 3156206 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

Thomas, please gang up with glorious Banzai7 Institute and publish "The illustrated review of 2012".  That would be so awesome!  

Tue, 01/15/2013 - 19:38 | 3155918 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is like to predict Fed Discount Rate for future...

2013 - below 1% but point up

2014 - still below 1% but point up

2015 - still below 1% but aggressive to point up




2020 - no Federal Reserve Banking System, no member banks, no dollar, only Gold, Silver, and Vodka!

Tue, 01/15/2013 - 19:38 | 3155919 DoChenRollingBearing
DoChenRollingBearing's picture

Jim Grant has tremendous credibility among those who have doubts about our current financial system.

Tue, 01/15/2013 - 18:21 | 3155671 TheFourthStooge-ing
TheFourthStooge-ing's picture

American bankers don't need to know much about banking; they're world-class grifters, which is what banking is all about. They have low paid cattle to fill out the forms, process the paperwork, and do all the mundane work considered "banking" by most people.

Tue, 01/15/2013 - 18:39 | 3155738 Snakeeyes
Snakeeyes's picture

Fannie, Freddie and Barney Frank promised us that they had little risk exposure and weren't buying anything but AAA mortgages.

It then turned out that they were buying over 30% risky mortgages the whole time!!!!!!!


Tue, 01/15/2013 - 17:48 | 3155560 Unprepared
Unprepared's picture

Wow, I never knew faxes were so dangerous.


I wonder if B. Shalome B. has a fax built in to his printer... God, that sounds even more dangerous.

Tue, 01/15/2013 - 17:57 | 3155594 Zer0head
Zer0head's picture

here is a list that enumerates the total population of Califronia's penal colonies by 2nd and 3rd strike offense type

AS OF JUNE 30, 2012

for example


2nd 440

3rd   71

Tot 511


everything you want to know about the three strikes law


Just ask Leandro Andrade. The father of three languishes in California state prison with two consecutive life sentences for shoplifting nine children's videos on two occasions in November 1995.1

Tue, 01/15/2013 - 18:10 | 3155635 Slightly Insane
Slightly Insane's picture

Zer0head  ...thank you for illustrating just how far off the rails the amerikan justice system has traveled .... Leandro Andrade ..... the system is so screwed up that "justice" no longer anywhere to be found.


It will surely get worse before it gets better.  This is the reason that Homeland Security (the Amerikan Stazi) is everywhere.  Keep the sheep from turning into wolves.

Tue, 01/15/2013 - 19:39 | 3155924 DoChenRollingBearing
DoChenRollingBearing's picture

And Biggest P.O.S. on Planet Earth Jon Corzine (TM) is still on the loose.  Grr...

Wed, 01/16/2013 - 08:40 | 3157073 Gohn Galt
Gohn Galt's picture

Corzine.  Who would have thought things could have gotten worse in Jersey.  He's the best at what he does.

Tue, 01/15/2013 - 18:40 | 3155754 Silver Bug
Silver Bug's picture

People are starting to wake up. They are not going to put up with the banksters nonsense much long.

Keep voting with your dollars. Keep stacking gold and silver.

Tue, 01/15/2013 - 19:15 | 3155838 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

The full definition of Fascism includes the government, big business, & the military in the Unholy Triangle. We certainly have that now don't we.

Maybe we'll see the Basketballer-in-Chief hanging by his thumbs? I wouldn't count on it...

Tue, 01/15/2013 - 17:44 | 3155549 CClarity
CClarity's picture

Steal a loaf of bread or cigarettes - go to jail.  Bankers steal from customers and get bonues.  Messed up world!


Tue, 01/15/2013 - 18:42 | 3155756 francis_sawyer
francis_sawyer's picture

Not according to them... They're 'Chosen'...

Tue, 01/15/2013 - 19:37 | 3155916 AllWorkedUp
AllWorkedUp's picture

Yep doing God work right? Chosen people my ass.

Tue, 01/15/2013 - 17:55 | 3155552 LawsofPhysics
LawsofPhysics's picture

That which cannot be sustained, won't be.  hedge accordingly, it's all you can do anyway.  In all the instances throughout history where revolutions occurred, the supply lines for essential goods and services broke before any real action was taken against the ruling class or bankers.  This time will be no different. So long as the ignorant sheep can still "swipe that EBT" and actually eat, nothing changes.

Tue, 01/15/2013 - 18:28 | 3155690 sdmjake
sdmjake's picture

Indeed.... "Und wie es gehn kann, so wird's gehn"

What is to be, will be.

Tue, 01/15/2013 - 18:39 | 3155733 linrom
linrom's picture

The ignorant sheep? Why should the underclass do all the lifiting in US? Where is its middle class? The White middle class is expecting the brown races to shed blood for them! WTF?

Tue, 01/15/2013 - 18:49 | 3155781 shovelhead
shovelhead's picture


The white trailer trash will help em when their EBT goes verklempt.

Tue, 01/15/2013 - 17:44 | 3155554 Mad Mohel
Mad Mohel's picture

LOL Has it ever been any other way? Did the serfs and peons ever pull one over on the fuedal lords?

Tue, 01/15/2013 - 19:46 | 3155938 Diogenes
Diogenes's picture

In my reading of history I was impressed with the faith the common people had in their so called superiors. Again and again they appealed to their "natural leaders", again and again they were abused and disappointed. Yet they never lost faith. Eventually the system collapsed on its own, was brought down by some folly of its leadership, or became so weakened that it was a pushover for an outside invader or revolution.

Tue, 01/15/2013 - 17:45 | 3155556 A_S
A_S's picture

Nice series, I like this one with Jim Rogers too



Tue, 01/15/2013 - 17:47 | 3155559 Shizzmoney
Shizzmoney's picture

Did the serfs and peons ever pull one over on the feudal lords?

Twice, one thanks to guillotines, the other thanks to guns (well, the lords in both instances were also French, so this is not saying much):



Tue, 01/15/2013 - 17:48 | 3155564 tooriskytoinvest
tooriskytoinvest's picture

U.S. Flirting With Disaster: Debt Ceiling + Ongoing Budget Resolution + Sequester + Ridiculous Leverage Gambling + Low Growth + Low Inflation + Long Term Unemployment+ Insane Gov't Spending And Borrowing + Declining S&P 500 Cash + Poverty Trap


Tue, 01/15/2013 - 17:48 | 3155565 A Lunatic
A Lunatic's picture

Pretty hard to make the case that bankers don't know much about banking when they keep coming out on the fucking TOP.....

Tue, 01/15/2013 - 18:29 | 3155693 TheFourthStooge-ing
TheFourthStooge-ing's picture


Pretty hard to make the case that bankers don't know much about banking when they keep coming out on the fucking TOP.....

On the other hand, it's pretty easy to make the case that most citizens don't know much about how often they're being ass raped, and by whom.

Tue, 01/15/2013 - 21:33 | 3156215 bunnyswanson
bunnyswanson's picture

 The town crier is giving false information on the banksters behalf.  When your govt is being overthrown by a silent coupe, this is how it works.  All the distractions are in place to lead to one event - gaining complete control over the assets. 

Iran has joined Agenda 21.  So has China.  This is depopulation and everyone is on board.  How long does it take to starve?  That is the day the US citizens will wake up..you know, when it is over.

Tue, 01/15/2013 - 21:49 | 3156263 Apostate2
Apostate2's picture

The Chinese never sign onto anything unless it can be ignored.

Tue, 01/15/2013 - 19:36 | 3155911 TimmyB
TimmyB's picture

Bankers don't know shit about banking and don't need to.  Any half-wit could make money borrowing from the U.S. Federal Reserve at 0.25%, especially if they were given "get out of jail free" cards from every U.S. law enforcment agency.       

All bankers need to know today is how to write checks to both parties' political campaigns, fund so-called issue ads, and hire effective lobbyists.     



Tue, 01/15/2013 - 17:49 | 3155568 CharliePrince
CharliePrince's picture

and no one has gone to jail


obummer will let the statue of limitations run out

and then collect from the banksters...retirement money..   good scam me thinks

Tue, 01/15/2013 - 17:50 | 3155572 sessinpo
sessinpo's picture

Um, that has gone on for decades. It's about time Grant and others focus more on the end game instead of what has happened.

Tue, 01/15/2013 - 17:52 | 3155581 buzzsaw99
buzzsaw99's picture

Straight from the no shit sherlock files.

Tue, 01/15/2013 - 18:00 | 3155605 news printer
news printer's picture

If U mentioned heads :

Heads rolling after all – 18 heads found at O’Hare Airport

Tue, 01/15/2013 - 18:16 | 3155656 ebworthen
ebworthen's picture

Bet the families don't know their loved one's heads were sold for medical research.

Crematorium probably doing a good business selling the heads and giving families a jar with ashes from the headless bodies.

Tue, 01/15/2013 - 18:39 | 3155741 TheFourthStooge-ing
TheFourthStooge-ing's picture


Crematorium probably doing a good business selling the heads and giving families a jar with ashes from the headless bodies.

They probably even threw in a few burnt human teeth to make it look good.

Tue, 01/15/2013 - 18:04 | 3155606 SpanishGoop
SpanishGoop's picture

It's more like heads bankers win, tails bankers win.

The taxpayer always lose.

 Must be a boring game for bankers, do not go to jail, doe not pass start, still receive the 200.


Tue, 01/15/2013 - 18:06 | 3155619 SheepDog-One
SheepDog-One's picture

Gosh, people are starting to see the reality that you're just an interest rate/tax slave and govt only does what its told by the bankers who took over using the 1871 Act, if not actually earlier than even that? Enjoy the open air concentration camp, free range sheeple.

Tue, 01/15/2013 - 18:07 | 3155620 reTARD
reTARD's picture

Still love how Jim Grant calls it the Department of the Debt. Perhaps there is irony in how it is also the DOD. They both are all about violence and destruction.

Tue, 01/15/2013 - 18:09 | 3155632 Debeachesand Je...
Debeachesand Jerseyshores's picture

Bankers get the Gold Medal and Taxpayers get the Golden Shower.

Tue, 01/15/2013 - 18:10 | 3155638 chockl
chockl's picture

Off with thier heads.

Tue, 01/15/2013 - 18:35 | 3155721 TheFourthStooge-ing
TheFourthStooge-ing's picture

...or, perhaps, "heads bankers keep them, tails they lose them," the only difference being whether they face the gallows or the guillotine.

Tue, 01/15/2013 - 18:11 | 3155644 ebworthen
ebworthen's picture

 I stopped at him talking about Mortgage Backed Securities being "interesting" at 0.10 cents on the dollar.

No MBS's please, or any other banker rehypothecation shadow banking overleveraged instruments to crash the system and get more bailouts and bonuses; not to mention that pricing MBS's is impossible because the FED is buying them.

Tue, 01/15/2013 - 18:33 | 3155712 sdmjake
sdmjake's picture

Keep watching. [Grant is one of the truly smart ones] And I believe he is right in identifying the biggest bubble of them all:

Misplaced Faith in the ability of the Central Banks to manage everything.

Tue, 01/15/2013 - 18:42 | 3155742 ebworthen
ebworthen's picture

Oh I agree with you and most of what he says, have heard it before in different interviews. 

Not sure why they included that clip, it detracts from his main points, I guess is what I was trying to say.

Yes, Central Banks can't manage shit except to prop mis-allocators and absconders of capital.

The only fix for mortgages is no government involvement, 20% down, and the originating bank holds the loan for life.

All that MERS crap (fraud) was precipitated by allowing banks to sell mortgages they originated, then allowing them to securitize them, and getting the government involved in guaranteeing them.


What did they think was going to happen?

May as well allow loans with 3% down guaranteed by the government to drug dealers, blame the users, and pass the bill to the taxpayers.

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