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Passport's John Burbank: "The Next Crisis May Look Like A 1987 Crash"

Tyler Durden's picture


John Burbank, whose Passport Capital has grown from $800K to $3.9 billion in 14 years (not your typical basement-dwelling, tinfoil blogger) was interviewed by Bloomberg TV on Friday, discussing his outlook on the US economy (bullish on San Francisco, bearish on the rest) which he defines as an "anomalous high change, low GDP" environment: "a lot of the change that is happening is degrading the GDP."

And while he is generally bullish on US companies, he is "very bearish" about liquidity, driven by what he calls a "tightening environment" (even with the Fed and BOJ still injecting billions under ZIRP and the ECB expanding its LTRO for the second time in 3 years, having pushed ZIRP into NIRP) and bad liquidity in the market.

Where it gets interesting: asked what could happen during the next crisis, Burbank's response: "it could fall fast"... "there is the possibility of a 1987 dislocation that does not reflect long-term economic stress but could reflect illiquidity in the market."

Furthermore it is good to see that unlike a legion of clairvoyants who "know" with pinpoint accuracy just where the S&P will close the year, Burbank does not fall for the usual predictive BS: "It's impossible to easily say: here what's going to happen because we're in a situation that nobody predicted and we've never confronted before.... The Fed's Fisher will be leading a tightening effort that Yellen may not have wanted." Asked if that could be the catalyst for a 1987-style correction, Burbank is laconic: "Could be. Illiquidity is a primary driver; it works both ways: can drive prices up and drive prices down."

His conclusion: "When there is a signal to sell, there won't be a lot of buying." That is assuming selling hasn't been made illegal by then or, as the recent bankruptcy of Banco Espirito Santo showed, if and when the time to sell comes, all sellable stocks are suddenly halted indefinitely while a committee of conflicted banks decides behind the scenes that no event of default has actually occurred.

Full interview below:


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Sun, 08/17/2014 - 15:15 | 5105719 ekm1
ekm1's picture

Incomplete explanation.

It will be far harsher than 1987, it will be 1987 + 2008.


No naked derivatives existed in 1987.

Sun, 08/17/2014 - 15:18 | 5105736 LawsofPhysics
LawsofPhysics's picture

Yes, and far more people had actual income with purchasing power.

rates are going to zero (think about where rates were in 1987), encouraging even more bad behavior...

Sun, 08/17/2014 - 15:22 | 5105749 ekm1
ekm1's picture

Oil was $20/barrell

Now it's 500% higher


This is oil in hyperinflation, costs of doing business are in hyperinflation

Sun, 08/17/2014 - 15:26 | 5105762 strannick
strannick's picture


That we could be so lucky.

The next crash will make 2008 look like 2007

Sun, 08/17/2014 - 15:37 | 5105784 ZerOhead
ZerOhead's picture

If pumping the market created an economy boosting 'wealth effect'

Will dumping the market create an economy crushing 'poverty effect' ?


And if so will Lululemon and 70% of the consumption based economy still be around at the bottom of the next 'downward dog'?

Sun, 08/17/2014 - 16:54 | 5106022 disabledvet
disabledvet's picture

That's the Great Lie...that there is such a thing as "the wealth effect." In fact the market rises because it is creating poverty "and everything else is identity politics."

Stay away from TRADING gold as dollars are becoming very scarce as energy production in the USA soars (certainly a silver standard of twenty bucks an ounce can be created here.)

There is a massive amount of liquidity in this market and simply put the Pro's have to be in it to win it. Those who have maintained doubt are now having their swamps of stale dollars and even more stale rhetoric drained.

You can definitely get a return on dollar denominated cash in excess of 4% right just gotta know where to put your savings.

I would avoid the totality of the private debt markets ("mezzanine finance as it is called) save for convertibles...and those should be handled only if you have an understanding that math does in fact exist.

Yes...the Dow can go to twenty thousand from here. Yes, interest rates on the thirty year can drop below 1%.

And I'm talking "in the next six months" not "yes, anything can happen because it's the future!"

Sun, 08/17/2014 - 17:11 | 5106066 NidStyles
NidStyles's picture

You sound like a paper pusher, so I will just do the smart thing and ignore you. 

Sun, 08/17/2014 - 19:30 | 5106481 Headbanger
Headbanger's picture

Gee, maybe I'll get laid a lot like I did in '87 too!

It's only.... 27 years ago..

Then again... Never mind..

Sun, 08/17/2014 - 22:26 | 5106931 old naughty
old naughty's picture

"...may look like..."

Aren't we constantly stride to greater, broader, eh...bader?"

Mon, 08/18/2014 - 00:19 | 5107391 Drunk In Church
Drunk In Church's picture

I agree.  A collapse followed by significant deflation.  But it has to happen, so why worry about it?  Bitchez.

Sun, 08/17/2014 - 18:32 | 5106334 CHX
CHX's picture

Yes, I think that was proven to be the case in the last crash. The middle class has already been effectively killed. IRP, NIRP and easy credit are the only life-support keeping this "economy" up while at the same time eroding the last pillar and hope for a real recovery. Any entity that is in debt cannot save, unless you take up credit to buy/gamble the S&P at/near the FATH now. Riiiight. Fool me once... 

Sun, 08/17/2014 - 15:36 | 5105801 Escrava Isaura
Escrava Isaura's picture

Article says:

“John Burbank, whose Passport Capital has grown from $800K to $3.9 billion in 14 year.”


Key Point

Sometime I wonder what I read come from deluded people, or, if they are just part of a massive Ponzi scheme.


Sun, 08/17/2014 - 15:53 | 5105847 Caviar Emptor
Caviar Emptor's picture

Ponzi? Check
There won't be a market crash. Algos will still trade with each other long after thermonuclear war wipes out the humans.

The market is Fed liquidity driven. The market will remain a barometer of the inflation side of biflation.

Sun, 08/17/2014 - 16:01 | 5105871 Escrava Isaura
Escrava Isaura's picture

Thanks, Caviar.

I thought, for a second, that I was alone.... here.

Sun, 08/17/2014 - 18:04 | 5106257 BobPaulson
BobPaulson's picture

You seem to have a fan club that down arrows every comment you make, regardless of what it is.

Sun, 08/17/2014 - 18:09 | 5106270 BrosephStiglitz
BrosephStiglitz's picture

What's your issue with the fan-club bro?  -1 for you..

If you don't have at least one or two haters, you have not been a Zerohedger for very long.

(Great name by the way.)

Sun, 08/17/2014 - 19:02 | 5106424 BobPaulson
BobPaulson's picture

+1 for you, and I will take that down arrow as a compliment!

Sun, 08/17/2014 - 21:41 | 5106772 Escrava Isaura
Escrava Isaura's picture

And, how about me?

Can I take down arrrows as complement, too?

Or is it too late?


Sun, 08/17/2014 - 15:59 | 5105865 Terminus C
Terminus C's picture

Yep, he started right at the bottm of the ponzi cycle.

Sun, 08/17/2014 - 23:36 | 5107222 TrulyBelieving
TrulyBelieving's picture

The article said that Spain made selling illigal. Now in a free market that could never happen. With eyes wide open it would seem easy to acknowlege the complete control these bankers and govt cohorts have over the market, and the manipulation going on. Much to the demise of the producers which are actually the ones paying, 'something for nothing' just isn't real, but it makes the criminals rich. 

Mon, 08/18/2014 - 02:38 | 5107622 TheCosmicTaco
TheCosmicTaco's picture

Great point, sir.


" Gee, Thelma, I wonder where most of the four trillion dollars that nice man Mr Bernanke printed ended up..."

Sun, 08/17/2014 - 16:24 | 5105933 Omen IV
Omen IV's picture

Oiil - $9.60 circa June 86'

See thru buildings

Sun, 08/17/2014 - 17:10 | 5106057 disabledvet
disabledvet's picture

I don't see whale oil traded anymore. Nor salt. I don't see icebergs be moved like they were back in day either.

"Price collapse equals default" save for treasuries because the Fed...and the ECB...and the BoJ...can and DO print "debt into existence." The US Fed is now tapering...Japanese "growth" is MINUS 7 percent and Europe is heading right back into recession. (Depression actually.) trying to cozy up to Russia as a "solution" simply has no basis in fact or reality.

Russia itself is in a recession.
The worst performing markets by far this year are in Europe's East.

Russia and "working with Russia" is making the problem worse not better.

This is one reason why acknowledging that the UN exists is a good thing. "All problems will be settled in Berlin"? Hitler is laughing his balls off right now. What kind of "security" are the French, Germans and Russians offering here?

Sun, 08/17/2014 - 17:14 | 5106074 NidStyles
NidStyles's picture

Russia's economy has been expanding for the past 7 years. Therefore, ergo, you are wrong.

Sun, 08/17/2014 - 17:57 | 5106242 BrosephStiglitz
BrosephStiglitz's picture

Very bullish on Russia macroeconomic fundamentals.  Not so bullish on the Russian institutional environment.

Sun, 08/17/2014 - 18:07 | 5106265 BobPaulson
BobPaulson's picture

Didn't Sock Puppet in Chief say they make nothing in Russia?

Sun, 08/17/2014 - 18:15 | 5106287 BrosephStiglitz
BrosephStiglitz's picture

Probably, and he might be half-right. They don't have to make much of anything though.  They are predominantly a commodity exporter, so they don't add value they simply have all the value-adding manufacturers in other countries by the balls.

They also have extremely low debt levels..  That is why NATO is trying to destroy the Ruble and bring the Oligarchs to their knees at any cost.  Would set back the BRICS countries' plans a fair bit.

Mon, 08/18/2014 - 03:00 | 5107645 TheCosmicTaco
TheCosmicTaco's picture

Russian oligarchs keep their wealth in rubles? Nyetski.


Dollares... Da! Da! Da!


Mon, 08/18/2014 - 05:06 | 5107730 BrosephStiglitz
BrosephStiglitz's picture

That's my point?  By trying to isolate the Russian financial system, and isolate Russian oligarchs from global financial markets the oligarchs will face three options- store money in foreign financial markets with risk of an asset seizure/freeze, repatriate financial assets home where the risk of a currency collapse is possible, plow everything into physical assets as best as possible and pray.

Physical assets are also at risk in foreign territories.

That is the western strategy.  Their only strategy really, aside from starting proxy wars on Russian borders.  Russia has them outgunned on energy and commodities, and is also most likely about even in terms of geopolitical leverage as long as the other BRICS trust them.  Furthermore, Russia has the luxury of not being perceived as a warmonger whereas the US is now perceived to be a warring nation by most.

Sun, 08/17/2014 - 17:38 | 5106173 BrosephStiglitz
BrosephStiglitz's picture


This is not oil in hyperinflation.  This is oil in the real economy ie: a mostly supply/demand driven relationship.  That is what is so scary.

I believe most of the "price inflation", although now bleeding over into the money supply, was most likely in financial assets.

Sun, 08/17/2014 - 17:55 | 5106232 Escrava Isaura
Escrava Isaura's picture


Great, and correct point about oil.

And you can clearly see it on the chart below.



Sun, 08/17/2014 - 18:45 | 5106369 ekm1
ekm1's picture

If oil and other commodities were stored as collateral for derivatives, price would be 50% less per supply/demand including bona fide hedging

Sun, 08/17/2014 - 18:59 | 5106418 Escrava Isaura
Escrava Isaura's picture

ekm, hard to say, but unlikely 50%. Flakmeister had it around 20%, if I am not mistaking.

Sun, 08/17/2014 - 22:47 | 5107010 Woodrox
Woodrox's picture

400% higher

Sun, 08/17/2014 - 15:22 | 5105750 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

Is Obama a homo?

Sun, 08/17/2014 - 16:00 | 5105868 Terminus C
Terminus C's picture

Are you a troll?

Sun, 08/17/2014 - 16:57 | 5106026 Escrava Isaura
Escrava Isaura's picture

Terminus C,

No! Leonardo Fibonacci2 has issues around his sexuality.  

Sun, 08/17/2014 - 17:13 | 5106072 mt paul
mt paul's picture

maybe he's a


Sun, 08/17/2014 - 19:00 | 5106286 Escrava Isaura
Sun, 08/17/2014 - 20:15 | 5106574 oudinot
oudinot's picture

Leonardo: Are you a 'homo'?

That's all you moan about.

You have an issue with your sexuality, no doubt. 

Sun, 08/17/2014 - 15:24 | 5105756 zorba THE GREEK
zorba THE GREEK's picture

The Fed can't and won't let the stock market crash. A crash in stocks would not only cause investors to lose everything, since most are on margin accounts, but every pension fund both private and public are heavily dependent on stocks because of the low bond yields. The economy would collapse and chaos would ensue.

Sun, 08/17/2014 - 15:26 | 5105766 LawsofPhysics
LawsofPhysics's picture

Bullshit.  The economy as we know it would collapse, yes, but that chaos would most definitely be neighborhood dependent.

Sun, 08/17/2014 - 15:30 | 5105782 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

BS again. The economy is going to crash no matter what the Fed does. Average joe six pack gets the bag and the big boys will have the short of a lifetime. This is an effective weapon for regime change. Right golfing Kenyan pigeon?

Sun, 08/17/2014 - 15:33 | 5105787 LawsofPhysics
LawsofPhysics's picture

"short of a lifetime" -- bullshit.


Full faith and credit.


Congrats on that short, too bad those paper promises don't mean shit anymore.

Sun, 08/17/2014 - 15:36 | 5105798 ekm1
ekm1's picture

People who do not do any real work do not understand the concept of:


PROFIT = REVENUE -..........(WAIT FOR IT).......COST


Onfly few are paying attention to COST of doing business, mostly those who actually produce something like farmers and small manufacturers

Sun, 08/17/2014 - 15:39 | 5105808 LawsofPhysics
LawsofPhysics's picture

I'd argue that no one really knows what the "cost" is because the central panners don't allow price discovery.

Sun, 08/17/2014 - 16:02 | 5105873 Terminus C
Terminus C's picture

and energy (oil) is subsidized by blood and force.

Sun, 08/17/2014 - 19:04 | 5106293 BobPaulson
BobPaulson's picture

As you dig deeper you find that what the fundamental problem is that there is no market, so no rules apply. It's all coercion. The NWO set figured out a while ago that if you could make yourself bigger than the market, you can pretty much control everything. For there to be supply and demand costs based on counterparties, you need to have choice, liquidity and a few other things which make a give trade small compared to the rebalancing effect of a "market".

Maybe markets are gone forever. I hope note, but it is not inconceivable that as the ant hill/ bee hive/ rats nest of the earth gets too full, it's hard to actually have flucutating markets. I'm saying this while looking out the hotel window in a polluted steel producing city in China teeming with people and I am not inspired by our species these days.

Mon, 08/18/2014 - 09:13 | 5108198 GoldenTool
GoldenTool's picture

In order to have a real market you must have rule of law, aka an even playing field.  We have rule of men which is feudalism 2.0.  Unless changed in the next 30 years this will go on a long time I think.

"Sic vita est"

Mon, 08/18/2014 - 07:51 | 5107913 spinone
spinone's picture

Please, cost is what you have to pay for a good or service.

Sun, 08/17/2014 - 15:34 | 5105792 ekm1
ekm1's picture

Not so.

Economy rebounded in 2009 when oil was $35.

Negative GDP started again in 2011 when oil crossed $80

Sun, 08/17/2014 - 18:19 | 5106297 BobPaulson
BobPaulson's picture

Energy is the only currency unit that could reliably replace gold except in its most liquid form (electricity) it is hard to store.

Sun, 08/17/2014 - 15:45 | 5105826 orez65
orez65's picture

"The economy is going to crash ..."

Well, no.

The current "economy" is an illusion.

It will be not be pretty, but it will not be the end of the world, as a "crash" implies.

Those with dollar denominated assets will be wiped out.

Those with "hard" assets will prevail.

"Hard" assets such as factories, real estate, gold, silver, people skills, etc will still be there after the "crash".

They'll take over from those with dollar denominated assets. Like an accounting revolution. 

It has to happen, that which is unsustainable will stop.

Sun, 08/17/2014 - 15:29 | 5105772 ekm1
ekm1's picture

No, it's opposite.

Bonds and stocks are not edible, neither can they be used to fuel a truck.


A crash will remove the chains of finance from the real economy.

Economy will rebound soon after that as it rebounded in 2009 when oil was $35 and died again in 2011 when oil crossed $80.


This is how it works.

Economy needs abundance of energy, not abundance of electrons in computers called stocks and bonds

Sun, 08/17/2014 - 15:37 | 5105796 LawsofPhysics
LawsofPhysics's picture

Correct.  Without calories available for consumption (and that's the important bit) you can't actually do shit. But then again ekm1 is an optimist, I recognize full well that there are no monetary, economic, or political solutions to resource scarcity.  People die, you start over, same as it ever was.


Perhaps we can interest these guys in a financial "product" of mass destruction.

Sun, 08/17/2014 - 16:07 | 5105887 assistedliving
assistedliving's picture

LoP "Perhaps we can interest these guys in a financial "product" of mass destruction."  As Warren taught us we already have.  Derivatives.  Simply

invented to circumvent the regulators, keep off the Balance Sheets, confound your local and state treasurers, trade amongst themselves until the musical chairs stop and devil take the hindmost (that wud be u n me)

Sun, 08/17/2014 - 18:24 | 5106314 BobPaulson
BobPaulson's picture

If only the derivatives traders kept to themselves. The problem is they participate in the world of real assets, and the dollar value of their activitity swamps the real economy.

Is the only way to kill the vampire to revert to barter?

Sun, 08/17/2014 - 16:15 | 5105914 ThroxxOfVron
ThroxxOfVron's picture

"calories available for consumption "

This is the only unit of account that does not change and the only liquidity that actually matters in any economy no matter how prehistoric or advanced.

Calories are money.  -ALL of the rest are derivative or counterfeit or illusion of money.

Note/clue: derivatives and illusions of calories may be traded, pyramided, counterfeited and/or promised; but, it is not possible to short or forward or option or account shift calories.

IMHO, calories are the only money that exists, and are likely the only viable unit of redeemable backing for currency.  

Sun, 08/17/2014 - 23:06 | 5107074 Kprime
Kprime's picture

I'd like one of your apples.  I will trade you this picture of a lucious, ripe, tomato.  It's so pretty you can almost taste it. You can see it's loaded with calories.

Mon, 08/18/2014 - 06:21 | 5107776 Optimusprime
Optimusprime's picture

Your example can be extended almost indefinitely into a basic metaphor for our way of life.  CogDis would probably have something to say on this score.

For those who like to read, Walker Percy's short but brilliant essay on semiotics in his great book Lost in the Cosmos is a good place to start on this subject.

Sun, 08/17/2014 - 17:50 | 5106220 Kirk2NCC1701
Kirk2NCC1701's picture

Agree.  Using fundamental laws/principles, I'd extend your argument to:  Available Precious Calories (Watts in SI units) + Available Precious Materials.

Where: Materials + Energy = Inputs

Labor = Value Add Work (effort+tech) +Information (knowledge), to create the Outputs (products+services).

Sun, 08/17/2014 - 15:28 | 5105774 indygo55
indygo55's picture

"The Fed can't and won't let the stock market crash"

They and their cohorts own most of it. They will just throw the kill switch if things look bad. The real action happens when the FED starts a new round of stimulus. Thats when the fireworks with the dollar starts IMO.

Sun, 08/17/2014 - 15:39 | 5105805 The Count
The Count's picture

That is all just an outer layer of the onion. A couple layers farther in you would find the richtest investment bankers plus who have placed their people in the white house, the Fed, etc who make sure that they can do whatever they feel like and should it go wrong, get bailed out. These are the same folks who finance all campaigns giving to both candidates, this way they cant't lose. 

Sun, 08/17/2014 - 15:49 | 5105837 eddiebe
eddiebe's picture

That's what I think too, Zorba. Doug Casey thinks markets dictate still. I don't believe it. The PTP or whatever their current name is have all markets under control via the dollar hegemony. They let air out of the various balloons as they see fit and blow bubbles as they see fit according to their algos. Right now stocks and bonds in the US for sure are in nosebleed bubble territory and at the same time they are inflating the western currencies like crazy. Nobody knows what anything is worth anymore, and even if they did it doesn't matter because PTP can adjust at will whatever currency they target. 

There is an issue they can't get around though. They can only keep wages depressed to a certain extent (thereby keeping a lid on inflation ) without causing riots, and they have to be careful as to how tightly they keep the lid on commodities for the same above reasons. 

So we will have inflation in areas of their choosing mostly, but certainly in fiat currencies.

Sun, 08/17/2014 - 15:59 | 5105859 Ocean22
Ocean22's picture

That's the game. Chaos. Total chaos. Problem reaction solution.

Sun, 08/17/2014 - 15:47 | 5105834 Cattender
Cattender's picture

i just keep buying silver... insane as i am.. LOL!

Sun, 08/17/2014 - 15:54 | 5105846 gatorboat
gatorboat's picture

"No naked derivatives existed in 1987."


Fed will print ALL THE DOLLARS NEEDED to keep stocks inflated, even if they have to buy up THE ENTIRE STOCK MARKET.

The US DOLLAR is what will CRASH.

Sun, 08/17/2014 - 15:56 | 5105856 ekm1
ekm1's picture

Crash of USD = world war 3


Careful what you wish for

Sun, 08/17/2014 - 16:02 | 5105869 LawsofPhysics
LawsofPhysics's picture

Perhaps, but war is inevitable.  As a veteran, my point is always simple, if you are going to go to war, then don't fuck around, go to war and exterminate your fucking enemy.  Welcome to the real world, as Nature/innovation cannot be "planned", that's like saying you can do away with free will or something.  Dangerously ignorant and stupid.  Again, I have seen enough war to not want to see it again, but  don't think the modern politico "gets" it.

Sun, 08/17/2014 - 16:07 | 5105889 ekm1
ekm1's picture

No objections, none whatsoever.


My point is that small wars like Iraq one to control oil are much better than large uncontrollable wars if USD collapses.


The concept of lesser evil applies

Sun, 08/17/2014 - 16:18 | 5105918 LawsofPhysics
LawsofPhysics's picture

"My point is that small wars like Iraq one to control oil are much better than large uncontrollable wars if USD collapses."  -  And my point is that such wars are not.  in the end you still lose control of all the resources and have chaos, but now you have no more capital or resources to invest in those fusion reactors etc.

When you are dealing with a closed system with finite resources, such "wars" just allow for the accellerated mis-allocation and mal-investment of capital and resources and exponential equations are a bitch.

I expect the "hunger games will start in the next 10 ten years.  Look for the government to clean out those ghettos with a draft (again).  military service and real sacrifice will become manditory again, it always does.  History is very clear on this.

Sun, 08/17/2014 - 16:33 | 5105964 ekm1
ekm1's picture

Somebody said a long while ago:


"Only the dead saw the end of wars"

Sun, 08/17/2014 - 16:39 | 5105985 Implied Violins
Implied Violins's picture

"I expect the "hunger games will start in the next 10 ten years. Look for the government to clean out those ghettos with a draft (again). military service and real sacrifice will become manditory again, it always does. History is very clear on this."

...not if we take the war to the people we really need to fight. That's the only way to end this cycle of madness.

Sun, 08/17/2014 - 16:42 | 5105991 LawsofPhysics
LawsofPhysics's picture

Yes, unfortunately, millions of years of evolution are not on your side.

Sun, 08/17/2014 - 19:05 | 5106328 BobPaulson
BobPaulson's picture

BTW, your comment on obliterating your enemy for strategic outcomes is the Sun Tzu concept. Agreed.

The current pilots of this plane, The Masters of War as Bob Dylan called them, don't give a shit about that. The outcome they want is to sell more arms to both sides.

Sun, 08/17/2014 - 23:09 | 5106918 Kprime
Kprime's picture

actually, when a thing has a low statistical probability over time, the larger the time line grows, the greater the probability.

Evolution may be slow, but when the millions of years pile up the little changes compound. Overnight, it seems, a new creature appears. Society is not immune from evolution's power of change. Revolutions are part of the process of evolution in societies.

With each round of metamorphosis new results become possible, nay even probable. At some point in the evolution of society the congregational body begins to recognize the cancer of .gov. As development continues, the fittest develop antibodies against this cancer. Note how the white blood cells of the US society were triggered to swarm to Bundy's defense. Societies are developing immune systems all over the globe.  These immune systems are learning to attack societal parasites (sociopaths). These parasitic s have historically drained the life blood of every society in human. Commonly they self promote and replicate unchecked as .govs. Their drain on societies ends parabolicly.

Those with governmental tendencies always turn cancerous and kill their host. If mankind is to survive over the long haul, mankind must develop total immunity to governments.  Mankind must learn to recognize, attack, and expel any individual humans, or small gathering of humans, which try to express the cancerous gene of government.

Mon, 08/18/2014 - 00:29 | 5107426 FreedomGuy
FreedomGuy's picture

Exactly, Laws. Even if one believes that Iraq is some sort of contrived war it is not controlled. It is like those "controlled burns" the forest service uses. An unexpected wind shift turns them into a raging uncontrolled disaster than mostly has to run its course.

Control is an illusion. Influence is reality.

Mon, 08/18/2014 - 07:54 | 5107923 spinone
spinone's picture

The low-intensity wars are about manuvering for resources and influence.  Total war is about exterminating your enemy.  Total war will mean ICBMs in the air.

Sun, 08/17/2014 - 16:47 | 5105992 ThroxxOfVron
ThroxxOfVron's picture

"small wars like Iraq one to control oil are much better than large uncontrollable wars"

ALL those who think and speak thus are obviously not in Iraq or any other place chosen to be the 'better' theater of sustained violence and chaos in lieu of conflict where they happen to actually be.

This is exactly why the politicians and corporatists that promote these conflicts should be confined to the locations of the most fierce fighting.  The arm-chair in front of the bloomberg termainl is nice and comfy when it isn't on the bombing range. 

Go live in Mosul for a decade and tell us what you think.

Sun, 08/17/2014 - 16:42 | 5105966 ThroxxOfVron
ThroxxOfVron's picture

 "if you are going to go to war, then don't fuck around, go to war and exterminate your fucking enemy."

Anything deviating from that simple precept is not war.  

The proliferation of expensive and often violently kinetic non extermination objective activities labelled nation building, police action, military adventure, etc., aren't explicitly war.

War has been replaced with a series of neo-corporatist neo-globalist police state adventures, religious and/or ethnic cleansings and forced migrations/conversions, expropriations, forced labor and enslavement regime activities.

The terminology of war has been also been broadly appropriated for use in the propaganda campaigns of these non-warfare violences and asymetric applictions of domestic laws/regulations/codes of conduct by those that profit from them.  The police state.  Big data/NSA/domestic spying.

War on poverty?  War on drugs?  War on terror?   --Orwellian advertising slogans...

Sun, 08/17/2014 - 16:54 | 5106021 Amish Hacker
Amish Hacker's picture

The War on Everything, because war is the most effective way to transfer huge sums of money from a lot of people to a few people. Therefore, the wars (and the full-spectrum militarization of American society) will continue.

Sun, 08/17/2014 - 17:50 | 5106221 christiangustafson
christiangustafson's picture

Throxx, you're getting darn near profound on us now.  Nice work.

Sun, 08/17/2014 - 21:19 | 5106716 TheRideNeverEnds
TheRideNeverEnds's picture

Like the 87 crash he says?  


So we are in for a shortlived event that will be an incredible buying opportunity at prices that will never be even remotely approached for the rest of human history?

Sun, 08/17/2014 - 23:36 | 5107220 Buck Johnson
Buck Johnson's picture

Bingo, and when it implodes it will take the dollar with it also.

Sun, 08/17/2014 - 15:18 | 5105732 HUGE_Gamma
HUGE_Gamma's picture

Will I be able to close out short positions and cash out my dollars?

Sun, 08/17/2014 - 15:21 | 5105751 Winston Churchill
Winston Churchill's picture

Does Hotel Kalifornia ring any bells ?

Sun, 08/17/2014 - 15:18 | 5105734 fonzannoon
fonzannoon's picture

Bullish on San Fran, bullish on US companies, just hoping for a violent 20% btfd. 


Sun, 08/17/2014 - 15:19 | 5105739 Eireann go Brach
Eireann go Brach's picture

The history books will call the next crash "The Obongo Crash". It will be defined as the moment all whites and blacks across the country finally gave up on the dickhead in the White house!

Sun, 08/17/2014 - 16:28 | 5105825 Deathrips
Deathrips's picture

It was not just one man..the history books will echo.


"In the year 2014 the populace was more concerned with what one person was responsible for the state of the American economy. Little did they know that a psy-op technology called controlled opposition was being unloaded by state owned media to keep control of the debt serfs.

Another weapon in the arsenal of controlled servitude was cognitive dissonance in which the people refused to believe that they rooted for the same team. A majority of the population identified with colors over simple logic. These two tools of disinfo gate keepers led to the ultimate collapse of the US Dollar. Till the end the financial war lords they called market makers and politicians preyed on the niave labor of the financially dependent. 


Ironic as it was in 2015 when the people chasing exceptional colored flags were put in FEMA camps for their safety, against the ever growing populace that had woken up and would not tolerate a distraction anymore. This all began with the controlled begging the government to protect them from critical thinkers. As they ate govt subsidized cheese and drank pond water, many wondered why they had ended up where they were. As the movement within the FEMA camps gained steam, the inhabitants painfully realized that they had asked for this ...and had what they had bleated for."


Fuck Fascist Socialists.



Sun, 08/17/2014 - 15:19 | 5105743 Bloppy
Bloppy's picture

The Fed WILL fail to control this market one day. Price controls don't hold up forever.

In the meantime, good to know Manhattanites have their priorities straight - they're abuzz over Rihanna being forced to wait in line for her drink:

Sun, 08/17/2014 - 15:21 | 5105747 eddiebe
eddiebe's picture

My guess is a fiat crisis coupled with stagflation and it has already started.

Sun, 08/17/2014 - 15:23 | 5105748 Peter Pan
Peter Pan's picture

The way it will work is that rather than offering stock for sale and having the market collapse, it will be required that only bids for specific quantities can be made to which sellers can then respond.

In other words, no sales in order to stop a shit load of stock owners hitting the sale button.

Come to think of it they might do the same with bonds to stop China and Russia dumping.

Sun, 08/17/2014 - 15:24 | 5105758 Winston Churchill
Winston Churchill's picture

A little late IMO. to stop Russia and China dumping.

Who is the bagholder ?

A much more important question.

Sun, 08/17/2014 - 15:34 | 5105777 The Count
The Count's picture

Anybody really still think reality is what it used to be? You pay extra to get an isle seat in a plane? Selling your own stocks is halted? A guy like Corzine is free? The NSA can do whatever they want?

Do not expect the media to provide any help...they NEVER ask the right questions, they just serve us shit from either the left or right spoon, which ever gives you more pleasure. 

Ever hear a reporter on CNN ask the white house spokesman who is funding ISIS in Irak and where are the arms coming from. Well, that would be Saudi Arabia and the Gulf states...our so-called allies. ISIS fighters are mostly not even Irakis so all the talk about reforming the Iraki government to be more 'inclusive' is a bunch of BS.

We are living in The Matrix my friends, and slowly but surely those that want to see the truth are getting a glimple of how f....ed it all is.

Sun, 08/17/2014 - 17:07 | 5106051 TruthTalker
TruthTalker's picture

You forgot to say that the US has armed ISIS as well and that ISIS is  Langley operation

Mon, 08/18/2014 - 00:34 | 5107434 FreedomGuy
FreedomGuy's picture

Most reporters nowadays are dumber than a box of rocks, but they look good on camera. They know how to look concerned and thoughtful on cue and change voice to a grave tone. However, they have little to no intellectual curiousity or skepticism of power unless it is the opposing party. Most are leftist tools unable to filter out their own biases from their reporting. So, they are good looking, stupid, incurious, unskeptical and highly biased. What do you expect from them?

Jon Corzine is still free and still rich.

Sun, 08/17/2014 - 15:33 | 5105789 jarana
jarana's picture

minute 7:15 or so; last sentence gives all the summary to me (not literally the same words):

"...we don't want to buy now. We want to be able to buy when [this-'87-like-thing-or-whatever-who-the-fuck-cares] happens..."

Sun, 08/17/2014 - 15:39 | 5105809 techstrategy
techstrategy's picture

It will restore balance.  Illiquid stocks trade at a significant premium because valuations reflect the ability to scalp premium in options, not the underlying value capture by a company.  Exit all low float, high multiple stocks for cash and gold.  Let those responsible hold all the risk and feel all the pain.

Sun, 08/17/2014 - 15:44 | 5105824 max2205
max2205's picture

Will it 86 or 87

Sun, 08/17/2014 - 15:48 | 5105835 No More Bubbles
No More Bubbles's picture

His fund will go back to $800K.  All the gains were fake bubble nonsense fueled by parabolic debt growth - debt that can't and won't ever be repaid at ANY interest rate.


Sun, 08/17/2014 - 15:51 | 5105842 Paracelsus
Paracelsus's picture

Ummm,they developed an  orderly way to wind up a business.


But,alas,all the assets are tied up by the court until such time as agreement is reached.


 The world has something like $400 Trillion in unhedged risk floating around.

JPM is probably responsible for $100 Trillion at least of this toxic debt.

JPM was responsible for the loans to England (The City) that allowed the Allies to continue fighting

during the 1st World War.It was largely because of that conflict from which our present disasters have

followed.Capitalism is like a finely engineered machine.But there are rules.Don't prop up failing businesses.

The Boardmembers and shareholders are responsible for the decisions which incurr profit or loss.

Japan has propped up Zombie banks for decades,and now they are an insolvent nation.

The USA started with the FED-supervised LTCM hedgefund bailout in the late 1990's.

Question: If the advantages of Hedge Funds being like a private investment club,high risk,high yield.

And they are very opaque,unwilling to open their books until someone brings a box of thumbscrews.

One more item: They are also highly leveraged,using risky computer models which can fail to represent the reality of  modern finance.LTCM was leveraged close to 100:1 when the Russian Bond default happened.

If they want to play with Vegas rules,then they should play with Vegas rules. (Think Kneecaps...) 

Sun, 08/17/2014 - 15:55 | 5105851 robertocarlos
robertocarlos's picture

I think I was earning 12% interest on a 5 year GIC. Let's try that again.

Sun, 08/17/2014 - 16:02 | 5105870 saveUSsavers
saveUSsavers's picture

'GD 'Ameritrade WILL BE **DOWN** ONLINE, mark my words! Same as before. Especially since Da Mafia Boyz now use Dark Pools.

Sun, 08/17/2014 - 16:04 | 5105880 robertocarlos
robertocarlos's picture

When we go broke, I'm going to hate working for a living.

Sun, 08/17/2014 - 16:15 | 5105915 Chippewa Partners
Chippewa Partners's picture

508 points and 22% down will be on their wish list when it's game over.

HFT and having more exchanges than O has golf clubs insure it.

There will be no liquidity.  

Sun, 08/17/2014 - 16:18 | 5105921 Fuku Ben
Fuku Ben's picture

Our market timing for a crash is tied to the opening of the Abyss

Check us out

Chronozon Capital - Profit from the Plunge into the Pit

Sun, 08/17/2014 - 16:26 | 5105937 TheFulishBastid
TheFulishBastid's picture

The economy will crash, unless it continues to go up.  At which point it will probably go down.

19.95/month and you too can trade, using the TFB proven system of dart throwing at stock picks.

Sun, 08/17/2014 - 16:26 | 5105941 q99x2
q99x2's picture

I want to print my own currency damn it.

Sun, 08/17/2014 - 16:29 | 5105944 db51
db51's picture

People, It's time for a reality check.   There will never be a market crash.  We may all be living in mud huts pissing in our drinking water, but the market will continue to infinity and beyond.   It is so detached from any reality now, it should be obvious to all.    I believe Pre 1960 Monopoly Money would be a better investment than Gold or Silver until such a time it is regulated by the Fed.

Sun, 08/17/2014 - 16:30 | 5105956 petruchio2100
petruchio2100's picture

Ironic how I learned from Ty that the CB's have bought the stock market. Crash will therefore be mitigated (or their baby).

Sun, 08/17/2014 - 17:04 | 5106045 Little Boomer
Little Boomer's picture

Like 1929.

Sun, 08/17/2014 - 18:00 | 5106186 petruchio2100
petruchio2100's picture

Since you wouldn't remark cleverly at the expense of reason, please respond to my next comment below, thanks.

Sun, 08/17/2014 - 17:18 | 5106092 bugs_
bugs_'s picture

1987 was far scarier than 2008.  even watching people clean their desks and walk out of lehman that weekend there didn't seem to be fear on the faces - just acceptance.

Sun, 08/17/2014 - 17:40 | 5106105 petruchio2100
petruchio2100's picture

According to ZH the CB's have bought in $21T, or 47%, of global equities just since the last crash. (I know my fellow bears can draw a straight line as well as I, so please either explain how the fact that at this rate all equities will be owned by CB's by 2021 doesn't mitigate crashes not sought by them, or change your handle to Moron Here.)

Sun, 08/17/2014 - 17:24 | 5106119 novictim
novictim's picture

Can there be a bank run these days givent he Federal reserve system and its willingness to print money?

(That was a real question btw)

Sun, 08/17/2014 - 17:40 | 5106181 GrinandBearit
GrinandBearit's picture

Another bear fantasy.   

A -22% loss in one day can not happen today... they would close the stock market.  

Way too many safety mechanisms in place today.

Sun, 08/17/2014 - 17:45 | 5106201 DarthVaderMentor
DarthVaderMentor's picture

Yep, you keep believing that. It could go down 22% in a millisecond, even before the safety mechanisms even realize there's a problem. BTW, are you aware that many safety mechanisms have been removed or inactivated?

Sun, 08/17/2014 - 18:42 | 5106357 GrinandBearit
GrinandBearit's picture

Even if it did, it would fully recover once the BTFD algos took over.

For the last 6 years being a bear has cost many here a LOT of money and caused much stress and anxiety.

The market is rigged from top to bottom and will most likely stay that way indefinitely.  Hugh Hendry was right to capitulate when he did.

Sun, 08/17/2014 - 20:38 | 5106631 Wait What
Wait What's picture

it always seems silly to me for ppl, esp. here on ZH, to express fear of that moment/day when all hell is going to break loose. spend your life thinking about and preparing for that one possible 'end of the world' scenario and you're going to miss out on all the things you could have been enjoying in the meanwhile.

if you really think the Fed won't just step in, buy everything in the name of 'financial stability' and restore order, even if it causes all manner of economic dislocation and strife, then you probably haven't been paying attention to what it has been doing for the last 30 years.

Sun, 08/17/2014 - 17:43 | 5106190 DarthVaderMentor
DarthVaderMentor's picture

The graph between what's coming and 1987 may look the same, but the magnitude will be so different you'll need a logarithmic market value y-axis to show it on the same chart.......

Sun, 08/17/2014 - 18:08 | 5106205 petruchio2100
petruchio2100's picture

Probably, but it will come from the bond market, not stocks.

Sun, 08/17/2014 - 19:26 | 5106478 GrinandBearit
GrinandBearit's picture

Been hearing stuff like this for the last 6 years.  2009/10/11/and 12 I actually fell for it too.

These markets are perfectly rigged... perfectly controlled.

Sun, 08/17/2014 - 22:51 | 5107022 Midnight Rider
Midnight Rider's picture

That's the way the smart money wants you to feel. After six long years of being beaten over the head with the concept that the Fed is in complete control of all the financial markets of the world, the last bear will finally roll over, just as they are positioned for it. Look, last year at this time the Dow was up over 2500 points. This year it is up 85. Can anybody do the math? I think there is a little bit of difference there. About 2400 points if my math is correct. Who wants to take the bet of a massive bull market taking off from historically unprecedented market valuations in an economy barely scraping by recessionary levels and massive headwinds ahead from numerous directions. Ok, who wants to take the bet on a market topping process staring them in the face?

Just do a survey of the posts on this website. More and more capitulation posts of the Fed never letting the market fall. Ever and forever. The Fed is all powerful. When the diehards roll over like they are today, everyone is on the same side of the trade, and the market shows a topping action allowing the smart money to position itself, I would take notice.

Your post is your own evidence.

Sun, 08/17/2014 - 18:10 | 5106274 Midnight Rider
Midnight Rider's picture

People, there is no free lunch. There wasn't in the 18th century or the 19th century and there still isn't today. The Fed thinks they can artificially push financial assets to the moon forever with no consequence. This is where they have forgotten to include the second half of the equation into their calculations thinking they can get away with it. Temporarily inflating and pushing wealth around from one place to another does more long term damage than the Fed is willing to admit. There are those on the Fed thwho recognize it and are attempting to normalize policy before it's too late. Are they going to succeed? Probably not. Besides, the vast majority of Americans do not have a major stake in the stock market. Do we need to be reminded again of the top 10% owning the vast majority of all equities? The Fed's current policies are causing major economic damage that we just haven't had to recognize yet. It's there though. Papered over in the trillions of phantom wealth that will once again vaporize just as every other bubble in recorded history. The Fed has not redefined the laws of physics.

Sun, 08/17/2014 - 23:08 | 5107079 AdvancingTime
AdvancingTime's picture

 The really big earners in recent years have benefited greatly from the surging stock prices as much of their income has come from financial markets and gains in equities. Many people seem to think this is the hope of our future. When you have more than you need or want to put money away for a rainy day where do you store it?

If you rated people on a "wealth chart" by how many tangible assets they owned you might be shocked to find much of the wealth people own is in paper and this is full of risk. More on this subject in the article below.

Mon, 08/18/2014 - 02:53 | 5107638 TheCosmicTaco
TheCosmicTaco's picture

Had a free lunch yesterday. God bless the Hare Krishna's.

Sun, 08/17/2014 - 19:18 | 5106459 swanpoint
swanpoint's picture

Black Monday looks like an 'ol 8am gold chart!


Seen this 50 times in 2 years

Sun, 08/17/2014 - 19:18 | 5106461 bluskyes
bluskyes's picture

The price-value divergence will continue, until people just drop out of the system all together, and the current system becomes immaterial. All "authorities" are against the free market.

The only free market is the black market.

Mon, 08/18/2014 - 00:39 | 5107446 hedgiex
hedgiex's picture

YES. The sooner the black market emerges the better. US/EC people have no experience like the generations in crony infested economies of S America/Asia on how to survive and build wealth away from the financial market economies and outside the controls  of Govts.

The psyche that the markets are reflections of economies are deep rooted. They are not in present times and it do not matter whether the markets crash or not.


Sun, 08/17/2014 - 20:21 | 5106598 Quaderratic Probing
Quaderratic Probing's picture

No liquidity now....

Sun, 08/17/2014 - 20:33 | 5106621 Wait What
Wait What's picture

is this the same Passport Capital that blew up its basic materials fund 2 yrs ago?

c'mon, TD find someone with some credibility.

the Fed will never allow markets to fall. they will ride this whip til the wheels fall off, which they can do til the rest of the world decides US financial hegemonic status needs to be tossed aside.

no one has the balls to do that completely... yet. check back in a half decade or so.

Sun, 08/17/2014 - 23:18 | 5107121 duck dodgers
duck dodgers's picture

"no one has the balls to do that completely... yet. check back in a half decade or so"


It seems to me the BRICS are moving in that direction as fast as they can.

Sun, 08/17/2014 - 23:05 | 5107072 AdvancingTime
AdvancingTime's picture

Over time we tend to forget the path we have taken to reach where we are. I'm amazed at how our day of reckoning is always being kicked out a year or two and never going to happen tomorrow. It is as if we can't handle what is coming at us and need more time.

For a long time I have been trying to develop a scenario for a market "super crash" and a reasonable map that would arrive at such a situation. Below is an article looking at how it could happen sooner rather than later.

Mon, 08/18/2014 - 02:05 | 5107598 boeing747
boeing747's picture

'Oil' is still the key to coming crash. Maybe I can see $200 oil this time (1st in my life time).

Ukraine which owns key pipelines is in war.

ISIS shit is near major oil fields.

South China Sea where main oil tankers have to go thru
is in near-war.

TBTF carefully controls the pace of progress. Next time you know whom they will blame.

Mon, 08/18/2014 - 02:43 | 5107625 TheCosmicTaco
TheCosmicTaco's picture

When China crashes, it will take the rest of Asia and much of the world down.


It's gonna be a financial Armageddon. For sure.


Mon, 08/18/2014 - 02:49 | 5107628 TheCosmicTaco
TheCosmicTaco's picture

Methinks all this apparent liquidity is an illusion.


It's gonna vanish like a snowflake in the Sahara. Soon.


Mon, 08/18/2014 - 03:11 | 5107659 damicol
damicol's picture

Ok for the sake of argument lets assume the markets can only ever go up as the CB's are owning more and more of it.

 Therefore the Fed will not let it crash.

So where does this logic take us.

Private savings will become a smaller and smaller part of the market, for one thing salaries and disposable is going down and debt is rising, and more are retiring.

As they retire, retirement funds have to liquidate more and more equities  and bonds to pay the pensions and benefits..

 Who are the buyers .

Not Joe soap or his sons who are tapped out and couldn't afford whaazzamoo wizzy corp stock at 98X and zero earnings or dividends, and 2.35 trillion in debt and a price tag of $96,237 a share.

So the fed buys it.


Where does the Fed get the money to buy this stock.

 From the taxpayer.


Erm no, the entire tax take is not enough to fund the rank insanity of the spending so far and the deficit just goes up


Raise taxes,  maybe, confiscate , maybe, but that just reduces tax take overall and depresses economy.

SO, print it,

Thats the only option

Result market rises, pension gets paid and debt increases and interest to service goes up.

Wealth created, ZERO, minus additional cash now in system, minus interest payment, equals wealth destruction.

Trajectory, Higher inflation, lower wages, higher taxes,

MOAR printing. Never ending printing.

Just like Japan, just like Europe, Just like Argentina, Just like Ghana, Just like Venezuela, Just like Zimbabwe.

Need any more examples.

OR the Fed does not buy them and they get dumped on the market.

Who will buy.

Not me, Maybe you, Maybe no a single sensible person, and certainly not any billionaire who is dumping as fast as he can right now .

See Buffet.

What happens then. Crash or rise to infinity.

Crash, then all your retirement funds get wiped out,

Rise to infinity then inflation will wipe you out and the billionaires too.

Who do you think will win.

When the billionaires are out as far as they can get out they will dump the market and let you fight and kill each other over bread.

Its a slow process, it takes time to manage an exit whilst propping the market close to all time high. with lots of fools and idiots and a MSM working 24/7  selling it for them, but they are getting out, and getting out fast.

And if that's the case then the market will not see SPY at 1980 again before 2020 minimum.

A gradual drift down is my best guess until it gets to about 1800 then off the cliff it goes as the market is thrown to the wolves.




Mon, 08/18/2014 - 16:56 | 5110680 flow5
flow5's picture

Tripe. 87 was the result of the largest contraction in real-output since the Great-Depression. 2014's 4th qtr flash crash is the product of a sharp decline in the roc of MVt. It will be much easier to reverse.

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