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Bob Janjuah: "Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer"

Tyler Durden's picture


Bob Janjuah is back.

Bob's World: Monetary Anarchy

Since my last note from early January I have spent the last few weeks assessing data and price action, as well as spending a lot of time talking to clients and trying to analyse the words and deeds of policymakers. In no particular order, my takeaways are as follows:

1 – Greece (and the whole eurozone story) continues to lurch about, seemingly perpetually, from Farce to Tragedy. Policy seems to be focused on protecting and preserving vested interests, with little consideration given to the dreadful conditions the people of Greece and other "peripherals" are being forced to live with. However, it seems that eurozone leaders may be about to pour even more taxpayer money down into the black hole that is Greece, primarily to help the banks in Europe, at the expense of perhaps a decade of suffering by the Greek populace. For my part, I am now consigning the Greece/Peripherals/Eurozone story to the box marked "self-serving political debacle" and from here on in I will simplify Europe as follows: Until, and unless, Germany signs up to full fiscal union, a eurozone breakup is likely. And depending on how long we can continue to "kick the can" down the road in order to protect the eurozone banks, the eurozone will be consigned to an extended period of weak growth, which in turn means ever decreasing debt sustainability. Ultimately this means that the end game will simply be more devastating for us all the longer we are forced to wait. Investors should be fully aware that "home" bias amongst real money investors is now "off the charts". This is not a good development for the eurozone, unless of course our leaders are preparing for break up, or at least considering it as a viable option.

2 – I am staggered at how easily the concepts of Democracy and the Rule of Law – two of the pillars of the modern world – have been brushed aside in the interests of political expediency. This is not just a eurozone phenomenon but of course the removal of elected governments and the instalment of "insider" technocrats who simply serve the interests of the elite has become a specialisation in Europe. Many will think this kind of development is not a big deal and is instead may be what is needed. Personally I am absolutely certain that the kind of totalitarianism being pushed on us by our leaders will – if allowed to persist and fester – end with consequences which are way beyond anything the printing presses of our central banks could ever hope to contain. Communism failed badly. Why then are we arguably trying to resurrect a version of it, particularly in Europe? Are the banks so powerful that we are all beholden to them and the biggest nonsense of all – that defaults should never happen (unless said defaults are trivial or largely meaningless)?

3 – More broadly, with Mr Draghi now in situ, it is clear that I misread and misunderstood two things. First, I am simply stunned that our  policymakers seem so one-dimensional, so short-termist, and so utterly bereft of courage or ideas. It now seems obvious that in response to the financial crisis that has been with us for five years and counting, we are being "told" to double up on these same policy decisions. The crisis was caused by central bankers mispricing the cost of capital, which forced a misallocation of capital, driven by debt/leverage, which was ultimately exposed as a hideous asset bubble which then collapsed, destroying the lives and livelihoods of tens of millions of relatively innocent people. Well now, if you listen to the latest from Bernanke and Draghi, it seems that the only solution they can offer up  is to yet again misprice the cost of capital, in the hope that, yet again, through increased leverage/debt, we are yet again "greedy" enough to misallocate capital, which in turn will lead to yet another round of asset bubbles. Such asset bubbles are meant to delude us into believing that we are now "richer". When – as they do by definition – these bubbles burst, those who have been suckered in will realise that their "wealth" is instead an illusion, which in turn will be replaced by default risk.

Secondly, I have clearly underestimated the ‘market’s’ willingness, nay desperation, to go along with this ultimately ruinous policy path. Personally, I think this is extremely worrying – the number of clients who tell me that they know they are being forced into playing a game that will end in disaster, but who feel they have to play along and who hope they will get out before it turns, is a depressingly familiar old tale. Some such folks hang onto the idea that Draghi/LTRO changed the asymmetry of risk from deeply negative to positive. Yet even these folks know that printing more money/more liquidity/more debt/more leverage is not a viable solution to our ills, and in fact will mean true supply side reform and the search for true competiveness and sustainable growth will be further cast aside, as the focus will be on the "easy gains" to be made in markets.

4 - Assuming that we are in yet another liquidity fuelled rally courtesy of Bernanke and Draghi, then there are some key things to remember. First, such rallies can last days, weeks, months, perhaps we could even extend into 2013. And – to give a proxy guide – the S&P could end up in the high 1500s again if this current binge lasts into 2013. The problem with such liquidity fuelled set-ups is that they can last longer and get bigger than any reasonable logic would dictate. The issue here is not what central bankers say – it now seems clear that Bernanke and Draghi will say whatever it takes to keep the market supplied with ample liquidity – but what they can do. In this respect one either believes that central bankers can do whatever they like whenever they like, or one believes there are limits. I think there are limits to what Bernanke and Draghi can do, and once we hit those limits these bubbles will burst, with increasingly greater consequences the longer we are forced to wait. Do I know when we may hit these limits? I hope that it is sooner rather than later, but I have no real conviction.

Secondly, when looking for where the bubbles may be, realise this: in this current cycle, where central bank balance sheets are at the core, the bubble is everywhere – in stocks, in bonds, in growth expectation, in credit spreads, in currencies, in commodity prices, in most real asset prices – you name it! This is why I think that this current bubble, if it is allowed to fester and develop into 2013, will have such widespread consequences when it bursts that it will make 2008 feel, relatively speaking, like a bull market.

Third, when this bubble bursts, I don’t think there is an easy way out. Who will be the bail-out provider? We already have extraordinarily weak and fragile government balance sheets, ditto banking balance sheets and consumer balance sheets. The big cap corporate balance sheet is sound, but it already worries about how bad the real economy hit will be when the next bubble bursts. As such, the corporate sector – which has a huge degree of "control" over the political classes – will keeps its powder dry until asset prices fall to clearing levels. When this happens they will be the biggest buyer of truly cheap assets in town, but not before then. The really dangerous thing about this next bubble is that it will likely ruin current central bank credibility, as their balance sheet expansion, accumulating ever more "toxic" assets, is at the centre of the current cycle. As a result, the central bank decision-making function is now (increasingly) deeply compromised, if not utterly at odds with its own raison d'être. This of course means that if/when the current cycle implodes, central banks which have seen explosive balance sheet growth will add to the problems, rather than being able to act as credible lenders of last resort. A resulting consequence is that we will, at that point, usher in a new era of central banking and policy settings, where the key will be to regain a semblance of credibility and independence. This will be good news. But we will likely have to go through the "bust" first.

5 – I am not well equipped to navigate bubbles where tactical views and secular views are all thrown into the melting pot together, where there is no visibility, where – as one client put it to me recently – we have Monetary Anarchy running riot, where the elastic band between the ‘real’ economy and the current liquidity-fuelled markets is stretched further and further beyond credulity, and where history tells us that policymakers will happily stand by whilst bubbles are being pumped up, and hope that they are onto their next job before it all comes tumbling down. It seems that the 07/08/09 part of this crisis has resulted in zero lessons learned. In fact it is much worse than that as we are instead being asked to double up on a strategy which I fear will end in failure. As such, clearly my outlook in my last note needs to be re-assessed in terms of the latest developments. Whilst equity market levels are still within the tolerance limits set out in this previous note, my timing is clearly being "stretched". Unfortunately for me, and as warned in the prior note, if my outlook set out therein is proven to be wrong, it is because I am overly cautious. I say "unfortunately" because the longer we have to wait for the "final" resolution to the global financial crisis, the bigger and more devastating the final leg lower will be. I have an extremely high level of conviction on this point.

6 – So, in terms of markets, be warned. My personal recommendation is to sit in Gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities. Bond and Currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears. Real assets are relatively attractive. But I am going to wait for this current central bank bubble to burst before going all in. I may be waiting 5 days, 5 weeks, 5 months, perhaps 5 quarters. It all depends on when and how our central bank leaders are exposed as lacking credibility and/or lacking the mandates to keep pumping liquidity into the system. The end of the bubble will be sign posted by either monetary anarchy creating major real economy inflation or by a deflationary credit collapse (if they run out of pumping "mandates"). The end game is incredibly binary in my view, but in between it is pretty much a random walk. Either way, "bonds are toast" in any secular timeframe (due either to huge inflationary pressures, or due to a deflationary credit collapse), which in turn means that asset bubbles in risky assets will get crushed on a secular basis.

My colleague Kevin Gaynor has a more nuanced view and he feels that we may well avoid the bubble outcome, as political hurdles, political changes, growth and earnings data will all very quickly undermine central bankers and their bubble vision. For all our (long term) sakes, I hope I am wrong when it comes to fearing another round of liquidity-fuelled bubbles, and that he is right that "good sense? will prevail soon.

I will continue to use the Dow/Gold charts to continue to guide me going forward. The USD price of an ounce of gold and the Dow will, I believe, converge at/around 1, at some point over the next 2 years or so. I have extremely high conviction on this. What I am not sure on is whether we converge at 7000+/-, or at 14000+/-. Because I do believe that even Bernanke and Draghi cannot do as they wish and that there are some limits to the recklessness of policymakers, I still lean towards a deflationary resolution at/about 7000 in the next year or two. Pretty vague, I know, buts it's the best I can do right now, and what is clear is that, in the world I fear ahead, gold is a winner either way – remember, gold is a great (monetary) inflation hedge, and in a deflationary credit collapse gold works as a store of value/wealth as it carries zero credit risk.

As a "credit" guy at heart I see more likelihood in a deflationary credit (i.e., a "real") collapse rather than a real economy inflationary (nominal) collapse. Either way however, what is clear is that if Bernanke and Draghi are allowed to continue on their current policy path for much longer, then whatever the final outcome will be, it will likely leave a deep scar on us for decades. Which on a ten-year timeframe may not be such a bad thing as it should kill off monetarism and usher in a new era of monetary and fiscal prudence? In the near term, LTRO2 at month-end is the next clear focus for markets, more so than Greece. If LTRO2 is USD1trn or more, the market will take that as a signal to load on more leverage, more risk and more ‘carry’. If LTRO2 is in the order of USD250bn to USD500bn, Risk Off will be the order of the day as markets will start to fear that central bankers are having to reign back-in their current policies, and that as a result we face another period where central bankers and policymakers fall back behind the curve. LTRO1 clearly took policymakers from behind to ahead of the curve, but this is an extremely fluid situation, where doing nothing is, in reality, the same as going backwards. As the skew of expectations is to a large LTRO2, a LTRO2 take-up in between these ranges is likely to be viewed with neutrality/mild disappointment.


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Mon, 02/20/2012 - 09:55 | 2177216 XtraBullish
XtraBullish's picture

This commentary sounds exactly like Joe Granville in 1982 - wrong wrong and more wrong about THE RALLY BEING A BEAR MARKET RALLY - went from 865 to 14,300 on the Dow.

Mon, 02/20/2012 - 10:00 | 2177225 BW
BW's picture

This is not a bull market in stocks, you are witnessing the crashing of the US dollar don't be fooled.  The US dollar is crashing in plain view.  That is why the market is up everyday.  Zimbabwai was the best performing stock market, too. 

Mon, 02/20/2012 - 11:13 | 2177423 francis_sawyer
francis_sawyer's picture

What I find fascinating is this... The laugh 'sort of' on everyone's mind, for more than a decade since the book came out, is DOW 36,000...

Now let's just say hypothetically, that the DOW would reach 36,000, but then do a long term technical pattern re-trace (using a normal fibonacci pattern of 61.2%)... That would revert it back to 13,680 (pretty much between where we are now & 14,000)...

So let's also say that to get to 36,000, the USD would have lose an equivalent amount in buying power (on the surface, that would have all the looks of a serious currency collapse)...

But then you could try to zig zag your way between not letting the DOW rise too much, and playing the leapfrog game of devaluing currencies (vs. hard assets)...

I'm not playing the game... But it seems to me that it is a lot easier to 'fool' people into incremental currency devaluation (more or less what's going on right now), than the 'boom-bust' periods of asset price appreciation... The only caveat is that if the banksters see the money that still remains in pension funds, IRA's etc. is the only fruit left to pick, they're sure as hell going to go after it... & to do that, you'd need another rise in the stock market (however implausible that might seem at the moment)...

Mon, 02/20/2012 - 10:03 | 2177235 rrrr
rrrr's picture

The stock market rally is a side issue. It is a relatively small event caused by a number of larger events, the primary mover of which is the real problem. The real problem is what we need to be focusing our attention on.

Mon, 02/20/2012 - 10:04 | 2177237 CH1
CH1's picture

Then go all-in with GM and Groupon!!

Mon, 02/20/2012 - 09:56 | 2177218 Freegolder
Freegolder's picture

I agree with Bob.

Physical Gold...get you some.

Mon, 02/20/2012 - 09:58 | 2177221 apberusdisvet
apberusdisvet's picture

 The smell of fascism in the morning is like a wet fart in an elevator.

Mon, 02/20/2012 - 10:01 | 2177228 It is a bargin ...
It is a bargin my friend's picture

I like this guy, hes often on CNBC Europe , they had that idiot Bob Parker this morning who said defualt was 100% priced in.....tosser, I nearly hit the wife, looking back on it should of anyway, cow

Mon, 02/20/2012 - 10:12 | 2177233 Martin W
Martin W's picture

I need to order some goats on E-Bay quickly... I won't starve after doom.

Mon, 02/20/2012 - 10:03 | 2177234 maxcody
maxcody's picture

I like high dividend pipelines.  I like the ones like BPL which has been downgraded or newer ones like WMB that will pay their way until growth returns.  BMY, PPE,MRK pay good dividends and selected asset managers. 






Mon, 02/20/2012 - 10:04 | 2177241 asteroids
asteroids's picture

Bob is right. They central bankers have dilberatly chosen to ignore Moral Hazard for political expediancey. There will be a terrible price to pay. It'll either be severe inflation or severe deflation. Gold is a winner either way. There IS another way out that I see. Drastic government spending in combination with drastic reduction in taxes and zero inflation. That should spur growth.

Mon, 02/20/2012 - 10:09 | 2177258 dizzyfingers
dizzyfingers's picture


As likely as asteroids..."in combination with drastic reduction in taxes..."

More likely that all humans will jump off the earth.

Mon, 02/20/2012 - 10:20 | 2177287 rrrr
rrrr's picture

One problem with your suggestion, "Drastic government spending in combination with drastic reduction in taxes and zero inflation," is that a large segment of our society, the baby boomers, are leaving the work force. Also, they have already begun dying off. These have been heavy consumers, eager to spend and enjoy. Their children and grandchildren, many of them, tend to be lazy, uninformed, and non-productive. The elements in our society that have been behind much of the growth since the Second World War are in the process of becoming a smaller influence in our country. It isn't realisitic to expect that our nation will experience long term significant growth, given this dynamics.

Mon, 02/20/2012 - 10:29 | 2177316 dizzyfingers
dizzyfingers's picture

rrr --  You are so right.

Been thinking about this for 30 years though didn't factor in "Their children and grandchildren (many) tend to be lazy, uninformed, and non-productive." (wasn't that in the NWO plan, though?) Along with millions of abortions of US babies who might have saved us from the need to bring in migrants, legal and illegal to swell the tax take and who might have provided some brainpower, the incontravertibility of demographic evidence gobsmacks lame theories of "experts" and empty-headed prognosticators -- it's all there to see if only sheeple could understand anything at all.

Mon, 02/20/2012 - 11:22 | 2177453 rrrr
rrrr's picture

You ask, "wasn't that in the NWO plan, though?"

Certainly it would be consistent with their wishes. And this does tend to indicate that if it wasn't planned it would at least have been expected.

Mon, 02/20/2012 - 10:44 | 2177349 roccman
roccman's picture

no cheap energy no growth


game over


really - game over

Mon, 02/20/2012 - 10:06 | 2177243 TooBearish
TooBearish's picture

Bob-There is a third path to the binary outcome that is clearly apparent.

It is ugly and scary.

The continued trend in merger of corporate and state interests that the ECONomist politely labeled "state capitalism" becomes even further entrenched.  The zombie banks that the Volcker rule and other fee grapping regulators are seeking are desparate in keeping asset values high as well.  Corporations that are flush with cash will only use inflated equity values to consolidate their industries unimpeded by monoply regulation using their own inflated stock prices.  This is the echo bubble of the late 20th century with the kicker that government will not impede agressive vertical and horizontal intergration on a global basis.

New highs in nominal stock prices are likely as implicit inflation rockets as no ZIRP capital finds its way into productive long term projects like energy and resource development, limiting new supply.  As in the last cycle of risk asset mispricing, capital allocation becomes horded capital and misallocated at the periphery, ie the big get bigger and the small fry trying to play catch-up or maintain some market share will make the marginal investment and blow up due to lack of staying power.  HIGH CAP TRANS-NATIONAL enties will emerge as the dominate providers of not only finished goods but also basic stables to the extreme that they will be able to dicate prices to the consumer at will. Market forces of supply and demand in a competive, transparent market will become the relic of classical economics. With the merger of govt and corportate interests and supervision of such integrated, the feudalistic fascist model is the end game. 

There is no opposing force to this trend.


Mon, 02/20/2012 - 10:22 | 2177292 adr
adr's picture

Like I said before. You have two $10 billion corporations and one $6 billion in one market. The $6 billion corp can't compete in the minds of Wall Street so their stock is punished. In order to be saved and the desire for one of the $10 billion corps to grow, the smaller corporation is bought out creating a $16 billion behemoth. Now the reamaining $10 billion corporation can't compete. Cycle goes on and on all because of the legal obligation to maximize revenue for shareholders. THERE IS NO ENDLESS GROWTH.

Mon, 02/20/2012 - 10:46 | 2177354 roccman
roccman's picture

the blue ribbon goes to you sir


there is no endless growth

Mon, 02/20/2012 - 10:10 | 2177262 Dr. Engali
Dr. Engali's picture

The higher they march this no volume market the deeper the crash will be. We will see just how "deep and liquid" these markets are when the liquidity searches begin.

Mon, 02/20/2012 - 10:12 | 2177263 JohnnyBriefcase
JohnnyBriefcase's picture

What the fuck is the point?!


This just keeps getting more retarded the more i read, watch, listen, speak or think about it.


Fuck. Can we end this now plz.

Mon, 02/20/2012 - 10:14 | 2177274 adr
adr's picture

If you look at the market from the perspective of prior to 2008, you can't even recognize it anymore. That is the point. The market can now be manipulated in any direction at will without any ability for individuals to change it.

I don't know what system we now have. It isn't facism or socialism. The closest system is feudalism with warring corporations taking over the position of fueding nobles. Instead or knights on horseback and legions of archers bent on conquering your neigbors castle, you have legions of lawyers and loose patent law to break the walls of your competitor.

The only things for certain is nothing is what it seems. There is no data that isn't falsified. Corporate balance sheets aren't as healthy as they appear. The common innocent man will lose.

Mon, 02/20/2012 - 10:14 | 2177275 LongSoupLine
LongSoupLine's picture

Thank God we still have the purity of...AAPL.


Oh, wait...what's a "Foxconn"?  awwww, crap.

Mon, 02/20/2012 - 10:16 | 2177277 BlackVoid
BlackVoid's picture

It may not burst. Instead confidence will erode in paper and there will be a flight to hard assets.

"Who will be the bail-out provider?" The FED, the ECB, the BOJ. There is no limit, they can create almost infinite amount of money.  


Mon, 02/20/2012 - 10:22 | 2177295 Dr. Engali
Dr. Engali's picture

Hey why hasn't anybody answered my requests in FarmVille ?

Wed, 02/22/2012 - 12:44 | 2185134 PrinceDraxx
PrinceDraxx's picture

We quit playing Farmville when the Wall Street Bankers started charging us rent to stay on our farms.

Mon, 02/20/2012 - 10:24 | 2177301 slewie the pi-rat
slewie the pi-rat's picture

# 6:

So, in terms of markets, be warned. My personal recommendation is to sit in Gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities. Bond and Currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears.

bobJ and slewie will leave robo_T and the "ETF singers" to climb the fuking wall0'worry without us!

Mon, 02/20/2012 - 10:50 | 2177365 fuu
fuu's picture

I want to hang with you guys.

Mon, 02/20/2012 - 10:28 | 2177313 ballafun
ballafun's picture

Finally GOT the ID, starting with my first comment!

Mon, 02/20/2012 - 10:43 | 2177345 Dr. Engali
Dr. Engali's picture

Welcome to fight club The 8th rule of fight club is , if this is your first night at fight club you have to fight.

Mon, 02/20/2012 - 10:43 | 2177346 MsCreant
MsCreant's picture

Wonder what a ballafun would get for an avatar?

Mon, 02/20/2012 - 12:34 | 2177698 Likstane
Likstane's picture

Hope you can swim. Lot of boating accidents around here.

Mon, 02/20/2012 - 16:24 | 2178367 Jena
Jena's picture

But do come in.  The water's fine.

Mon, 02/20/2012 - 10:43 | 2177343 marcusfenix
marcusfenix's picture

"good sense will prevail soon"

man, I haven't laughed that hard in long time...

Mon, 02/20/2012 - 10:43 | 2177347 Hubbs
Hubbs's picture

I think this is one of the more realistic articles out there and basically it boils down to the fact that things are so messed up that it is impossible what to predict what will happen to the extent that any of us can really plan around it.

Mon, 02/20/2012 - 10:50 | 2177366 craig_slater_nl
craig_slater_nl's picture

Surely, in the deflationary bust scenario then everything is going to get sold, including gold, and in fact their would be much better opportunities to buy gold at a lower price with an increased purchasing power.

Mon, 02/20/2012 - 11:47 | 2177538 jimmyjames
jimmyjames's picture

Surely, in the deflationary bust scenario then everything is going to get sold, including gold, and in fact their would be much better opportunities to buy gold at a lower price with an increased purchasing power.


Nope-in a deflationary scenario-money-all money which gold is the king of-is hoarded and it becomes much more valuable relative to the price of goods and services-

It is credit that deflates-not dollars or gold because they cannot deflate-they are always "somewhere"

Mon, 02/20/2012 - 11:01 | 2177369 Bansters-in-my-...
Bansters-in-my- feces's picture

Speaking of manipulation.check out the big "W" on Kitcos gold chart and you will see central planning at its best.

Ps.   Fuck you you little weasel timmy.

Pss. You too Jon Nerdler

I know you read ZeroHedge.

Mon, 02/20/2012 - 10:53 | 2177375 xcehn
xcehn's picture

Funny how the worse things get, the more everyone thinks they're improving.  Trying to warn those around you about this when they have been brainwashed by endless rallies is senseless.

Mon, 02/20/2012 - 11:16 | 2177433 marcusfenix
marcusfenix's picture

yup...all I ever get for my efforts is the MSM says everything is alright, unemployment is dropping, we are going to vote Obummer out in 2012 and take back the country, bomb Iran, empty, glassy eyed, I rather talk about my kids soccer game, thousand yard stare. 

Mon, 02/20/2012 - 10:55 | 2177379 1835jackson
1835jackson's picture

A deflationary death spiral or a rampant inflationary tax increase...what's your pleasure?

Mon, 02/20/2012 - 11:04 | 2177402 dizzyfingers
Mon, 02/20/2012 - 11:04 | 2177403 Coffin Dodger
Coffin Dodger's picture

All the evidence required to substantiate Bob's outlook is available to everyone, and it's all around them.

ZH'ers chose to inspect it closely and work through the ramifications. The vast majority of 'normal people' can't bear to consider the implications and pretend it's happening to someone else, somewhere else.

You've been looted all your life. Your parents were looted. Your grandparents. You thought you lived in a free and fair country. You thought the law applied to everyone.

You think they don't see the tide turning? Of course they do. They are shit scared. Animals backed in to a corner can only lash out.

It's time to tell everyone you care about, exactly what you know. Don't shout it from the rooftops, keep it to people you trust - if they 'get it', in turn they will pass it along. Don't be phased by their uncomprehending looks or ridicule. Help them to understand your outrage.

Do we fight their wars, far from home, for their gain and our loss - or do we fight them? The tipping point draws closer.

Mon, 02/20/2012 - 11:18 | 2177439 People'sRepubli...
People'sRepublicof CT's picture

The  3 stages of Debt---…Socialize , Monetize , then Realize .   The faster step three is reached, the sooner the rebuilding will commence.

Mon, 02/20/2012 - 11:21 | 2177448 Miss Expectations
Miss Expectations's picture

Encourage your clueless friends to try this.  Change the rules in the Monopoly game so that the banker is one of the players.  The banker's playing piece will be a small metal squid.  The squid can foreclose on any player at any time on any property that has been mortgaged.  The squid can change the prices of available property and the rents payable, overriding the game's "suggested prices."  The squid gets unlimited "get out of jail free" cards plus the advantage of 4 rolls of the dice at each turn.  I haven't actually tried this, but my guess is that I would have to be amazingly lucky to end up with an unmortgaged house on Baltic Ave.

Who the hell would play such a game?

Mon, 02/20/2012 - 11:21 | 2177449 MachoMan
MachoMan's picture

My biggest problem with the article is that there is this latent hope that things can turn around...  If we're to the point where there is nothing but a binary decision of picking our poison, I'm sorry bob, you're in denial.

Mon, 02/20/2012 - 11:27 | 2177467 fijisailor
fijisailor's picture

The US and Europe are adopting economic fascism as a solution which will evolve into outright fascism.  How long can this go on?  indefinitely.

Mon, 02/20/2012 - 11:34 | 2177483 monopoly
monopoly's picture

Bob is spot on. Just reinforces what most of us think. But Robot has a point, short term. Up we go, this market makes Space Mountain at Disney look like a tea cup ride. 

"Bonds are toast". As always the timing. But I do think we are close.

And my thanks to Zero Hedge for reporting the important facts of what is happening today with our markets closed. Very few articles on Greece in most papers and MSM.

Truth, we can survive this. But we much have TRUTH.

Mon, 02/20/2012 - 11:51 | 2177552 BadKiTTy
BadKiTTy's picture

Fun to speculate, spend hours on it myself.

In the end though none of us know.

How will end?

One word........



Mon, 02/20/2012 - 11:56 | 2177562 newworldorder
newworldorder's picture


While most of us try to understand the reality of our current world wide financial system, in terms of past perspectives, logic, economic reasoning, etc., the new reality for us is very simple.

Central banking has or is slowly replacing politics as the control mechanism of choice in the new world order. It is the only way for economic control to bypass national borders and introduce new ways to control the masses.

As such ...... Our current central banking system has to be maintained at ALL COSTS. Logic, moral hazard, economic freedom, free enterprise etc., has to be controlled. Since debt is the common denominator and  since we live in a debt based system, the system cannot be allowed to fail. Events of the last 4 years have convinced our economic overlords that this is the only way forward.

There are too many pension retirement schemes, financial markets, energy, food supplies and trade flows to be protected. While there can be minor issues along the way such as the Arab Spring, A natural catastrophe or two, civil unrest in small countries, - control of the core is the ultimate game.

The only way to try to guarantee core stability is through the concept of NO FAILURE ALLOWED. Financial markets will be centrally controlled until the need for  real world assets surpasses the false financial control mechanisms. Water, food, oil, gold must become more precious than paper for there to be meaningful change. Until then, financial manipulation and money printing is the order of day, every day, across the entire financial oligarchy.

We may not like it, but there it is.

Mon, 02/20/2012 - 13:12 | 2177844 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Uh, who clicked -1 on this?  I think government stooges are clicking -1 on any comment that explains the truth or reality.  Anyone else notice all these odd minuses lately?

Mon, 02/20/2012 - 11:56 | 2177572 VelvetHog
VelvetHog's picture

Gold, gold and gold.  If the S(really)HTF and you come to me to repair your drinking water pump that has crapped out on you and you offer to pay me in gold, you ain't gettin' your pump fixed.  In a SHTF situation I will have the same philosophy as my black lab;  if you can't eat it or fuck it, piss on it.



Mon, 02/20/2012 - 13:44 | 2177939 s2man
s2man's picture

Same reason I am not stacking gold.  I'm not going to accept a shiny bar which says Kitco or Perth in exchange for my goods.  I have no way to assay it, or to make change.  That is why I am stacking silver coin-of-the-realm.  Easily recognizable and divisible.

Will you take silver?  Say your pump work is worth 10 chickens.  You have no way to house them, or to freeze them if butchered.  But if you took my silver, you could go to bartertown and trade for one chicken per week...

Just my 2 cents on SHTF barter system.

Mon, 02/20/2012 - 12:17 | 2177646 banksterhater
banksterhater's picture

" Blue-chip big cap" will go DOWN BIGTIME, the hot money is now hiding-out there, look at the R2K underperforming, they are loading into DVY and such TO BAIL QUICKLY.

Mon, 02/20/2012 - 12:18 | 2177648 lizzy36
lizzy36's picture

Bob touches on some great points.

I remember reading a commentator in Jan 2009, who said fed would succeed in blowing one last bubble.

If you don't think 2008-2009 left a lasting mark, then one isn't paying attention to the rise of Rick Santorum. One isn't noticing that the fly over states, particularily those hardest hit, are becoming more conservative. Nationalism is on the rise.

When the president does it, it is not illegal has been replaced by "when the elites do it for the good of the banking system it is not illegal".

Mon, 02/20/2012 - 12:37 | 2177712 daxtonbrown
daxtonbrown's picture

We are already in a global civil war over the collapse of the welfare state. Anyone who botheers to read the balance sheets knows the debt overhang of Europe, Aerica, Japan and even China are such that the course we are on is unsustainable. The only way out would be hyperinflation, but the central banks haven't even been able to pull that off. So we are stuck in a low grade civil war over debt slavery, as our politicians and bankers try to bail each other out on the backs of future generations (who will eventually grow wize to the Ponzi).

The only way out for the little guy is to try and offload as much of his microeconomy as he can from the rest of the system. That means buying gold, but that is only a small part. It means internationalizing ones savings and investments to avoid broken currencies. It means ridding oneself of debt. It means living a sustainable lifestyle and taking at least a few survivalist measures. It means in short, Going Galt.

Mon, 02/20/2012 - 13:09 | 2177729 thunderchief
thunderchief's picture

"Always listen to a person who's last name should be smoked in a Waterpipe"

Confucious. 477BC

I think.

Mon, 02/20/2012 - 12:58 | 2177798 gwar5
gwar5's picture

Bob sums up the world... he is describing Fascism perfectly, which is exactly what it is.


It´s a central planning neo-Monarchy imposing it´s own undeclared sovereignty over nation states, insulating itself from the people and democracies. They have no authority to rule over sovereign peoples so this is going to require the usual force and coercion, which will take us back to medieval. Ron Paul was just warning about that today.

When the masses see that our treasonous lawmakers are also the biggest lawbreakers, they will quickly conclude there is no advantage to following any rule of law either because there is no rule of law. It would not take much for the Lord of the Flies to replace the Rule of Law. 



Mon, 02/20/2012 - 13:02 | 2177811 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

The writer is one smart SOB!  Great summary.  I am now a few IQ points smarter after reading this.

Mon, 02/20/2012 - 13:22 | 2177861 ekm
ekm's picture


Check above. Your Nomura is a primary dealer. You are stating that markets are rigged, which is 10000% true. But the mechanism is implemented via the primary dealers = plunge protection team. YOUR NOMURA IS GUILTY.

I lived in communism. IT FAILED WHEN ALL EASTERN EUROPE ENDED UP WITH FOOD STAMPS. Does it ring a bell?

Same as in 2008, any LIQUIDITY will go to CRUDE OIL which is the base of western civilization. Oil is NOT ONLY FOR DRIVING, but for plastic, furniture, food refrigeration and anything and everything. Check state of Texas website.

The CENTRAL BANKERS that are practically OUR COMMUNIST LEADERS who thought they could handle:

- House price collapse

- A controlled Lehman collapse

Failed because this is impossible. Any liquidity will increase the cost of FOOD AND CRUDE OIL. Hence, COLLAPSE. It has never been, it is not and it will never be controllable. Because my friend, HUNGER IS THE ONE MAKING THE DECISION. Remember ARAB Spring????

Mon, 02/20/2012 - 14:19 | 2178033 passwordis
passwordis's picture

"I am staggered at how easily the concepts of Democracy and the Rule of Law – two of the pillars of the modern world – have been brushed aside in the interests of political expediency'


I'm staggered by the ignorance of people who use the word Democracy instead of Republic. 


The best argument against democracy is a five-minute conversation with the average voter.

Sir Winston Leonard Spencer Churchill

Mon, 02/20/2012 - 14:34 | 2178077 howswave5workin...
howswave5workingforyou's picture

hardly helpful advice if you are a money manager "5 days, 5 weeks, 5 quarters"

cheers. even a stopped clock....

Mon, 02/20/2012 - 14:54 | 2178132 Bam_Man
Bam_Man's picture

I don't want to live in Bob's World.

Tue, 02/21/2012 - 04:07 | 2180211 The Navigator
The Navigator's picture

The problem with such liquidity fuelled set-ups is that they can last longer and get bigger than any reasonable logic would dictate. The issue here is not what central bankers say – it now seems clear that Bernanke and Draghi will say whatever it takes to keep the market supplied with ample liquidity – but what they can do. In this respect one either believes that central bankers can do whatever they like whenever they like, or one believes there are limits. I think there are limits to what Bernanke and Draghi can do, and once we hit those limits these bubbles will burst, with increasingly greater consequences the longer we are forced to wait. Do I know when we may hit these limits? I hope that it is sooner rather than later, but I have no real conviction.

And That is the Problem - we keep seeing the end, but they keep seeing the on-going of the fantasy - and the Golden Rule applies; those with the gold, rule.

The End won't be pretty but the sooner we face it, the sooner we can move on to reality.

For now, Greece (at 120% debt to GDP), Japan (at 200% debt to GDP), the US (at 110% debt to GDP) will live in the fantasy.

One day, Alice will have to exit the rabitt hole and reality will bitch-slap the world.

I know most of the ZH'ers have had a good time to prepare.

ZeroHedge - one year participation = a Masters in Economics (or better).

Thanks Tyler.

Tue, 02/21/2012 - 20:25 | 2182835 stiler
stiler's picture

you lost me at "2 – I am staggered at how easily the concepts of Democracy "

we're a Republic or a Representative Democracy. Big differnce: Greece was a Demo-cracy.



Wed, 02/22/2012 - 04:14 | 2183914 sikefeier0728
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Thu, 02/23/2012 - 04:44 | 2188223 stockbets
stockbets's picture

Tyler and Janjuah - two frustrated perma-bears. Pathetic 

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