This page has been archived and commenting is disabled.

Elliott Management: We Make This Recommendation To Our Friends: If You Own US Debt Sell It Now

Tyler Durden's picture




 

Every now and then we prefer to sit back and let some of the smartest money speak, especially when said smart money agrees with us. In this case, we hand the podium over to none other than Paul Singer's Elliott Management, which after starting with $1.3 million in 1977 was at $19.8 billion most recently. No expert networks, no high frequency trading, no "information arbitrage", no crony capitalism and pseudo monopolies of scale, and most certainly no bailouts: Singer did it all the old fashioned way: by picking undervalued assets and watching them appreciate. The timing is opportune because while Elliott has much to say about virtually everything in their latest 20 pages Q2 letter, it is the billionaire's sentiment vis-a-vis US Treasury debt that may be most critical, and may be the catalyst that resulted in today's abysmal 10 Year bond auction. To wit: "long-term government debt of the U.S., U.K., Europe and Japan probably will be the worst-performing asset class over the next ten to twenty years. We make this recommendation to our friends: if you own such debt, sell it now. You’ve had a great ride, don’t press your luck. From here it is basically all risk, with very little reward." There is little that can be misinterpreted in the bolded statement. And while many have taken the other side of the Fed over the past 3 years, few have dared to stand against Paul Singer because if there is one person whose opinion matters above most, certainly above that of the Chairsatan, it is his.

More deep thoughts from Elliott:

On QE and the nanny state:

  • Printing money and overstaffing government offices may look like growth for a period of time, but it is actually the road to poverty, corruption and, ultimately, political upheaval.

On regulation:

  • Opaque, overleveraged and vulnerable Financial Institutions which need to be propped up by the implicit or explicit guarantee of sovereigns does not make for a solid financial plumbing system for the global economy...this is a formula for power entrenchment, favoritism and shady deals behind closed doors.

On Dodd-Frank:

  • Not only will it fail to make the system safer, but we believe it will likely be an actual accelerant of the next financial crisis
  • Dodd-Frank was supposed to “fix” the American financial system and end “too big to fail.” Unfortunately, the law, born in a political steamroller, does the exact opposite: it will be the accelerant of the next crisis.
  • The 2008 crisis was episodic and took a while to get rolling. The next one could well be a black hole, and Dodd-Frank will bear responsibility for that.

On why Americans are angry:

  • The government, lacking deep understanding of these firms, wants to pretend that their gigantic efforts (most notably Dodd-Frank) actually fixed the situation. But we believe that citizens are angry at what their guts tell them (correctly, basically) about the special treatment and riskiness of Financial Institutions.

On public data reporting:

  • Decades ago, the balance sheets of the Financial Institutions contained most of the information you needed to know to understand their risks. Today the picture is profoundly different, predominantly due to the growth of leverage through derivatives....As a result, there is no major Financial Institution today whose financial statements provide a meaningful clue about the risks of the firm’s entire panoply of assets and liabilities including derivatives, nor how the firm’s performance, or even survival, will be affected by market movements in the future.

On leverage:

  • Including derivatives, nearly all the world’s largest Financial Institutions are levered 50-100 times (not 10-20 as reflected on their balance sheets), so the exact composition of their derivatives books is essential to an understanding of their risks and stability....no hedge fund is remotely as leveraged as the Financial Institutions, and no hedge fund actually had to be rescued during the crisis.

On European banks:

  • European institutions are in worse shape than before. Not only is their leverage (including derivatives) still at pre-crash levels, but they are choking on vast holdings of questionable sovereign debt which regulators more or less forced on them with lenient risk-weightings.
  • These banks are stuffed with paper that private investors would not buy, as part of the “three-card Monte” shuffle that characterizes the European banking/sovereign system today.

On "peak fragility" in the bond and stock market:

  • People are still buying bonds despite pitifully low yields because, well, they continue to go up in price, albeit in a self-reinforcing process goosed by central bank and momentum buying. When these forces exhaust themselves, the reversal could and should be swift and large.
  • A decade ago, stocks were overpriced, but institutions who owned them were generally happy... Stocks looked predictable and safe at the very moment that they were maximally unsafe. That is where long-term bonds of these four currency blocs (euro, U.S., U.K. and Japan) now stand.

On "safety":

  • “Safe haven” could be the two most expensive and painful words for investors in the financial lexicon this year.

On market sentiment:

  • Global financial markets currently feel like they are in a period of calm before a storm, possibly centered on the European situation. The problem is that no one can foresee when the storm will make landfall, or how severe it will be.

On why Europe is making one wrong decision after another:

  • Raising taxes to confiscatory levels (75% top rates are absurd and self-defeating), lowering already-too-low retirement ages, making it hard or impossible to fire people (which obviously discourages hiring them in the first place), increasing the scope of regulation and making it more complicated and subject to greater discretion by hostile, inadequately informed regulators, and making threatening noises at every turn about “the rich”, are the precise opposite of the actions and statements that policymakers should make to attract businesses and encourage expansions of existing businesses.
  • Nobody is forced to locate a business in Europe, and in fact capital flight today from several countries is already large and relentless.

On the future of Europe:

  • Since all of the euro bloc surprises in the last couple of years have been negative, and since the answer to every question about the ultimate cost of preserving the euro is “more than you thought yesterday,” the metaphor of a slow-motion train wreck seems quite appropriate.
  • The overall situation is not going sideways or up. It is drifting down.

On Socialists - in this case in France, but applicable everywhere:

  • The Socialists are unlikely to be terribly successful at preventing the destruction of jobs, but they may be all too effective, however unintentionally, at stifling job creation.

On tax policy:

  • Dramatic increases in taxes and regulation, together with a repeatedly punitive tone, are understandably extrapolated by capitalists and investors as indicators of hostility toward business and profits. The societal loss from the business decisions occasioned by such signals is self-reinforcing. Businesspeople sitting on their hands leads to lower growth and more angry rhetoric and hostile actions by government.

On the lack of job creation:

  • Since the top 20% of taxpayers (which includes a great number of people making less than billions and even millions) pay the overwhelming bulk of taxes, this promise to raise taxes has not exactly generated enthusiasm or jobs.

On US (small) business uncertainty:

  • Under ACA and the scheduled rise in overall federal income tax rates, one of the largest aggregate tax increases in American history is scheduled for five months from now. This is occurring at the same time that several strapped large states are also raising their top tax brackets.

On shifts in paradigms:

  • Businessmen are inherently optimistic, typically always looking for reasons to do business, expand and innovate.
  • Historical experience shows that when established perceptions are wrong, it can take a long time for contradictory data points to accumulate before such perceptions start to adjust and to cause alterations of behavior. However, at a certain moment, shifts in perceptions and trends could be abrupt, especially given modern tools of instant communication.
  • Today the hostility of the American and European governments to private enterprise, wealth and profits is used by those governments as  vote-buying tactics. The impact on growth and jobs is already visible, and capital flight (already seemingly underway in France) may accelerate unless the policies, and tone, change.

On the US welfare state:

  • If [Social Security, Medicare, Medicaid and government pensions] are not reformed, such entitlements simply cannot be paid as promised, regardless of the levels of future growth or taxes on “the rich” or anyone else.
  • The numbers are just too big, the result of a form of corruption: politicians made big promises in exchange for votes, not worrying about whether the promises could be fulfilled.

On the US "recovery"

  • Three and a half years after the bust, the massive spending, guarantees and money printing have left America with 8.2% unemployment (which vastly understates the actual level, since millions of people have simply left the workforce, while others have migrated from receiving unemployment benefits to getting long-term disability payments), sluggish growth, $5 trillion in additional federal debt, and $3 trillion of freshly-printed dollars on the Fed’s balance sheet. This is not a success. This is a national tragedy, in a society in which the world’s greatest engine of prosperity has  historically been fueled by innovation, optimism, entrepreneurship, flexibility and opportunity.

On Congress handing over the decisionmaking process to the Fed:

  • We believe that relying on monetary authorities to pick up the considerable slack in growth by printing money by the boatload is completely wrongheaded. It distorts both the price of money and the risks of holding long-term claims denominated in paper money, builds a future risk of large inflation, supports economic activity only in an oblique and unfair way, and creates something that is going to be very hard to unwind.

On the consequences of the printing money "alchemy":

  • Somehow many policymakers and citizens have come to believe that money printing is some kind of magical process, that good things can be produced literally out of thin air, and that if leaders don’t create growth from obviously-needed changes in wrongheaded policies, then poof!... printing more money will solve it. This is pathetic.
  • The range of inevitable costs to societies practicing such alchemy is somewhere between “a lot” and “utterly catastrophic.” The damage is already becoming evident, particularly in the distortion between the rise in financial asset prices and the sluggishness of the real economy. When consumer prices soar across the board or there are other painful consequences, we wonder what excuses the blameworthy policymakers will make to deny their responsibility.

Finally, on what nobody wants to discuss, but could very easily be the final outcome:

  • A loss of confidence in paper money could result in searing and startling inflation, evaporating life savings and turning every stolid worker into a frantic speculator.
  • If that were to occur, nobody could possibly say in hindsight that the conditions for such a sorry state of affairs were not in place.
  • The people who are telling us now that inflation is impossible because there is slack in the global economy, and that central banks can print trillions of dollars more without a significant risk of inflation, are the same folks who not only failed to predict the financial crisis, they did not even have a clue that a crisis of such kind was possible.

Indeed the "smartest money" is just that because it calls it how it is.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 08/08/2012 - 15:33 | 2688674 hedgeless_horseman
hedgeless_horseman's picture

 

 

...but my broker said that sovereign bond funds are a safe investment.

Wed, 08/08/2012 - 15:33 | 2688682 Silver Bug
Silver Bug's picture

Get out while the getting out is good!

 

http://jamesturkblog.blogspot.ca/

Wed, 08/08/2012 - 15:44 | 2688713 Dr. Richard Head
Dr. Richard Head's picture

But, but, but......Bernanke built me this sweet wingsuit and I am just having a flight to safety - http://www.youtube.com/watch?v=Bjr21IAmgU8

Wed, 08/08/2012 - 16:13 | 2688791 Precious
Precious's picture

How much loyalty does that US Debt have to the American citizen?  Zip.  Nada.  Who knows where the hell it goes.  Maybe t-shirt foodstamps for Jewish billionaires?  And people accuse banks of money laundering?

How much loyalty does the Japanese Debt have to the Japanese citizen?  100 percent.  It all goes back in somehow, or it doesn't go out in the first place --- and surely not for t-shirts.

Wed, 08/08/2012 - 16:24 | 2688851 engineertheeconomy
engineertheeconomy's picture

Strange question:

With 900 Quadrillion in derivitives and who knows how many Trillions in this alleged national debt, what would happen to the price of Gold if we passed a "Resumption of Specia Act" (from 1875), and paid off everyone in Metal instead of paper?

What would Gold be worth then, $100,000/oz?

Wed, 08/08/2012 - 20:22 | 2689462 Renewable Life
Renewable Life's picture

They better hope the curiosity rover finds gold on Mars!!

Wed, 08/08/2012 - 16:07 | 2688802 Panafrican Funk...
Panafrican Funktron Robot's picture

The flaw in Singer's argument is the false dichotomy between private industry and government.  That he repeatedly suggests this illusion tells me he's either stupid or corrupt.  I'm willing to grant him the latter.  Consider:

"We Make This Recommendation To Our Friends: If You Own US Debt Sell It Now"

Talking your book doesn't make you a hero.

Wed, 08/08/2012 - 18:59 | 2689316 TradingChief
TradingChief's picture

Lets see..... a guy that lives off of distressed debt, is calling for the end of the world as we know it. A guy that is a staunch Republican supporter believes "socialists are not the answer, and that Ben is not someone that should continue to hold his job? Hmmm are we sure Romney did not write this?

Wed, 08/08/2012 - 19:35 | 2689389 Alea Iactaest
Alea Iactaest's picture

The flaw is that this is all by design, so the so-called problems are only a matter of perspective. If one's goal is to collapse the equity market, create growing distrust of government and ruin the currency then things really couldn't be better. What, that's not what you want? Too bad.

Wed, 08/08/2012 - 22:10 | 2689747 old naughty
old naughty's picture

but, didn't Gross sell all his US debts back in Q1 2011? 5Q late?

Or, is there more here?

Thu, 08/09/2012 - 00:15 | 2690062 LowProfile
LowProfile's picture

 

Talking your book doesn't make you a hero.

It does when you're right, and it's contrary to what TPTB want you to believe.

Wed, 08/08/2012 - 15:33 | 2688679 slaughterer
slaughterer's picture

Paul Singer stands at the pinnacle and looks down upon all of us.  

Wed, 08/08/2012 - 15:41 | 2688694 LawsofPhysics
LawsofPhysics's picture

Lots of people have correctly identified the problems, how about some solutions for a change?  Maybe the "Wealth" these fuckers stole isn't that real either?  Fuck all the paper-pushers who refuse to have an adult conversation. This report from captain obvious sounds like someone who successfully front ran all the Fed and government stupidity, has made their millions (while creating nothing of real value) and is simply cashing out.  Fine, good for you, might not want to gloat so much less you find the guillotine.

Wed, 08/08/2012 - 15:48 | 2688735 Winston Churchill
Winston Churchill's picture

No solutions.

We have entered the event horizon.

Wed, 08/08/2012 - 16:02 | 2688778 Xibalba
Xibalba's picture

Here's one, but you might not like it.  Ammo, Butter, and Gold.....

Wed, 08/08/2012 - 16:08 | 2688805 Winston Churchill
Winston Churchill's picture

See below.

Have all those plus.

 

Wed, 08/08/2012 - 19:36 | 2689398 Alea Iactaest
Alea Iactaest's picture

@ Lawsofphysics. Of course the "wealth" isn't real. No way when the plan is to print money and buy debt. If the debts don't get paid just print more money. If they do then you get to pass Go and collect $200. And no, you can't play this game.

Wed, 08/08/2012 - 16:09 | 2688809 gmrpeabody
gmrpeabody's picture

Fine, good for you, might not want to gloat so much less you find the guillotine.

Don't begrudge the man. He neither lied, nor stole, nor asked you or I to subsidize any losses. Unless you are totally against trading for a living, you should allow success to those who use their brains as well as their brawn.

Wed, 08/08/2012 - 16:16 | 2688829 LawsofPhysics
LawsofPhysics's picture

Bullshit, the fact that he asserts a distinction between private industry and government should tell you he is corrupt.  Let me guess, you really think that there have been "free markets".  Had that been the fucking case moron, bad business models would have been allowed to fail in 1982, 2001 and 2008.  let me guess, you probably supported TARP and TALF as well. 

Wed, 08/08/2012 - 19:25 | 2689373 Likstane
Likstane's picture

Because "he asserts there is a difference between private industry and government, this should tell you he is corrupt"....but by this assertion he would possibly be one of the few that does incorporate a moral standard.   How is it you know this persons ethical business practice?   It seems as you are using your own immoral assertions to judge this persons behavior.  

Wed, 08/08/2012 - 19:44 | 2689379 gmrpeabody
gmrpeabody's picture

"Let me guess, you really think that there have been "free markets"."

" let me guess, you probably supported TARP and TALF as well. "

Wrong on all counts...,

Truly, try to think before you wildly flay at other folks about whom you know little to nothing at all.

Moron..., indeed!

Wed, 08/08/2012 - 17:45 | 2689138 Stock Tips Inve...
Stock Tips Investment's picture

Our responsibility is to protect the possible effects of this potential crisis. The government will not do. The Fed either. The companies ... less. Social security ... impossible. So we must be alert to the signs that give us the market. Do not forget that in times of crisis when great opportunities arise. Today there are tool that anyone can benefit from this debacle. You just have to be careful, know where to act, and ... acting.

Wed, 08/08/2012 - 19:00 | 2689312 olduser
olduser's picture

No solutions.

Indeed. People are unwilling to pay the price of any solution, but they ultimately will by default.

Wed, 08/08/2012 - 19:37 | 2689400 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

No solutions.

It's not a matter of price or willingness to pay.  Population exceeds carrying capacity, that cannot be sustained.  People will have to die.  The particulars of how, when, and who are uncertain, but war and famine seem most likely.

Wed, 08/08/2012 - 15:54 | 2688755 lolmao500
lolmao500's picture

Why no solutions? Because there isn't any unless you plan to leave the country. Once it all goes down, if you're still in the US, investments won't matter. All hell will break loose.

Wed, 08/08/2012 - 16:00 | 2688772 Lost Wages
Lost Wages's picture

What good is leaving the country going to do? You need to leave the planet.

Wed, 08/08/2012 - 16:26 | 2688858 NotAMathWhiz
NotAMathWhiz's picture

Psst.... pretty sure some people 'round here have already stepped off...

Wed, 08/08/2012 - 16:36 | 2688891 honestann
honestann's picture

And we're working on that, but as good as the predators are at kicking the can down the road, we're worried we won't be off this rock in time.  Hence the need for a way to vanish into the extreme boonies and finish our work "out of sight, out of mind".  Too bad most people spend their lives in denial, or increasingly (especially here at ZH), frozen in the headlights.

Wed, 08/08/2012 - 16:03 | 2688782 Winston Churchill
Winston Churchill's picture

All right I'll bite.

The only solution I have is ABCD.

Anything Bernanke Cannot Destroy.

50% cash under a mattress.

50% gold, lost in a gardening accident.

If we get through this.

I have property overseas however my major income is here.,so

I'll stay as long as possible.Probably get caught here.

I have a plan for that as well.

Wed, 08/08/2012 - 16:21 | 2688841 GERxit
GERxit's picture

Define cash!

The only cash you have (which the Bernank can't destroy) is the stuff you lost at your garden accident. The rest is just toilet paper if Bernanke goes for the heli...

Wed, 08/08/2012 - 16:40 | 2688921 Winston Churchill
Winston Churchill's picture

There will be greater fools who will take that cash(basket of currencies by the way)for

hard assets along the road.

Stay flexible as it could play out several ways.

Wed, 08/08/2012 - 17:27 | 2689095 Mark Carney
Mark Carney's picture

I have been busy stuffing my garage full of two-ply.....the real stuff. just waiting for the wife to see it and be like WTF?

Wed, 08/08/2012 - 19:18 | 2689364 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

SHTF was not meant to be taken literally.

Wed, 08/08/2012 - 16:37 | 2688868 HardAssets
HardAssets's picture

"Maybe the "Wealth" these fuckers stole isn't that real either?"

 

Yep - - all the 'debt' and 'wealth' they talk about is pure bullshit. Nothing but a fraud. 

People will go hungry and put up with poverty for their children (austerity) in the attempt to pay back the criminal banksters, not knowing that what they 'loaned' was all made up out of thin air. An illlusion.

Ignorance has a high price. 

Time for a total reset. Throw the banksters in prison. Repudiate all the debts. Toss out fractional reserve banking fraud. All the paper pushing has nothing to do with the real physical world, and their claims on real wealth mean nothing. Start over with a sound system based on commodiity backed competitive money.

And then get rid of the mandatory public 'schools' and teach young Americans their true history (good & bad) and the foundations of Liberty. So, this won't happen again. 

Wed, 08/08/2012 - 16:38 | 2688907 Sweet Chicken
Sweet Chicken's picture

WORD +1

Wed, 08/08/2012 - 16:44 | 2688932 Arnold Ziffel
Arnold Ziffel's picture

Will the last one out please turn off the light & close the door.

Wed, 08/08/2012 - 17:57 | 2689165 CrashisOptimistic
CrashisOptimistic's picture

Maybe.  

Tyler started out applauding the guy like a fanboy for growing from 1 B to 19 B, but we don't know how much of that was selling ice cream to eskimos and attracting new money, and the rest, how it compared to the S&P.

OTOH, overall, if people think there's a Bernanke floor under equities, which is not clear, they should damn sure KNOW there is a Bernanke floor under bonds, because that's his fucking job.  If an attempt were made to wholesale dump bonds, he'd buy with both hands, scare the shit out of the sellers/shorters and presto, mid day reversal.

This is all largely bullshit.  Buy farmland.  Nothing else has value that is not solely in your imagination.

 

Wed, 08/08/2012 - 19:13 | 2689352 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

That was 1M to 19B, but your point about it being unclear how much of that is other people's money still stands.

The notion that land can be owned is bullshit too, especially in times of revolution.  Land has the advantage of being productive.  Coins have the advantage of being portable.  Land can be occupied.  Coins can be posessed.  Ownership is a social construce.

Wed, 08/08/2012 - 15:35 | 2688695 govttrader
govttrader's picture

I know i've said it before...but:

Of the last 13 new 30yr bond auctions (not re-openings, but new issues...going back to May 2009), buying 30yr bonds in the auction and holding the paper for 24 hours has been profitable 13 out of 13 times.   This stat is making its way around the street, so expect an additional amount of players in tomorrows auction. Should be bullish.  Also, shorts in S&P futures have been building as many Elliot Wave technicians have been talking about an  upcoming cliff in the S&P, as they look for a 100-300 point drop in the S&P 500.  This should be bullish for 30yr treasuries (for 24hrs post auction)  as stocks seem to be full of Central Bank hopium lately. 

On the long long term, I agree with Singer, but as a day trader, its irrelevant.

http://govttrader.blogspot.com/

Wed, 08/08/2012 - 15:47 | 2688731 Precious
Precious's picture

There will be no cliff as long as Bernanke has his finger on the "no-cliff" button.

Wed, 08/08/2012 - 15:36 | 2688700 bigdumbnugly
bigdumbnugly's picture

unfortunately i didn't see Singer's name on the ballot.

and now i know why.

Wed, 08/08/2012 - 16:38 | 2688910 SAT 800
SAT 800's picture

Probably because he's not an unemployable choclate colored moron; he has better things to do.

Wed, 08/08/2012 - 17:58 | 2689167 YC2
YC2's picture

800 on the 1600 scale or the 2400?

Wed, 08/08/2012 - 18:05 | 2689180 smiler03
smiler03's picture

Or an undiplomatic mormon warmonger.

Wed, 08/08/2012 - 15:37 | 2688701 PiratePawpaw
PiratePawpaw's picture

Elliot just now decided that govt debt is a bad risk?

Brilliant!

Wed, 08/08/2012 - 15:47 | 2688732 Dr. Engali
Dr. Engali's picture

Up until now it was a good bet. I enjoyed selling my 10 year paper to somebody else at a premium.  

Wed, 08/08/2012 - 15:54 | 2688753 PiratePawpaw
PiratePawpaw's picture

I understand, but we have long known that one day it wouldnt be.

My position is that for some time the risk of being the one holding the bag has been greater than the reward.

Wed, 08/08/2012 - 16:02 | 2688780 Dr. Engali
Dr. Engali's picture

Well I agree with you there, but my belief has been that the treasury would be the "safe haven" trade with each market deflationary collapse until we get to the point where Ben blows up the system by going one step too far. I believe the next QE will be the step that breaks the dollar and starts the panic. I was initially going to ride treasuries down to 1% on the ten year, but I figured 1.5 was good enough. Greed kills.

Wed, 08/08/2012 - 18:03 | 2689175 YC2
YC2's picture

I figure we bust long after Japan or Europe or anyone.  Every time that happens, Ts will get bid unless it cant be contained.  If that happens, it wont matter what your account statement says anyways. 

 

Plus I only play this game with matched 401k money, so if SHTF I dont figure I will ever see it.  So, might as well position it for non-SHTF scenarios.

Wed, 08/08/2012 - 15:38 | 2688704 Timmay
Timmay's picture

Unless Singer has his own carrier Battlegroup and tactical nukes, I don't think Bernanke gives a crap what he thinks.

Wed, 08/08/2012 - 15:54 | 2688754 DeadFred
DeadFred's picture

That would imply he does care what the Chinese think. I wonder if they agree with Singer?

Wed, 08/08/2012 - 16:24 | 2688852 Timmay
Timmay's picture

Well, considering that the Fed has Defacto financed the U.S. military (or allowed us to have a massive entitlement society AND the largest military in the world take your pick) then I would say yes, Bernanke has looked at the Chinese and said "What the fuck are you going to do about it?"

Hey Singer, see that drone overhead? No? Well, just wait, a little longer now......

Rule of law and finance long since gone as noted on this site. Rule of Force now in effect. Just ask our Gay, Indonesian exchange student/community organizer President who gets his jollies watching Afghanistan snuff films.

Wed, 08/08/2012 - 17:57 | 2689164 Peter Pan
Peter Pan's picture

The Chinese do not have to do anything. The US is doing enough on its own to wipe itself out. Even without the foreign debt the US government has, the situation is still unsustainable.

Wed, 08/08/2012 - 15:39 | 2688706 debtor of last ...
debtor of last resort's picture

From FEDbuster http://www.zerohedge.com/news/government-your-legal-right-redeem-your-money-market-account-has-been-denied-sequel

 

third comment:

 

 

Ann Barnhardt - July 12, AD 2012 11:39 AM MST

 

Ninety Miles An Hour Down a Dead End Street

 

People are emailing asking what firm I recommend.

NONE.

GET OUT. 
GET OUT. 
GET OUT. 
GET OUT. 
GET OUT. 
GET OUT. 
GET OUT. 
GET OUT. 
GET OUT.

The ENTIRE SYSTEM is totally, completely corrupt and therefore NO FIRM IS SAFE. Don't be stupid. Don't be obtuse. Snap yourself out of the Stockholm Syndrome that you are clearly stuck in. Get ALL MONEY out of the ENTIRE FINANCIAL SYSTEM, including stocks, bonds, retirement accounts, futures, EVERYTHING.

But what about . . .

What part of EVERYTHING are you not comprehending?

One. More. Time.

If you can't touch it, if it isn't physically on your property such that you can stand in front of it with an assault rifle and PHYSICALLY defend it, you don't own it, and it could be confiscated/stolen from you at any time, if it ever actually existed at all.

Wed, 08/08/2012 - 15:49 | 2688718 john_connor
john_connor's picture

Agreed. Sell everything non-tanglible.

 

This is not a doom and gloom statement but rather reality and simple math.  When the taxing entity you are domiciled in has gone completely broke and has resorted to currency dilution as the only attempted means of growth, then it only stands to reason they will attempt to confiscate any and all private assets in a last ditch attempt to preserve the existing oligarchy.

 

The BEST case is that people face rampant inflation and higher taxes.  A vicuous double hammer even if outright confiscation does not occur.

Wed, 08/08/2012 - 16:04 | 2688789 debtor of last ...
debtor of last resort's picture

Yep, confiscation, except my pityful bullion load, which i lost in the woods during my Corzine hunt. Funny hey? We organize Corzine & Draghi hunts in the woods in The Netherlands where cought bankers get to choose a mask from one of them before they get hunted. We are ahead of the ponzi. And we have a small country, so they don't have a chance. Feels good he?

Wed, 08/08/2012 - 15:40 | 2688708 SheepDog-One
SheepDog-One's picture

One of these morning there will be no buyers, and HFT machines unplugged.

Wed, 08/08/2012 - 15:46 | 2688727 Unprepared
Unprepared's picture

One of these mornings

Won't be very long

You will look for me

And I'll be gone

Wed, 08/08/2012 - 16:22 | 2688844 NoTTD
NoTTD's picture

One fine morning,

When I wake up...

Wed, 08/08/2012 - 16:27 | 2688860 SheepDog-One
SheepDog-One's picture

Each morning I wake up...

Before I put on my make-up...

Wait a second, I'm a guy.

Wed, 08/08/2012 - 17:25 | 2689087 TIMBEEER
TIMBEEER's picture

One fine morning in 2009, no wait, 2010, no wait, 2011, no wait, 2012..

These days I only say that there will be one such fine morning, but I won't name the year. Back a few years ago I couldn't have imagined that the System could last until 2012..

Wed, 08/08/2012 - 15:40 | 2688709 RSloane
RSloane's picture

Daneric's Elliott Wave Update: "I am bearish on the market long term even if 1422 SPX is breached to the upside.

First, we have a count of Minor 2 that sports a bearish rising wedge on lower volume. Second, even if the market makes it above 1422 SPX for a new Primary [2] high, the market would actually be fulfilling an even larger rising bearish wedge. In either case both patterns at the smaller Minor degree or at the larger Primary degree suggest dramatic price collapse is coming after the completion of the pattern. If Minor 2 stays intact, the price collapse should take the S&P initially towards and then below 1300 SPX. If the S&P manages a first higher high above 1422 SPX to create a new Primary wave [2] high, then a price collapse of epic proportions is possible. In this case, a price collapse of the markets would take the S&P back toward 1000 SPX."   Source: http://danericselliottwaves.blogspot.com/
Wed, 08/08/2012 - 16:03 | 2688787 DeadFred
DeadFred's picture

Resistance tomorrow will be right at 1420 or so. I wonder what a B(L)S fudged number would do?

Wed, 08/08/2012 - 16:26 | 2688857 RSloane
RSloane's picture

I can't think of any B(L)S  [nice one, Fred]  numbers that aren't fudged and that haven't been fudged.

Wed, 08/08/2012 - 15:41 | 2688711 slewie the pi-rat
slewie the pi-rat's picture

a)  the demise of dodd/frank has been greatly exaggerated by varios republicunt interests for quite a long time now (see mittens and his fuktards)

b)  the idea that the chairsatan isn't jacking0ff to this risk0n bond-selling is most assuredly absurd...

...BiCheZ!

 

Wed, 08/08/2012 - 15:48 | 2688734 slewie the pi-rat
slewie the pi-rat's picture

...let's make that:>   ... right-wing republicunt risk0n bond-selling TOUT TOUT TOUT ... <:   ok?  {fixed!]

L0L!!!  (don't let the zH neoCon propwash knock yo offa yer pins, now, maties)

Wed, 08/08/2012 - 15:50 | 2688737 RSloane
RSloane's picture

Dodd, who belongs in jail, recently said he hasn't read Dodd-Frank yet but he plans on reading it sometime, in the near future, any day now.

 

PS I'm writing in Slewie the pi-rat for my vote for president.

 

Wed, 08/08/2012 - 15:42 | 2688714 koaj
koaj's picture

seems like mr singer has been reading ZH

 

well done tyler

Wed, 08/08/2012 - 15:47 | 2688721 Lost Wages
Lost Wages's picture

So for money trapped in a 401K where you have to be long, can never be short, and only have a choice between Pimco, Fannie/Freddie, TIPS, small-cap, mid-cap, large-cap, real estate, a few foreign funds that are a mismash of every country on the planet, and finally NO cash option except ABS "managed income portfolios," there is nothing you can possibly do. Good luck.

Wed, 08/08/2012 - 16:01 | 2688773 john39
john39's picture

nice set up, isn't it...

Wed, 08/08/2012 - 16:09 | 2688811 DeadFred
DeadFred's picture

I do have the option of going long on gold and energy funds. Everything else has a "Danger Danger" tag on it.

Wed, 08/08/2012 - 16:24 | 2688853 chet
chet's picture

Don't forget paying outrageous expense ratios for the privilege!

Wed, 08/08/2012 - 16:38 | 2688908 theTribster
theTribster's picture

Take the penalty and pay the tax - get your money. That can be done and should be IMO, having anything in the system once the next collpase starts will be lost. Capital controls and various other regulations will be invoked eliminating your ability to access your funds - in some cases at all. We've all heard the Gubmint will simply convert everyone's retirement savings (IRS, 401s, 403s, Social Security) into wonderful Treasuries, lets face it there is 52 trillion in the private accounts - there is now ay they don't have their eyes on that.

Until they steal everything it will continue except with recklass abandon, no more fleecing just steal it all as the financial industry is completely above the law regardless of how heinous the act (think MFGlobal, PFG, Knight, the TARP(s)). It has risen to a level of being completely outrageous, the stealing, cheating and lying has reached an all-time high from politicians and corporations - no sign of it slowing down. As the dickhead from Europe said: "When things are really bad you have to lie".

Our choices for President are a lier and an idiot, at least from my point of view. The Senators are the most corrupt set of people on the planet, directly and indirectly destroying the country, creating and causing wars, stealing on a massive scale, etc. These guys are the most responsible for where we are and are culpable to the point where they should be tried for treason of the highest degree and then, frankly, executed - well at least the vast majority of them. Same is true for the house but not to the same extent.

I'd rather have things unwind sooner than later, they could too. In any case, the sooner you bite the bullet and get out of the 401K the better - pay the penalty, pay the tax - be happy you recovered something where millions of others will fail and lose most or all of it. The 401K was such a great idea, made it easy to steal billions and billions of dollars over the years. In fact, most of wall street exists because of these funds and their ability to constantly and consistently steal from them - fleece. I think the days of fleecing are coming to an end, it will become outright theft (as it has in many cases already)...

Wed, 08/08/2012 - 16:43 | 2688929 SAT 800
SAT 800's picture

Exactly. Correct.

Wed, 08/08/2012 - 21:23 | 2689622 Landrew
Landrew's picture

Very few plans allow withdraw until age 591/2 very very few. The only way to withdraw is to quit your job. That would be stupid at this point.

Wed, 08/08/2012 - 17:07 | 2689037 IndicaTive
IndicaTive's picture

Right on Tribster. The only way I can get mine out is to quit my job (of 16 years). Headhunters are telling me to stay put--it's ugly out there. Quitting is not an option for me. Am I missing a loophole that would allow me to cash out while still employed?

Wed, 08/08/2012 - 18:10 | 2689171 Lost Wages
Lost Wages's picture

No, the only thing you can possibly do is borrow 50% of it and pay yourself back out of your paycheck month-after-month, which would affect your current income. You will be paying about 5-6% interest, but technically paying it back to yourself. So you could take out half of it, put it into gold or TBT or cash and just wait. If you are fired before paying it back, you can continue paying it back or they will issue a 1099 calling the remainder income, at which time you pay tax on it instead of paying back the "loan." The loan will also have a quarterly maintenance fee (approx $6) and a setup fee (approx $75) and you will be paying it back with after-tax money.

Wed, 08/08/2012 - 18:16 | 2689207 smiler03
smiler03's picture

In my UK SIPP (Self Invested Peronal Pension) I can't take anything out or invest in bullion.

Well I can take 25% out in cash when I'm 55 but the bastards just increased that from age 50. When I'm 54 and a half, it'll no doubt be raised to 60.

As far as I'm aware all UK Personal Pensions have the same restriction. (there are minor exceptions).

http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/PersonalPensions/DG_10027141

Wed, 08/08/2012 - 21:28 | 2689635 Landrew
Landrew's picture

Sorry also not true. Almost all plans only allow hardship (which is very narrow) or purchase of a occupied home. Sorry they set it up so you can't get out. I would think advising people to quit their jobs is a very bad idea. You can borrow part of the funds at LIBOR or Commercial Business rate and that makes very little sense. You must have the most liberal plan ever created.

Thu, 08/09/2012 - 18:09 | 2692357 Lost Wages
Lost Wages's picture

The default setting on the Fidelity website is that you are preapproved for a loan of 50% of your current assets. There is another type of loan for housing, but as for a general loan there is no problem getting the money out. Sometimes people simply take a loan out of their 401K for no other reason than to pay off a higher interest loan and pay themselves back interest instead of the lender. I'm not necessarily recommending it, but the 50% loan thing is normal. As for the guy who can invest in energy and gold in his 401k, that is lenient.

Wed, 08/08/2012 - 20:00 | 2689429 dapper_dan
dapper_dan's picture

I tried this.  They wouldn't let me - unless I leave my job.  I just simply can't cash out the 401k if I want to stay employed.  I only contribute now up to the match point, then nada.  I can't invest in cash, gold, anything except stocks and bond mutuals.  I realized it was a scam a few years ago, but haven't wanted to leave my job yet.  So it's actually worse than you say - get OUT IF YOU CAN.  If not, stop contributing (except if your employer matches, but even then I'd consider not doing it as it's probably still going to go DOWN).  In 10 years of contributing I have a negative return.  hahaha  guess I was the idiot but now I know

 

Wed, 08/08/2012 - 15:46 | 2688725 buzzsaw99
buzzsaw99's picture

ironic, that's what the bernank wants too. take your money out of bonds and give it to his billionaire buddies.

Wed, 08/08/2012 - 15:56 | 2688763 slewie the pi-rat
Wed, 08/08/2012 - 15:46 | 2688726 SheepDog-One
SheepDog-One's picture

Everyone in Stockholm Syndrome...its going to be so funny to see the morning when they pull the rug out and everyone crying that they were assured Bernank had their back...LOL!

Wed, 08/08/2012 - 15:52 | 2688749 buzzsaw99
buzzsaw99's picture

do not underestimate the power of the dark side

Wed, 08/08/2012 - 15:55 | 2688756 RSloane
RSloane's picture

I don't know if you've ever lived in a hurricane zone, but its the same dynamic. People are warned constantly that a hurricane is coming and is going to directly hit them but they don't listen until their house gets torn from its base and deposited several miles away in a swamp. They wander around shell-shocked looking for someone else to blame for their situation. Then they cry for the government to help them and get angry when no one is dropping McBurgers and fries from the skies for them.

Wed, 08/08/2012 - 18:18 | 2689220 smiler03
smiler03's picture

I suppose the obvious answer is to make your (proverbial) house hurricane proof.

Wed, 08/08/2012 - 15:47 | 2688728 tahoebumsmith
tahoebumsmith's picture

The credit card is maxxxxed. Soon the ponzi will reveal its true colors and it won't be green. It will soon become a currency crisis and the dollar will be left to fend for itself...Those who believe you can solve a debt crisis with more debt are complete imbeciles. As the economy collapses around us the only focus is on the markets, the very same markets that got us here in the first place. What would you expect from a society that evolves around bets from compulsive gamblers? A world that has become nothing more then one big casino, a casino that has been propped up with free money created out of thin air. What we are seeing is the money drying up and trillions of dollars of more debt accumulated to keep the Casino doors open. The recovery that isn't... Peter Schiff 2009 called it again...

"For those market boosters who are prattling on about the possibility of a "jobless recovery," I offer an invitation to join me for a breakfast of "fat-free bacon," "eggless omelets," and "no-carb bread." As unappetizing as such a meal may sound, it would nevertheless offer more substance than the oxymoronic concept of an economic resurgence without job creation."

http://www.lewrockwell.com/schiff/schiff50.1.html

Wed, 08/08/2012 - 16:31 | 2688872 RSloane
RSloane's picture

"Those who believe you can solve a debt crisis with more debt are complete imbeciles."

That's almost our entire government and their panels of advisors.

Wed, 08/08/2012 - 17:06 | 2689035 AnAnonymous
AnAnonymous's picture

And what are people who keep claiming that 'Americans' are interested in solving the debt problem by cutting on their debt?

Wed, 08/08/2012 - 17:13 | 2689046 akak
akak's picture

And what are retarded and wildly dishonest people who keep claiming that 'Americans' were somehow responsible for the devastated environment and concomitant societal collapse of Easter Island in the late 16th-early 17th centuries, long before they had had their first contact with the outside world, and even longer before the USA was even founded as a nation?

You call them corn.  We call them trolls.

Wed, 08/08/2012 - 15:50 | 2688736 drivenZ
drivenZ's picture

Nice to see someone with serious money come out and say it, but is this really a revelation? The 10yr at 1.5%? I mean over the longer term does anyone really think treasuries will outperform? it's basically impossible with yields so low now due to artficial fed action and general safe asset scarcity. Sure, the fed will support the long end in the coming months via twisting but it doesnt take a genius to say treasuries will underperform in the long term. 

Wed, 08/08/2012 - 15:52 | 2688747 Lost Wages
Lost Wages's picture

Did bond yields ever suddenly shoot up in Japan?

Wed, 08/08/2012 - 16:00 | 2688768 drivenZ
drivenZ's picture

good point, but JGB's really havent done much since the late 90's. mainly just muddled along. Which still kind of supports the Elliot sell call. There could be alot of downside risk(who knows) in the US and the upside reward long term at these yields is severely limited. So your basically taking all downside risk in the longterm. 

Wed, 08/08/2012 - 16:46 | 2688943 AGORACOM
AGORACOM's picture

Except for the fact that people were saying the same thing 100 basis points ago.  I wouldn't be surprised to watch US Treasury yields dip another 100 basis points over the next 24 months as the mess gets worse, not better.

Regards,

George ... The Greek ... From Canada

Wed, 08/08/2012 - 15:55 | 2688757 reader2010
reader2010's picture

 

the big sharks control the system and you want short?

 

Buffett's Housing Bet Pays Off

 

 

http://www.hispanicbusiness.com/news/newsbyid.asp?idx=290873

Wed, 08/08/2012 - 15:57 | 2688764 no life
no life's picture

Potter nodding off at his desk like a veteran air traffic controller.

Wed, 08/08/2012 - 21:57 | 2689716 Landrew
Landrew's picture

Ha, yes Mr (warren) Potter. Real Estate in Potterville ha! He looks and sounds just like Mr Potter!

Wed, 08/08/2012 - 16:02 | 2688779 resurger
resurger's picture

well written

Wed, 08/08/2012 - 16:06 | 2688796 monopoly
monopoly's picture

Excellent post and spot on.

Wed, 08/08/2012 - 16:13 | 2688820 rufusbird
rufusbird's picture

Reading the article made me recall an incident that happened in the 1980's. I had driven out into the country to meet an old farmer who was father to one my current clients. I was to pick up a the certificate for an 8% GNMA security that he wanted to sell.  He was discusted that in the current interest rate environment at the time, 12% plus...he could only get 65 cents on the dollar for the remaining principle.

He seriously asked me if there was someone he could sue about that. Someday there will be a lot of people who feel the same way.

Wed, 08/08/2012 - 16:26 | 2688856 MachuPicchu
MachuPicchu's picture

The most secure investment in the next 10 years will be sovereing debt from developing countries (the best ones, not BRICs).. safe and profitable..

Wed, 08/08/2012 - 16:32 | 2688873 LawsofPhysics
LawsofPhysics's picture

Oh do tell, because what I see is a world with a currency crisis.  No one trusts anyone and there is increasingly no uniform way to settle trade accounts as no one really wants someone else's paper.

Wed, 08/08/2012 - 17:35 | 2689115 TIMBEEER
TIMBEEER's picture

And the Chinese just announced that they will start devaluing their currency. But wait a minute .. wasn't their currency about to become a replacement for the dollar? The World Reserve Currency!

 

My bank tried to sell me some Monopoly investments into the Chinese currency just six months ago.. "Safe bet."

Wed, 08/08/2012 - 16:29 | 2688864 ReallySparky
ReallySparky's picture

Outstanding article.  Finally, another responsible adult shows up and states the truth.

Wed, 08/08/2012 - 21:24 | 2689413 slewie the pi-rat
slewie the pi-rat's picture

nothing new here

but what to do with the "money"?

leave it with the broker?  maybe a less-liquid-than-last-year moneyMktFund with new improved "freeze legislation in a panic"?  nice bankster CD paying ?  stocks?  here?  risk0n? 

could you show me where he answers this question or do ya hafta ship him $0.5 mil  so he can "help" you?

these guys walk on water ya think? never bin sued probably, too...?

say...howzabouta nice   HedgeFund YouTube here?  let paulSinger help w/ the "proceeds and profits of the bond sales"? 

he's good!  he's rich!:  give him yer money NOW!  from

Paul Singer (businessman) - Wikipedia

  [Paste} :>  Paul Singer (born August 22, 1944) is the founder and CEO of hedge fund Elliott Management Corporation and The Paul E. Singer Family Foundation.[1] According to The Guardian, "Elliott's principal investment strategy is buying distressed debt cheaply and selling it at a profit or suing for full payment." Singer is a major donor to the Republican Party.[2]  <:

who coulda node?  L0L!!!

take a # to put yer lips to this uber's mittens-loving ass!    zH alert:  bonds over priced due to more funny money malinvestment (?) rilly?  8.8.12?  ya got that?

to quote theDailyMogambo:> I mean, how do you make sense of ANY of that, except by first assuming that everybody is out to get you, then it all falls into place? <;

Wed, 08/08/2012 - 16:30 | 2688869 humblepie
humblepie's picture

 

http://www.mauldineconomics.com/images/uploads/pdf/mwo072312.pdf 

I wonder if Mr. Singer would be saying the same if he was addressing the 'debt disequilibrium panic years of 1873 and 1929 in the U.S.'? In the above article, Hoisington Investment's Lacy Hunt points out after debt induced panic years, the LT Govt Bond average low is 2.%; the average no. of years after panic to low is 13.7 yrs; average level of interest rates 20 years after the panic is 2.5%, and the change from the low level of interest rates to the 20th year is only 0.5%.

We are currently in year no. 4 after the panic.  So, this time is different? I can't wait. I have been holding my breath waiting for higher interest rates. I'm starting to turn from blue to black now.

Wed, 08/08/2012 - 16:35 | 2688884 RSloane
RSloane's picture

Medic!!!

Wed, 08/08/2012 - 16:37 | 2688897 AGORACOM
AGORACOM's picture

Thanks for providing the data that backs up my logic post just above yours.

George

Wed, 08/08/2012 - 16:35 | 2688882 AGORACOM
AGORACOM's picture

I 100% agree with the logic of every statement ..... but timing this kind of call is impossible.  We could sit here for years and even see lower yields in years to come.  I actually believe the latter for the following reasons:

  1. Yields will be manipulated for as long as they need to be.
  2. Debt service levels are unmanageable and can't afford higher interest rates
  3. Debt and deficits are only going to get worse for the foreseeable future

1+2+3 = US interest rates aren't going anywhere until 2020 at a minimum.  Moreover, given the logic of every statement above, we are more likely to see a further rush into Treasuries as every other asset class (other than gold / silver) collapses.

The collapse will come .... but we have a lot of circling around the toilet bowl to complete until that day comes.

Regards,

George ... The Greek .... From Canada

Wed, 08/08/2012 - 17:02 | 2689011 RSloane
RSloane's picture

I agree with most of what you wrote BUT I don't think we have a lot of circling around the toilet bowl to complete.  I offer a different analogy. This is like a massive systems failure in a body whose heart is being held in the hands of a cardiac surgeon and is being artificially stimulated. Eventually the heart is also going to expire regardless of stimulation because the rest of the failed systems can't support its functioning. The medical overview is with stunning damage to the brain, liver, kidneys, etc the body is in fact nonfunctional. I think we are very close to the cardiac surgeon putting the heart back into the lifeless body and pronouncing death.

Wed, 08/08/2012 - 22:28 | 2689797 GMadScientist
GMadScientist's picture

Same analogy, but with one small twist: the (presumably dead) patient is a beloved relative of the owner of the hospital.

 

Thu, 08/09/2012 - 10:16 | 2690918 MrSteve
MrSteve's picture

There could be lots of running around the drain pipe before the FINAL FLUSH. With CBs tag-teamming at the printing presses and buying their own bonds, rates will be kept low to avoid a rising-rate-rollover disaster, like Spain is seeing now with rates at, around and about 7%. Hide the weenie, three card monte, shell game, etc; there are lots of names for the same dodgy strategy. We are seeing them all now and will continue to see them.

What is QE, Twist, LTRO, etc, etc, etc except inventive wordsmithing for the same old currency debasement.

It smells the same, whatever the name.

(a nice little internal rhyme for the poetry-deprived masses here in ZH!)

Wed, 08/08/2012 - 16:37 | 2688898 Dealer
Dealer's picture

Barney Frank is a know-nothing, worthless cocksucker.

Wed, 08/08/2012 - 22:29 | 2689805 GMadScientist
GMadScientist's picture

This is not the time or place to ask for your money, hon.

 

Wed, 08/08/2012 - 16:37 | 2688899 Dealer
Dealer's picture

Barney Frank is a know-nothing, worthless cocksucker.

Wed, 08/08/2012 - 16:50 | 2688959 Remington IV
Remington IV's picture

Obama's fault

Wed, 08/08/2012 - 16:56 | 2688990 Neethgie
Neethgie's picture

Im just gonna say what ive been thinking for a while now, leave your country, if your in america the uk or most of the piiigs get the fuck out of dodge, their is no future for you there, if your an eu citizen get the hell into norway, the place is a paradise (For now).

 

Wed, 08/08/2012 - 17:05 | 2689019 AGORACOM
AGORACOM's picture

I wrote this a year ago and got a ton of flack .... http://blog.agoracom.com/2011/07/27/to-america-emigrate-to-canada-fast/ .... Now almost a year to the day, this article came out about record numbers of Americans emigrating to Canada ..... http://nexuscanada.blogspot.ca/2012/07/americans-moving-to-canada-in-record.html

If you're going anywhere, consider Canada.

George ... The Greek ... From Canada

Wed, 08/08/2012 - 18:20 | 2689228 Alpha Monkey
Alpha Monkey's picture

I live in seattle.  Every time I visit canada I want to stay.  Hopefully I can get there before they lock down the border.

Wed, 08/08/2012 - 20:51 | 2689517 Overfed
Overfed's picture

Just trying to figger out how to sneak all of my guns over the border.

Wed, 08/08/2012 - 22:05 | 2689733 Landrew
Landrew's picture

You can own guns in Canada. You just can't own machine guns. Of course you have to prove you know how to use them. I wish we had that here.

Sat, 08/11/2012 - 12:17 | 2697394 Overfed
Overfed's picture

You can't own a handgun, or an AR or AK in Canada. Plus I have a big problem with having to get permission from the gov't to own anything.

Wed, 08/08/2012 - 21:47 | 2689670 pain_and_soros
pain_and_soros's picture

When the US goes into deeper depression, their largest trading partner (a largely socialist country that gets by largely by selling its natural resources to other countries rather than producing value added end-user products) will feel the pain as well.

That will trigger the popping of Canada's real estate bubble (driven largely by foreign, mostly asian money bidding up properties in Vancouver, Toronto, etc.) - the debt load (debt to income) of the average Canadian is actually worse than it was at the peak of the US housing bubble...and when the bubble pops, and the value of properties drops to less than the mortgage balances, those suckers will have to keep paying on those full recourse mortgages, assuming they have a job & enough income to do so....

That will finally expose the Cdn banks, who have so far escaped the worst of the GFC, and thanks to most mortgages having been guaranteed by CMHC (the Canadian version of FNM & FMH), the goverment's debt will actually balloon if they decide to honor those mortgage guarantees (& bail out the banks).

The federal government is already starting to cut back its workforce, since they probably have an inkling of what is coming...which will only serve to reduce consumer spending & govt revenues while increasing its social spending (unemployment insurance, welfare, etc.)

The Canadian goverment's financial situation is actually worse than the US in one very important aspect - reserve assets - while Canada is blessed with a lot of gold as a natural resource, the government holds very little of it...their biggest reserve asset is...yep you guessed it, $US - which will at some point will become worthless....

So the Cdn government will find itself with revenues declining if not collapsing while expenditures increase if not soar & nothing in reserves other than a printing press...(plus the separatist party in Quebec is leading the polls in that very socialist province's current election campaign, and will be very intent on extorting more money from Ottawa to Quebec City).  Their deficit & debt situation will suddenly have deteriorated very quickly & expose the sustainability of the country's much vaunted social health care & pension plans and its only recourse may be to extract more taxes from the only game left in town - selling whatever is left of its resources to other countries able to pay up with real money (i.e., gold) - namely China & perhaps the US.

So before you decide a move to Canada would be the answer, thinking that things are all roses here, check out who their largest foreign trading partner is (Canada is actually a bigger trading partner of the US than China) and extrapolate how Canada will fare if the US goes down the tubes....

 

Thu, 08/09/2012 - 09:51 | 2690789 AGORACOM
AGORACOM's picture

If the US goes into a deep depression, the entire planet is up the creek without a paddle and there will be nowhere to hide. No argument there.

We're just talking about a better solution as the US goes into Japanese mode for the next 15 - 20 years.

Regards,

George ... The Greek ... From Canada

Wed, 08/08/2012 - 22:22 | 2689778 GMadScientist
GMadScientist's picture

Work on your sales pitch.

Wed, 08/08/2012 - 17:14 | 2689048 JuicyGrabs
JuicyGrabs's picture

Guy lost so far with his bet. He`s been short treasuries since May. http://www.bloomberg.com/news/2012-05-10/elliott-s-paul-singer-says-he-s...

Wed, 08/08/2012 - 17:14 | 2689056 Unholy Dalliance
Unholy Dalliance's picture

I have just looked up the value of $1.3 million in today's money: apparently it is roughly $19.8 billion. Well done, Mr. Singer!

Wed, 08/08/2012 - 17:20 | 2689074 govttrader
govttrader's picture

Most of you posters seem to miss the major point...a politicians "job" is to keep his job.

A central bankers "job" is to stay a central banker long enough that his actions create such wealth for his "friends" that when he leaves his post, he has a vault of gold bars and other rare earth elements waiting for him in his basement.

Under these auspices...we are no-where close to the end.  Central bankers will LTRO and QE (and make statements to that effect) until it doesn't work.  It hasn't stopped working yet.  In trading, to be early, is to be WRONG.  I am a trader.

http://govttrader.blogspot.com/

Wed, 08/08/2012 - 17:49 | 2689146 Arnold Ziffel
Arnold Ziffel's picture

Earthquake hits SoCal...again:

 

California Institute of Technology seismologist Kate Hutton says the latest quake at 9:33 a.m. Wednesday quake was a magnitude-4.5 and was centered two miles northeast of the Orange County city of Yorba Linda. The quake's magnitude was revised several times.

Seismologists also slightly revised Tuesday night's Yorba Linda-area quake to magnitude-4.5.

Yorba Linda is about 35 miles southeast of downtown Los Angeles.

 

http://news.yahoo.com/southern-calif-shakes-another-earthquake-164227230...

 

You might also say,

"We Make This Recommendation To Our Friends: If You Own a House in SoCal Sell It Now"
Wed, 08/08/2012 - 18:45 | 2689269 smiler03
smiler03's picture

If you search for magnitude 4.0 and above, within a 400 km radius of Yorba Linda, there have been 13 so far this year (and 36 in 2011).

Nothing to see here, move along!

USGS searchable database http://earthquake.usgs.gov/earthquakes/eqarchives/epic/epic_circ.php

Type "yorba linda latitude" into Google and you get the lat/long easily..

33.8886° N, 117.8122° W (W should be entered as a negative number for anywhere in the US)

Wed, 08/08/2012 - 22:19 | 2689770 GMadScientist
GMadScientist's picture

Not news. Lots of little ones is a good thing.

Wed, 08/08/2012 - 18:05 | 2689183 Quinvarius
Quinvarius's picture

The Fed will continue to overpay for US government debt until Hell freezes over.  There is no amount of debt the Fed cannot buy.  Treasuries are a bad investment here.  But they are not going to crash.  That would require that we actually have a Treasury market.  We don't.  We have an exchange of funds from the Fed to the government and the bankers.  The collapse will be in the purchasing power USD as it is printed to prop the system up.

Wed, 08/08/2012 - 18:53 | 2689284 smiler03
smiler03's picture

I think this is one of the smartest and most believable comments I've seen regarding US debt. Nice and succinct so that even I can understand it.

Wed, 08/08/2012 - 22:24 | 2689784 GMadScientist
GMadScientist's picture

+1 Well put.

Thu, 08/09/2012 - 18:42 | 2692413 AGORACOM
AGORACOM's picture

Nice and 100% agreed.

George ... The Greek ... From Canada

Wed, 08/08/2012 - 18:50 | 2689293 q99x2
q99x2's picture

Passport time.

Wed, 08/08/2012 - 19:57 | 2689410 linrom
linrom's picture

This article is full of urban myths.

Myth Buster #1

The level of taxation is inversely correlated to job creation because it is less expansive to outsource jobs including production. While this might seem counter-intuitive, it is NOT because the return on asset speculation is higher than on investment in productive capital, thus high taxation is the perfect tool to remedy this. That is, make returns on investment in productive capacity higher than those of ponzi asset speculation.

Hence the level on taxation has absolutely on impact on employment. Job growth under Bush was anemic despite favorable tax policies combined with deficit spending. What would spur job creation is imposition of high tariffs combined with on-shoring tax credits.

Myth Buster #2

Somehow private sector financial service workers such as hedge fund managers possess higher acumen in predicting the future than fish market salesmen. If bond fund managers were so smart, they wouldn't be holding tens of trillions debt instruments, would they?

Wed, 08/08/2012 - 23:19 | 2689945 slewie the pi-rat
slewie the pi-rat's picture

if the equi_T goes down the toobs in a shitstorm of insolvency, the debt controls the corporate assets, doesn't it, mrBones?

Thu, 08/09/2012 - 15:59 | 2692064 ReactionToClose...
ReactionToClosedMinds's picture

1. Dodd is equal to, maybe worse than, Corzine (and both are worse than Madoff ...... think about why that is).

I forgive Barney Frank, as disastrous, but not evil like the preceding; he was a titanic fool who liked tho hear himself talk.

Henry Cisneros, Rbt Rubin can join the list of 2 above for their knowing duplicitous, self-serving impact ......

2.  Let your ideologies drive your thinking directionally as a surprising number here seem to do.  No one possesses perpetual, eternal or all-knowing 'truth' or wisdom.   Last I looked, all of us are human and make mistakes every day .... in finance, business, families, friends,  What we believe is important .... to you and your interaction with others ... but irrelevant to the universe or reality.  Don't be so blinded by ideology or beliefs or politics to totally dismiss a very successful credible investor. As TD said, he did it the old-fashioned way.  I despise Soros, but am willing to give him a fair listen even when I know it is 50/50 he is manipulating as he proffers 'free' wisdom.  You can do the same with Singer ....debate in your own mind why is off- target, where and what it means for your/your family's savings.  I would not dismiss Singer too lightly just as I do not dismiss Soros out of hand.

But then, politics is not about succeeding for the greater good; just about making oneself feel better as compared to the 'ugly, angry slobs' on the other side

 

Fri, 08/10/2012 - 18:07 | 2695551 Helix6
Helix6's picture

Why do I think that Elliott Management has the other side of that trade...

Oh, yeah, because that's what financial firms are all about!  Stampeding the muppets via dire predictions that play into their positions!

Do NOT follow this link or you will be banned from the site!