Friday Humor: Waiting For "Magic" Is Now An Investing Strategy

Tyler Durden's picture

It has long been known that under central planning "Hope" (that Bernanke sees the printer's shadow; that the economy implodes so Bernanke can print; that the economy surges so that Bernanke can still print; that Brian Sack fat fingers in a few million extra shares of NFLX, speaking of which the Fed's Other Assets are now $160 billion) is one of the dominant investment strategies. To this roster of unorthodox investment practices, we can now add magic. Because when analyzing the capital shortfall at Deutsche Bank (whose assets are 84% of German GDP), arguably the bank with most to lose when Europe is gripped by out of control default contagion (right after Allianz and Generali, or A&G, of course), Credit Sights makes the following observation: "The capital shortfall of €3.2 bln identified by the EBA's capital exercise at 30 September 2011 has magically disappeared... This illustrates the capacity of banks to improve capital ratios without raising new capital." We agree:expecting nothing short of magic is by far the best means to achieve the €21 trillion in deleveraging needed to make the world viable from a solvency standpoint, forget about growing. As for "magic" as an (inverse) bailout strategy, surely this opens up unlimited potential untapped avenues of value uncreation - just consider the endless opportunities of "magically vaporized" as an official explanation for what will happen to your money when this latest Ponzi bubble bursts...

Full blurb from Credit Sights:

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GeneMarchbanks's picture

All your imagination, bitchez!

Unprepared's picture

Just fat fingers: intended [Ctrl]+[P] and typed [Delete]

economics1996's picture

Bull shit unemployment numbers.


The civilian labor force participation rate dropped from December 2011 to January 2012 from 63.8% to 63.4%. this is the lowest it has been since May 1983. The employment-population ratio dropped from 58.5% to 57.8% from December 2011 to January 2012. So why has the unemployment rate dropped from 8.5% to 8.3%?


The civilian non-institutionalized population increased from 240,584,000 to to 242,269,000, a increase of 1,685,000, and more importantly the actual civilian employment dropped from 140,681,000 in December 2011, to 139,944,000 in January 2012.

Using the BLS data the employment was 139,994,000 and the civilian labor force was 153,485,000 for a unemployment rate of 8.8%. So there is a statistical correction with their numbers of 0.5%?

If you use the late 90s as a base line the unemployment rate is 139,994,000/164,112,000 = 14.7%. The 164,112,000 is based on a growth rate of 16.68% in the civilian non-institutional population increase since June 1999.

If you use more recent participation rate the unemployment rate INCREASED to 11.5%.

Either way you calculate it the federal government has decided they do not want Mitt Romney cutting their budgets and the propaganda war is on. Look for this bogus data to continue through election day.

Jonas Parker's picture

Hell, we've been getting bogus data since FDR!

Manthong's picture

That 3.2 bil is just a pimple on the butt of their problem..

I understand that the sovereign risk adjustments have already wreaked 700 bil of damage to DB's balance sheet.. this is barely a rounding error.

Hansel's picture

You're going to hate this answer, but this isn't "correct":

The civilian non-institutionalized population increased from 240,584,000 to to 242,269,000, a increase of 1,685,000, and more importantly the actual civilian employment dropped from 140,681,000 in December 2011, to 139,944,000 in January 2012.

In the BLS release there is this (which the Tylers didn't really cover):

Effective with data for January 2012, updated population estimates which reflect the results of Census 2010 have been used in the household survey...

In accordance with usual practice, BLS will not revise the official household survey estimates for December 2011 and earlier months. To show the impact of the population adjustment, however, differences in selected December 2011 labor force series based on the old and new population estimates are shown in table B.

The adjustment increased the estimated size of the civilian noninstitutional population in December by 1,510,000, the civilian labor force by 258,000, employment by 216,000, unemployment by 42,000, and persons not in the labor force by 1,252,000.

December 2011 numbers and January 2012 numbers in the household survey aren't "comparable" according to Bullshit, Lies, and Statistics.  Basically they want you to believe the new numbers, and throw out the old numbers.  The whole report was just garbage.

Saro's picture

Thanks, I was trying to figure out how we added 1.6 million people in one month, whereas it took all of 2011 to add 1.88 million.

GeneMarchbanks's picture

Then, when the creditor shows up for payment you do the same unless he's packing heat, in that case, get ready because you are about get a real lesson in Real-o-nomics.

drink or die's picture

aaaaaannd, it's gone.

francis_sawyer's picture


This is your brain on drugs... Any questions...

JPM Hater001's picture

Yes, can I get that with a side of bacon and some toast?  Anyone else here hungry?

taniquetil's picture

Why wait for magic when you have Groupon and Zynga?

Oh regional Indian's picture


Mark to model. And we've been trained to get used to a NEW Model. Every year. A NEW Model.

Suckers, all of us.



Squid Vicious's picture

Magically delicious...

francis_sawyer's picture

that would be a leprechaun...

Squid Vicious's picture

VXX are for kids!! Wish i learned that about two weeks ago...

WmMcK's picture

Volatility, it's part of a balanced breakfast.  I prefer Golden Grahams myself.

BlackholeDivestment's picture ...and therein ''lies'' ...the ''rub''. That's ''rub'' as in ''rubber biscuit'', the one that don't bounce back ...and you go hungry ..bow ..bow. Lol Now let's sing da blues brutha. Lol

Vicious, you hit me with a flower...

Sandmann's picture

Deutsche Bank gains a new Chairman in May - Dr Paul Achleitner of Allianz SE and formerly of Goldman Sachs.............Magic will be in the air !

SillySalesmanQuestion's picture

Now, if only we could get the banksters to magically disappear...maybe GS will put out a David Copperfield IPO next week...?

HD's picture

Someone walk me through this one.  How is it "magically vaporized"?  Is this just another change the accounting, change reality situation?

tekhneek's picture

I'll bite.

"I bought the mortgage for $500,000 but now it's worth $220,000. I did buy it when it was worth $500,000 though so... I'm just going to stick with that."

If these banks mark-to-market their books they'd all "magically vaporize"

faustian bargain's picture

If these banks mark-to-market their books they'd all "magically vaporize"

And there it is.

HD's picture

Sorry - maybe I wasn't clear in what I was asking. I understand mark to market - what I don't understand is what mechanism they used to get the €3.2 bln to disappear.

Reese Bobby's picture

The 3.2 bln was a capital ratio shortfall.  Think Tier 1 assets divided by risk weighted assets.  Change the calculation of RWA to reduce the denominator enough and, poof, shortfall gone.

slewie the pi-rat's picture

yes, you can change the "weighting" of the "asset classes"

and, you can also change the assets w/out changing the weights

so you could get yer local centralBankster to help you swap those "risky" corporates (banks) for "safe" sovereign which are "weighted" risk-free!  or "risk-free-". 

you would still be an extremely stinko P0S, but the regulators would arrive "magically" wearing nose-plugs!

BW's picture

Does anybody know how many barrels of oil did India get for each ounce of gold?

BW's picture

Does anybody know how many barrels of oil did India get for each ounce of gold?

tekhneek's picture

Hypothetical, I don't actually have any idea, but It probably went like this:

Price of Gold: $1727

Price of a Barrel: $100

17.27 barrles of oil per oz of tradition.

BW's picture

That's a lot of gold

ParkAveFlasher's picture

Excellent hypothetical because if you track the relationship between the dollar, gold, and a barrel of oil it usually hovers around 16-17 barrels per ounce of gold. 

But let's not forget, gold is back by nothing ;)

ParkAveFlasher's picture

just one of many supporting links for those interested:

Over the last 50 years or so, gold and oil have generally moved together in terms of price, with a positive price correlation of over 80 percent. During this time, the price of oil in gold ounces has averaged about 15 barrels per ounce. However, with recent soaring oil prices, the relationship has strayed far from this average. While oil prices recently set an all-time high of $56 per barrel, gold prices have not kept pace and the oil:gold ratio fell to an all-time low of 7.5:1. At US$56 per barrel oil, the gold price should be in excess of US$840 per ounce. Some experts are suggesting that, in two or three years, US$100 per barrel oil is very possible. At that price gold should be US$1500 per ounce.

The gold silver:ratio has varied from 16:1 to 100:1. Currently it is about 66:1. Gold Fields Mineral Services expects this ratio to fall to between 40:1 and 50:1 in the near future. At a 50:1 ratio and a $1,500 gold price the price of silver should be $30/ounce. At 16:1 it would be $94/ounce.

The size disparity between oil and gold markets must also be considered. While annual gold production is approximately US$35 billion, annual oil production is US$1.5 trillion, by far the largest-trading world commodity. As oil prices increase and demand for US dollar diversification increases, there will be an ever-expanding number of petro dollars and other offshore dollar holders chasing a relatively small amount of bullion ounces.

In conclusion, the price of oil is poised to rise steadily as the supply/demand imbalance increases and the dollar declines, even if there are no supply disruptions, terrorist threats or geopolitical concerns to consider. As this happens, the price of precious metals will climb until they eventually catch up to their historic ratios. Should oil producers demand euros, dinars or precious metals in payment for their product, the decline in the US dollar will accelerate while the price of precious metals explodes. If oil producers and other foreign US dollar holders begin to sell the trillions they hold and diversify into alternatives, then the price of both oil and precious metals will rise to levels that today are hard to imagine.

22 April 2005

^^^^^check that date!!!!

tekhneek's picture

Somebody forgot to carry the 1.

slewie the pi-rat's picture

others forget everything they ever learned!

remember last year when they "found the money in the couch", t_k? 

this year:  magic! 

maybe next year:  somebody gave it to me!

and we could also possibly get to "my dog shits money!" before the final curtain, too...

Jonas Parker's picture

Ahah! The banksters have discovered a method to suspend the law of mathamatics!

Is the law of gravity next?

Augustus's picture

Euro keeps getting stronger.  If Greece goes out, is a stronger Euro the result?

EscapeKey's picture

No doubt this magically appearing capital was levered by 80:1.

Tomorrow, assets will magically arrive from an alternate dimension.

The liabilities won't appear until AFTER bonuses have been paid.

Gubbmint Cheese's picture

Here is the title of a research report from my old company dated Dec 3, 1999 for Nortel Networks: "New Growth, New Valuation" - "In our view a price to sales approach, although riskier than traditional P/E valuations, currently offers the best assessment of Nortel's potential value" - 1 year target price: $149.00, 2 year: $180. BUY Rated.

at the time, the PE of NTL was 93.. but the P/S was a very 'cheap' 5.1x F2000 sales.

I've kept it all these years to remind myself not to get too carried away with "magic" solutions.



mayhem_korner's picture



So...if plug in the 93 PE into one of them-thar naive DCF valuation models, and I assume a RF rate of 0%, the required growth rate to get to the $149 says....wait for next Thursday I should be driving a Nortel SUV heading out for a fine meal at Nortel's.

It truly is magical. :D

Alex Kintner's picture

I just got a whiff of Abbey Joesph Cohen's pheromones in my nostrils. Oh how I yearn for the return of the Internet Bubble.

Thank you so much.

Gubbmint Cheese's picture

double post - sorry

mayhem_korner's picture



In the digital age, things can disappear with a few strokes of the backspace key.  Same way the BLS props up the UE rate - former UE recipients magically disappear from the ranks of the labor population.  Deleting is quite fashionable these days.

Zola's picture

Just like the Facebook stock will magically "disappear"...