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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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Fri, 02/03/2012 - 15:45 | 2124352 GeneMarchbanks
GeneMarchbanks's picture

All your imagination, bitchez!

Fri, 02/03/2012 - 15:50 | 2124369 Unprepared
Unprepared's picture

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

Fri, 02/03/2012 - 15:51 | 2124372 economics1996
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.

Fri, 02/03/2012 - 15:59 | 2124409 Jonas Parker
Jonas Parker's picture

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

Fri, 02/03/2012 - 16:16 | 2124497 Manthong
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.

Fri, 02/03/2012 - 16:05 | 2124427 Hansel
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.

Fri, 02/03/2012 - 16:09 | 2124466 Saro
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.

Fri, 02/03/2012 - 16:12 | 2124477 mayhem_korner
mayhem_korner's picture



Useful.  Thx.

Fri, 02/03/2012 - 15:54 | 2124387 GeneMarchbanks
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.

Fri, 02/03/2012 - 15:45 | 2124354 drink or die
drink or die's picture

aaaaaannd, it's gone.

Fri, 02/03/2012 - 15:46 | 2124357 francis_sawyer
francis_sawyer's picture


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

Fri, 02/03/2012 - 16:49 | 2124635 JPM Hater001
JPM Hater001's picture

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

Fri, 02/03/2012 - 15:46 | 2124358 taniquetil
taniquetil's picture

Why wait for magic when you have Groupon and Zynga?

Fri, 02/03/2012 - 15:46 | 2124360 Oh regional Indian
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.



Fri, 02/03/2012 - 15:47 | 2124362 Squid Vicious
Squid Vicious's picture

Magically delicious...

Fri, 02/03/2012 - 15:50 | 2124371 WmMcK
WmMcK's picture

No, silly rabbit ...

Fri, 02/03/2012 - 15:57 | 2124398 francis_sawyer
francis_sawyer's picture

that would be a leprechaun...

Fri, 02/03/2012 - 16:00 | 2124414 Squid Vicious
Squid Vicious's picture

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

Fri, 02/03/2012 - 16:32 | 2124572 WmMcK
WmMcK's picture

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

Fri, 02/03/2012 - 16:51 | 2124639 BlackholeDivestment
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...

Fri, 02/03/2012 - 15:51 | 2124374 Sandmann
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 !

Fri, 02/03/2012 - 15:52 | 2124377 SillySalesmanQu...
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...?

Fri, 02/03/2012 - 15:55 | 2124390 HD
HD's picture

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

Fri, 02/03/2012 - 15:58 | 2124407 tekhneek
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"

Fri, 02/03/2012 - 16:07 | 2124450 faustian bargain
faustian bargain's picture

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

And there it is.

Fri, 02/03/2012 - 16:08 | 2124462 HD
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.

Fri, 02/03/2012 - 16:12 | 2124481 Reese Bobby
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.

Fri, 02/03/2012 - 16:20 | 2124521 HD
HD's picture

Thanks mate.

Fri, 02/03/2012 - 20:41 | 2125502 slewie the pi-rat
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!

Fri, 02/03/2012 - 15:56 | 2124392 BW
BW's picture

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

Fri, 02/03/2012 - 15:56 | 2124393 BW
BW's picture

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

Fri, 02/03/2012 - 16:00 | 2124410 tekhneek
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.

Fri, 02/03/2012 - 16:02 | 2124426 BW
BW's picture


Fri, 02/03/2012 - 16:03 | 2124434 BW
BW's picture

That's a lot of gold

Fri, 02/03/2012 - 16:26 | 2124545 ParkAveFlasher
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 ;)

Fri, 02/03/2012 - 16:33 | 2124576 ParkAveFlasher
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!!!!

Fri, 02/03/2012 - 15:56 | 2124395 tekhneek
tekhneek's picture

Somebody forgot to carry the 1.

Fri, 02/03/2012 - 20:32 | 2125473 slewie the pi-rat
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...

Fri, 02/03/2012 - 15:57 | 2124402 Jonas Parker
Jonas Parker's picture

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

Is the law of gravity next?

Fri, 02/03/2012 - 20:46 | 2125509 slewie the pi-rat
slewie the pi-rat's picture

do bubbles float?

Fri, 02/03/2012 - 15:57 | 2124403 Augustus
Augustus's picture

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

Fri, 02/03/2012 - 16:00 | 2124415 GeneMarchbanks
GeneMarchbanks's picture

Longer term? Probably.

Fri, 02/03/2012 - 16:00 | 2124417 EscapeKey
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.

Fri, 02/03/2012 - 16:00 | 2124418 Gubbmint Cheese
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.



Fri, 02/03/2012 - 16:07 | 2124451 mayhem_korner
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

Fri, 02/03/2012 - 17:05 | 2124703 Alex Kintner
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.

Fri, 02/03/2012 - 16:01 | 2124420 Gubbmint Cheese
Gubbmint Cheese's picture

double post - sorry

Fri, 02/03/2012 - 16:01 | 2124422 BW
BW's picture


Fri, 02/03/2012 - 16:01 | 2124424 mayhem_korner
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.

Fri, 02/03/2012 - 16:04 | 2124436 Zola
Zola's picture

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

Fri, 02/03/2012 - 16:08 | 2124461 mayhem_korner
mayhem_korner's picture



And frosted Lucky Charms are magically delicious...

(weak, I know, but it just came to me)

Fri, 02/03/2012 - 16:14 | 2124487 francis_sawyer
francis_sawyer's picture

must have been 11 minutes after seeing my 14:57

Fri, 02/03/2012 - 16:16 | 2124500 mayhem_korner
mayhem_korner's picture



Sorry, dood.  Not looking to stake claim on yer cereal references.  Didn't notice.  I'll give you a +1 for royalties and we can call it even.

Fri, 02/03/2012 - 19:17 | 2125222 francis_sawyer
francis_sawyer's picture

My cereal references are a territory I defend... It's the only good thing I have going for me anymore :-)...

Fri, 02/03/2012 - 17:37 | 2124475 Mercury
Mercury's picture

"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."


...thanks to  Corzine's Vap-O-Rub !  Just apply to affected area...

You can smell it working! 

Won't leave greasy residue on your balnace sheet!

Like magic...the problem's just gone!

Fri, 02/03/2012 - 16:17 | 2124508 Agent P
Agent P's picture

Magic is something that is impressive on the surface, but is based on something fake underneath...Credit Sights couldn't have picked better language to describe this.

Fri, 02/03/2012 - 16:18 | 2124512 Normalcy Bias
Normalcy Bias's picture

I wonder if the "magically vaporized" excuse would work with the IRS. Something tells me this is a one-way street...

Fri, 02/03/2012 - 16:22 | 2124531 centerline
centerline's picture

Same as MF Global.

Fri, 02/03/2012 - 16:25 | 2124542 non_anon
non_anon's picture

one should know that when "magic" is conjured up, hanky panky is afoot

Fri, 02/03/2012 - 16:32 | 2124571 antidisestablis...
antidisestablishmentarianismishness's picture

Waiting for Armageddon as an investment strategy seems to be no less delusional.

Fri, 02/03/2012 - 16:53 | 2124644 WmMcK
WmMcK's picture

... and you can only be right (at most) once.

Fri, 02/03/2012 - 16:39 | 2124596 Quinvarius
Quinvarius's picture

And all this time I was collecting underpants! 

Fri, 02/03/2012 - 16:53 | 2124648 a growing concern
a growing concern's picture

Phase 1: Collect underpants

Phase 2: ???

Phase 3: Profit

Fri, 02/03/2012 - 16:47 | 2124598 SILVERGEDDON

MF Global was the test case. Nothing happened to the architects of "Fuck the deposit holders, real good." So, the phrase "I've been Corzine -d !" entered the modern investment language lexicon. Aaannnnd - it's gone.

Fri, 02/03/2012 - 16:52 | 2124642 a growing concern
a growing concern's picture

Let's see how they feel about "magically disappearing" wages from my W2s.

Fri, 02/03/2012 - 16:54 | 2124646 Alex Kintner
Alex Kintner's picture

First, is the computer plugged in and turned on?
If yes, check the Recycle Bin. Geez, people, it ain't that hard.

Fri, 02/03/2012 - 17:28 | 2124807 hawks5999
hawks5999's picture

These days, I'm with Kyle Bass and prefer MGIC.

Fri, 02/03/2012 - 18:03 | 2124957 spanish inquisition
spanish inquisition's picture

I am going to wait for the WSJ report. This could fall under the same crack reporting of money vaporizing into thin air. The WSJ is currently at the forefront and have expert investgative financial resources studying money moving around world markets. They may be onto the cause of all economic downturns, money just dissapearing through untraceable inventory drift.

I expect that upon hearing of this news, Jamie Dimon will check his pockets, just in case.....

Fri, 02/03/2012 - 18:36 | 2125065 Use of Weapons
Use of Weapons's picture

Right then... I got these three <del>beans</del> CDOs off this Goldman Sachs' guy, in return for my parent's house + life savings.


Anyone know what I do next with them?





/sigh.... HTML not working in here, and native strikethrough doesn't either. Bleh.

Fri, 02/03/2012 - 19:40 | 2125318 Coldfire
Coldfire's picture

Risk-weighted asset optimisation. Bitchez.

Fri, 02/03/2012 - 21:01 | 2125553 Kali
Kali's picture

Magic Vaporization - a new form of literature , in the subset of "Magic Realism", that is specific to the FIRE economy.

It's art, baby! 

Sat, 02/04/2012 - 05:17 | 2126187 Poor Grogman
Poor Grogman's picture

If we really want to stimulate the economy what we need is my new invention called

Drum roll please.... "copy and paste money"

The idea is that you find an electronic bank statement (It doesn't have to be your own) and as long as everyone is ok with the idea you can.
" copy and paste " the money into your own and other people's accounts.

As well as that you could copy and paste some money to charity that way you feel good while helping the poor people. in this scheme the government also wins as they collect transaction fees on all the new "copy and paste" money.

Obviously there would have to be revisions of some archaic "anti growth" laws. But that was no problem for sub prime housing loans.
Really there is no reason that everyone cannot be a winner

At this stage of the game innovative solutions are needed and this just might be it folks.....

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