This page has been archived and commenting is disabled.

Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?

Tyler Durden's picture




 

While much has been said about the vagaries in the European repo market elsewhere, the truth is that the intraday variations of assorted daily metrics thereof indicate three simple things: a scarcity of quality assets that can be pledged at various monetary institutions in exchange for cash or synthetic cash equivalents, a resulting lock up in interbank liquidity, and above all, a gradual freeze of the shadow banking system. As we have been demonstrating on a daily basis, we have experienced all three over the past several months, as the liquidity situation in Europe has gotten worse, morphing to lock ups in both repo and money markets. As a reminder, both repo and money markets (for a full list see here), are among the swing variables in shadow banking. And shadow banking is nothing more than a way to expand credit money while undergoing the three traditional banking "transformations" - those of maturity, liquidity and credit risk, although unlike traditional liabilities, these occur in the "shadow" or unregulated area of finance, interlocked between various institutions, which is why the Fed has historically expressed so much caution when it comes to discussing the latent threats in it.

Indicatively, of the $15.5 trillion in shadow US liabilities (by far the biggest such system in the world), $2.6 trillion are liabilities with money market mutual funds and just $1.2 trillion are repos. Indicatively, traditional plain vanilla bank liabilities amounted to $13.4 trillion as of Q2 (an updated for Q3 is imminent). As such, the focus on repo while useful, misses the forest for the trees, which is that not the repo market, but the entire shadow banking system in Europe is becoming unglued.

What explains this? Two simple words, which form the foundation of modern finance - "risk" and "confidence", and in Europe both are virtually nil. Seen in this light, the unwind of the shadow system explains much: the inability of Germany to place bunds, the parking of cash with the ECB, the freezing of repo, the plunge in the currency basis swaps, the withdrawal of money markets, the blow out of various secured-unsecured lending indicators, etc. All of these fundamentally say the same thing: there is too much risk and not enough confidence, to rely on the abstraction that is shadow risk/maturity/and liquidity transformation. All this is easily comprehended. What is slightly more nuanced, is the activity of the ECB and especially the Bundesbank in the last few weeks, whereby as Perry Mehrling of Ineteconomics demonstrates, we may be experiencing the attempt by the last safe European central bank - Buba - to disintermediate itself from the slow motion trainwreck that is the European shadow banking (first) and then traditional banking collapse (second and last). Because as Lehman showed, it took the lock up of money markets - that stalwart of shadow liabilities - to push the system over the edge, and require a multi-trillion bailout from the true lender of last resort. The same thing is happening now in Europe. And the Bundesbank increasingly appears to want none of it.

So just what is happening? Mehrling first explains the European funding status quo:

Apparently everybody, borrowers and lenders, public and private, wants the ECB as their counterparty.  Reluctant though the ECB may be to step into that role, and vocal as the ECB has been about that reluctance, what we are seeing in practice is that it has no choice, literally. 

 

Clearing imbalances within the Eurozone that cannot be resolved in the interbank market show up mechanically as imbalances between national central banks on the books of the ECB (see here  for details).  The ECB lends to the central bank of the deficit country and borrows from the central bank of the surplus country, so expanding its own balance sheet on both sides.   (Think Greece on the asset side, and Germany on the liability side.)

 

Something quite similar happens when private banks settle private clearing imbalances not by shifting reserves from deficit to surplus but rather by the deficit bank borrowing from the ECB and the surplus bank lending.  Again, the ECB balance sheet expands on both sides.

 

Why is this happening? 

 

The underlying problem is that deficit central banks and deficit private banks increasingly have nothing to sell (or to pledge) that surplus central banks and surplus private banks want to buy (or accept as collateral for a loan).   The ECB is also reluctant to buy--it is serving as pawnbroker of last resort , not dealer of last resort.

 

The consequence is that the ECB  is more or less forced to lend, against more or less whatever collateral is offered; even bad collateral is better than no collateral.  (The famous Bagehot Principle offers an out, since it urges valuation of collateral at non-stress prices.) 

So far so good: this is the system that as noted above is slowly crumbling. So what is happening next? One read is the following:

Now comes the latest deal over eurozone fiscal rules , presumably the deal that ECB President Draghi asked for last week .  It is a deal about sovereign budget discipline.  But if I read Draghi's speech right, we should not expect him to be buying sovereign debt.  (That will be the IMF's job, if anyone's, and with strict conditionality; details to be sorted later.)

 

Instead, he'll be buying bank debt, specifically the debt of the banks that hold the sovereign debt.  Banks currently borrowing from their own national central banks will therefore be able to repay, and consequently the national central banks will be able to repay the ECB.  This takes national central banks out of the picture on the asset side.

 

What about the liability side?  Here, perhaps in a longer time frame, I think the logical move is again to take the national central bank out of the equation, by replacing liabilities to the Bundesbank with deposits to the credit of private banks.    Freed from the responsibility to fund ECB loans to other central banks, the Bundesbank will be able to return to its preferred asset holding, German sovereign bonds.

One conclusion that is possible is that one proposed by Mehrling: "we're not going to be using the payment system to hide imbalances any more.  The ECB is going to serve as a proper lender of last resort to the banking system, affirmatively and up front rather than mechanically and through the back door.  But it will be doing so only to the banking system, not to sovereign debtors." It would be expected that some combination of EFSF/IMF funding would sourced the balance. In effect the ECB would intermediate itself directly in the national bank bailout scheme, allowing it to be more like the Fed, which has been the primary complaint against the ECB all along.

There is also one other explanation: the Bundesbank wants slowly and quietly out.

As a reminder, while the Fed is the one central bank in the world which supposedly has the biggest amount of gold in possession with 8.1 thousand tonnes, Buba is #2  with 3,401 tonnes. In other words, it has a solid backing to its fiat asset representation. However, unlike the Fed, the Bundesbank is part of a nation that has a natural trade surplus and thus is cash flow positive from a current account perspective. One may say that Germany, far more than the US and the UK, is the world's truly AAA-rated nation. All this means that the Bundesbank, if disambiguated from the ECB, where it currently is accountable for funding a major portion of deficit nations' funding deficiency, would regain its status as the world highest quality monetary institution. And going back to the beginning, it is the Bundesbank which is effectively depleting "good money" in exchange for "bad" either in the form of undervalued collateral through the repo markets, or soon to be devalued fiat.

Here one has to keep in mind the primary prerogative of the Buba - keep inflation low. If that means detaching from a failing currency, or halting asset-liability matching in which it hands out good money in exchange for worthless assets, so be it.

Which is why another interpretation of the ECB's proposal is not to bring the ECB as a lender of only resort closer to the peripheral, deficit nations, but to commence proceedings for severing the umbilical cord of the Bundesbank with a Eurozone which is doomed in all but the most optimistic eyes. Bringing us to our question: for anyone wondering what the future of the Eurozone is, should they merely observe what steps  the German central bank is stealthily starting to take. Because if indeed the Buba wants to have as little as possible with Europe, what does that mean for the EUR, and for Europe itself?

Full video explanation below:

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 12/06/2011 - 19:27 | 1953009 tawdzilla
tawdzilla's picture

Plan B??  Aren't we on Plan Z by now?

Tue, 12/06/2011 - 19:56 | 1953085 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

this europe mess is getting really complicated.....maybe thats what theyre trying to do, make it too complicated for anyone to comprehend

Tue, 12/06/2011 - 20:24 | 1953176 CPL
CPL's picture

How is theft complicated?

 

You take without asking.  Couldn't be simpler.

Tue, 12/06/2011 - 20:50 | 1953246 clownfishheaven
clownfishheaven's picture

The complication lies in the pretence in generating alien excuses to justify said theft.

Tue, 12/06/2011 - 21:20 | 1953318 disabledvet
disabledvet's picture

"the mind martians made me do it"? what's wrong with that?

Tue, 12/06/2011 - 21:59 | 1953407 Misean
Misean's picture

So it's Plan 9 from Outer Space then?

Tue, 12/06/2011 - 23:35 | 1953606 Oh regional Indian
Oh regional Indian's picture

Actually it's just Plan Six from the Stix. Just sexed up is all. All of this Euro focus, screaming, headline grabbing.... I'm sure the real shit is hitting th efan elsewhere. This much daily drama is a desperate mask.

What is that, that they are hiding?

ORI

/the-plan/

Wed, 12/07/2011 - 03:11 | 1953806 sqz
sqz's picture

I'm not surprised people are confused. Merhling's article contains a lot of silliness.

There was no indication in Draghi's speech that he would be in the least bit interested in permanently expanding the ECB's balance sheet with non-sovereign debt (excluding the existing covered bond programs). If anything, many market participants read it and the most recent political announcements as laying the bare minimum fiscal groundwork and shared risk for large sovereign debt purchases.

Backstopping the banks is still a fiscal choice, even if it were implemented by the ECB. In that latter case, it would be a joint and several fiscal risk at the EMU level. Even to the ECB, this would be a step too far in fiscal involvement. It would be far more likely that the EFSF or another vehicle would buy at least the senior bank debt. It is this effective (joint) nationalisation that the politicians would have to work out how to do.

As for this strange solution of replacing the NCBs with private banks (yes, I know many CBs are "private" entities in law, but they are fully state backed and central authority), what is the point? These semi-NCBs would no longer be private any more and it would permanently crystallize the concept of TBTF/G-SIFI.

The Bundesbank is not the problem here. They may have some issues with the TARGET2 imbalances impacting on the flexibility of their monetary tools and having to keep mopping up the excess liquidity, but its nothing they cannot handle for the foreseable future, especially if they coordinate it with the ECB who also have unused sterilization tools.

I'd go as far as to say, there is absolutely nothing inherently wrong with the Eurosystem inter central bank framework. Of course, I couldn't say the same for having a currency area with no political or strong fiscal union in the first place.

Wed, 12/07/2011 - 07:51 | 1954166 Ghordius
Ghordius's picture

I completely agree with you, except with the "currency area with no political or strong fiscal union" part.

Yes, "the markets" have treated the peripherals "too well" for a decade (Squid "advise" to Greece was just the topping), so we'll have now a long period of "the markets" treating the complete EZ "badly". The "treatment" can be the "cure".

Central Banking advocates would say that's why you have CBs in the first place...

At the end, it's all about how you mop up this kind of mess (not really the first time):

- defaults (banks and/or sovereigns)

- or nationalization of (bad) banks

- or inflation

- or a combination of the above

Thu, 12/08/2011 - 20:06 | 1955506 sqz
sqz's picture

Please don't tell me after already 3 years of Eurozone sovereign crises hell and more to come, let alone the inevitable enormous consequences of the crises on not just their own real economies but on the entire world, that you believe the Eurozone is in any way sustainable without being a much stronger union?

There is simply no rational argument otherwise. Period. Either the Eurozone rapidly converges to at minimum a strong fiscal union or it will inevitably break apart due to its enormous structural imbalances.

Also, the solution cannot be driven by structural changes, almost every union everywhere has large outstanding structural issues that are extremely difficult to eliminate. For example, England vs Scotland, Northern Italy vs Southern, Flanders vs Wallonia, West Germany vs East, etc. The only reason these regions have a common currency is a political union. Even simply attempting to fix the imbalances causes serious fiscal problems.

So, from the outset, political convergence with a minimum of a strong fiscal union is not only what is historically proven to be required but is also expected by the global markets or the Euro will fail since a currency only has value while people (especially others) believe in it. If all your trading counterparties first ignore your debt, then start demanding even a small part of your trade must be denominated in external currencies or commodities, then your currency has failed. Just ask the South Americans, Asians and now Greeks how that worked or is working out!

The markets are just a function of confidence, expectations and time. It is not some conspiracy. We could go back a 50 years, 100 years, 1000 years and the exact same process we are witnessing today can be shown to have happened then as now. The only difference now, even with greater access to global resources, is that events happen faster and are more globally interconnected.

Wed, 12/07/2011 - 03:25 | 1954050 the tower
the tower's picture

Why is it that the US and the UK are running after Europe, flying in and out, practically begging Europe to do this and that? They NEVER run after Europe...

When the UK and the USA start to beg you KNOW who's in DEEP shit...

 

Think about it: the UK does not produce anything. The city gives the UK 30% of the GDP... 30%...

 

If the financials get worse the UK will be left with NOTHING, and it's not much different in the USA.

Tue, 12/06/2011 - 20:37 | 1953216 walküre
walküre's picture

The vast majority of people can't understand the judging on Dancing with the Stars. You honestly think they'd have any brains to get this?

Now the elite is a different matter. They thought their advisors would be able to make sense of it all and now they're at a total loss. The advisors wouldn't want to look like complete idiots to their masters so they make stuff up.

NOBODY understands this except for the money changers who have invented every scheme in the history of mankind to steal money from you and me without us knowing.

 

 

Tue, 12/06/2011 - 21:35 | 1953355 pods
pods's picture

Clarke and Dawes explain the European fiat-sco very well.  

http://www.youtube.com/watch?v=thSTpGnWEAs

pods

Tue, 12/06/2011 - 23:12 | 1953566 walküre
walküre's picture

Thanks for that. I passed it to an Australian friend.

But that was not my point. EVERYONE understands that too much debt gets you in trouble and too much lending among each other is but a circle jerk of debt.

That's what the world has become, a circle jerk of debt.

The elite understands debt and lending and eternal debt slavery - of course.

What NOBODY understands are these alleged plans to keep the show going now that everyone is tapped and everybody owes everybody debt payments.

Merkozy is a puppet. They play their part, they're actors. The plans are schemes from the grand masters of financial wizardry that have been bamboozeling the world with financial schemes forever! Why do we have leverage on monetary "products"? Why can a banker lend out multiple times the asset value their bank is holding? It starts right there and it evolved into further perversions that are clearly from sick and demented minds.

 

Tue, 12/06/2011 - 23:43 | 1953625 pods
pods's picture

Agree totally with you.  When I got halfway through the article my head started to hurt.  Then seeing others here explaining it made me get that sad feeling that many WANT to believe that somehow this will work out.  So we can all go back to being good little debt serfs, slowly being sapped of our labor over the years so some bankster may aquire more power.

I think that this charade has to be done, so it looks like "they" are actually trying to solve a problem.  

What they are going to do is the same thing that the USA did in 2008.  Provide oodles of liquidity to banks and allow them to deleverage while we think things are getting better.  When the banks (the real ones, not the little guys) are healed, then comes the money spigot shutoff (austerity).  Then real property can be taken possession of and a new, bigger system will be implemented to save us.  The majority of people, being simple, will claw for this newer, better, more stable system that merely provides them more security.  

Each iteration of this process removes more property from the masses and concentrates it at the top.  There is no real endgame to this, as a new crop of debt serfs are born every year, being educated just enough to jump on the debt wheel to power some rich ass bankster's house.

Knowing all this, I merely try to inject a bit of humor every now and again to keep someone from sucking on a gun barrel.

BTW, check out their skit "The Front Fell Off" too, it is absolutely hillarious!

http://www.youtube.com/watch?v=GgrX7uOZqHI

pods

Wed, 12/07/2011 - 00:09 | 1953691 TrulyBelieving
TrulyBelieving's picture

Agree with just about averything you say. Now when you say 'Merkozy is a puppet' I'll assume that not only her, but all the players in this insidious scheme are puppets. The problem I have with this is, I can't believe that she would get a call or message, somehow from her supposed boss every day or so telling her what she must do. Can't envision all the players getting their orders in this manner... but I might be wrong. Just thinking it's more like a culture that teaches one to behave and do in a way that the culture accepts as normal. Any odd behavior out of what is expected would not be tolerated, indeed would not even be thought of, by any person desiring inclusion in this culture. So what is driving them, or 'pulling their strings', is the own desire to please the culture. Now what drives this wicked culture is another matter, a matter of the heart. This is the perfect culture for a base human, all the human instincts being used to satisfy man-based cult. And morality would drive someone away from this culture. For a heart that desires justice, honesty, and integrity could find no peace in such a place. Just wonder if this is really what it comes down to, each individual choosing which culture to belong.

Wed, 12/07/2011 - 03:30 | 1954056 the tower
the tower's picture

PS here you can clearly see that "our leaders" actually get direct commands from their bosses: http://www.youtube.com/watch?v=QTcL6Xc_eMM

Wed, 12/07/2011 - 03:27 | 1954054 the tower
the tower's picture

I agree, Merkozy are working on solutions to not let this happen again - if we are to believe that - but no-one is working on finding solutions to the shit that we're in... because there aren't any... it's the biggest show on earth...

Thu, 12/08/2011 - 20:50 | 1961332 stuman
stuman's picture

I might be wrong but it seems to me...that as long as all (or most) of the parties sitting at the Monopoly table "keep" playing, keep opening up new game boards and using the new money...that the game can just keep going. It doesn't matter how much debt you have IF you just continue to borrow/print and keep the game rolling.

Everyone's going along with it because everyone knows they're screwed once the game ends...the answer?

Never let the game end ;)

At some point it'll crash, someone will have to leave the table to eat or go to the bathroom...one might even have a heart attack from too many energy drinks and no sleep...

But till then, might as well ride it till it breaks ;)  

Tue, 12/06/2011 - 20:52 | 1953258 masterinchancery
masterinchancery's picture

Just a shell game, not complicated in any other sense.  Europe has far too much debt, generally stagnant economies, and rapidly aging and retiring populations.  Because of the bad demographics, the eurozone's problems will get worse every year.  So long term bets on its viability are doomed, and that has caused even short term bonds to decline sharply.  What the eurozone and its accomplished liar politicians need is a sucker with a lot of money--paging Bernanke.

Tue, 12/06/2011 - 21:20 | 1953317 Hi Ho Silver
Hi Ho Silver's picture

3 card Monte with a Mexican turn over.

Tue, 12/06/2011 - 23:10 | 1953556 non_anon
non_anon's picture

just need to go to the bailout store

Tue, 12/06/2011 - 20:01 | 1953102 JPM Hater001
JPM Hater001's picture

No, this makes plan V.

Tue, 12/06/2011 - 20:03 | 1953107 tmosley
tmosley's picture

Unleash the T-virus?

Tue, 12/06/2011 - 20:30 | 1953195 Unprepared
Unprepared's picture

Plan B is a continuously recursive option: When all fails, try plan B. When all fails, try plan B. When all fails, try plan B ...

That way, you're not limited to 26 options.

Tue, 12/06/2011 - 20:41 | 1953227 BurningFuld
BurningFuld's picture

There is the unlikely possibility of B1 B2 etc. Or B1a B1b..........

Tue, 12/06/2011 - 22:03 | 1953417 Misean
Misean's picture

Can't use that. Those are soon to be Euro zone credit ratings.

Tue, 12/06/2011 - 20:35 | 1953210 WhiteNight123129
WhiteNight123129's picture

Good post, I guess that goes in teh same direction of people like Pettis and Bass arguing about a hard default of Greece pronto.

 

Tue, 12/06/2011 - 20:50 | 1953248 billybobtx
billybobtx's picture

PLAN B, BITCHEZZ

Tue, 12/06/2011 - 20:51 | 1953254 francis_sawyer
francis_sawyer's picture

Plan B??  Aren't we on Plan Z by now?

We're on Plan "B Cups"... (just ask Becky & Uncle Warren)...

Tue, 12/06/2011 - 21:30 | 1953340 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Plan B?? Aren't we on Plan Z by now?

Plan B-12 is currently on-deck...

 

Tue, 12/06/2011 - 21:19 | 1953313 Zgangsta
Zgangsta's picture

We have run out of alphabet letters to label the plans, so we have switch to Chinese characters (which ZeroHedge apparently doesn't support)

Tue, 12/06/2011 - 23:44 | 1953633 Buck Johnson
Buck Johnson's picture

They want out and since they don't want to yell it out, they will do it by stealth.  The only thing holding the EU (England too) up is Germany and if they go then everything ends.

Wed, 12/07/2011 - 06:52 | 1954134 Onohymagin
Onohymagin's picture

Plan H, Recuscitate Adolph Hitler?

Tue, 12/06/2011 - 19:33 | 1953024 falak pema
falak pema's picture

15 T shadow banking in Euro land; we live n learn. How does this compare to US?

Tue, 12/06/2011 - 19:36 | 1953029 LawsofPhysics
LawsofPhysics's picture

Last I looked seriously it was over 70 T.  How do you say "fucked" in Chinese again?

Tue, 12/06/2011 - 20:10 | 1953129 LeBalance
LeBalance's picture

"interesting."  Chinese are too polite to say that.

Tue, 12/06/2011 - 20:40 | 1953222 Solarman
Solarman's picture

LOL, you don't know many Chinese.

Tue, 12/06/2011 - 20:57 | 1953263 francis_sawyer
francis_sawyer's picture

May you live in 'INTERESTING' times...

Does that explain the correlation between 'fucked' & 'interesting' to you?

---

See... It's kind of how central bankers feel as well... They want you to live in 'INTERESTing' times... Or, as the Chinese used to say...

"Man who run behind car become EXHAUSTED... Man who run in front of car become TIRED"...

Tue, 12/06/2011 - 19:41 | 1953044 Tyler Durden
Tyler Durden's picture

15 T is in the US.

Tue, 12/06/2011 - 20:23 | 1953174 I am Jobe
I am Jobe's picture

15T is chump change the way things are going. 16T by Election

Tue, 12/06/2011 - 20:49 | 1953241 disabledvet
disabledvet's picture

well, yeah...actually in the world of ones and zero's and where info tech is King then 16 trillion is actually "el zippo." having said that this is a very well put together missive. my understanding of 2008 however is not that the money markets caused the blow up but the commercial paper market--in other words "counter party risk." you simply didn't trust the other guy to come through with the money. this in fact CAUSED a money market fund to blow up ("break the buck.") this may sound crass but "that's nothing compared to Europe." i mean so what if Lehman failed? and the Fed i might did "did exactly the right thing." i frankly have no idea what Super Mario can do here. Sure "save the banks" sounds good--but when the country of Greece itself failed obviously the banks had long since become worthless. The only "plan" that works is the original one that i can see: "Germany must rescue Greece." It has done everything but. Now Germany itself is at risk cuz "there's no such thing as liquidity" if you're talking "currency union" either. I call this phucker "the ultimate arb play" when it first broke out--and outside of some "crazy government shit" that still holds true. German interests must rise to reflect the risk of existing in the currency union itself. is it like AT&T having to basically bankrupt itself because it failed to take over that other wireless provider? yeah, pretty much. it really doesn't seem all that complicated to me. obviously if you have anything deonominated in euros don't expect it to be getting more valuable for the forseeable future.

Tue, 12/06/2011 - 21:43 | 1953373 nmewn
nmewn's picture

Saaay, we're startin to talk some serious unbacked paper here.

Mon, 03/05/2012 - 02:23 | 2223339 lewy14
lewy14's picture

It's all backed. By more paper. It's paper all the way down.

Tue, 12/06/2011 - 19:34 | 1953025 LawsofPhysics
LawsofPhysics's picture

Shadow banking finally realizing that unicorns shitting skittles are not real.  Fine with me, fuck these paper-pushing fucknuts.

Tue, 12/06/2011 - 20:32 | 1953202 Unprepared
Unprepared's picture

And BAC is what? Underworld? Fuck those too.

Tue, 12/06/2011 - 19:34 | 1953026 binky
binky's picture

Buba taking it on the arches.

Tue, 12/06/2011 - 19:34 | 1953028 A Lunatic
A Lunatic's picture

Lender of last resort..........True lender of last resort........Ultimate lender of last resort........Final lender of last resort......Super Duper Mega lender of last resort..........This could take awhile.

Tue, 12/06/2011 - 19:38 | 1953036 LawsofPhysics
LawsofPhysics's picture

Wait until America learns that they have been on "double secret probation" all along.

Tue, 12/06/2011 - 20:25 | 1953178 I am Jobe
I am Jobe's picture

NAH, Sheeples are still shopping like there is no more fucking waffle irons left in the country along with towels.

Tue, 12/06/2011 - 22:48 | 1953508 WonderDawg
WonderDawg's picture

Not really. The shopping season was pretty much over after black Friday, and those numbers were blown out of proportion. This retail season is going to be a big letdown (crater) in the final analysis.

Tue, 12/06/2011 - 21:01 | 1953278 francis_sawyer
francis_sawyer's picture

Wait until America learns that they have been on "double secret probation" all along.

You know what that means... ROAD TRIP!

Tue, 12/06/2011 - 21:59 | 1953406 TeamDepends
TeamDepends's picture

You know you make me want to SHOUT

Say that you love me

Say that you need me

Say that you want me

You want to please me

Come on now!

Tue, 12/06/2011 - 21:37 | 1953358 pods
pods's picture

No shit.  When the Red Shield comes to foreclose we realize just how fucked the Corporate US of A really is.

pods

Tue, 12/06/2011 - 22:38 | 1953485 RickyBobby
RickyBobby's picture

??? Why do they need to foreclose? The USA will pay in full. Here's your $15T boys. Fresh off the presses. Have fun investing those worthless bucks.

Tue, 12/06/2011 - 22:47 | 1953506 pods
pods's picture

Well, if the story of the Act of 1871 holds true, there is collateral.  The way those loans are settled, you cannot just print up bucks, as the owners of the real printer (the FED) ARE the same people we owe money to.

pods

Tue, 12/06/2011 - 19:39 | 1953038 falak pema
falak pema's picture

By the looks of it this crazy financial system is really looking for BENDER of the last resort.

Tue, 12/06/2011 - 19:53 | 1953072 redux2redux
redux2redux's picture

I liked 'pawnbroker of last resort'...

Tue, 12/06/2011 - 20:01 | 1953103 yabyum
yabyum's picture

Crack dealer of last resort??

Tue, 12/06/2011 - 21:23 | 1953324 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Crack whore of last resort?

Tue, 12/06/2011 - 21:32 | 1953347 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Are you gonna eat that?

Tue, 12/06/2011 - 20:26 | 1953180 CPL
CPL's picture

OVER 9000 LENDER OF LAST RESORT!!!!

 

http://1mut.com/wp-content/uploads/2011/06/over-9000-12.jpg

Tue, 12/06/2011 - 20:38 | 1953218 Unprepared
Unprepared's picture

I find the following name more politically correct:

Last and fucking only pawnbroker of previous tourism spot

Tue, 12/06/2011 - 19:41 | 1953043 ReallySparky
ReallySparky's picture

And the ramifications of this theory are...?

Tue, 12/06/2011 - 20:51 | 1953253 The Fonz
The Fonz's picture

This stuff makes my head swim. I'll take a stab at it, in being wrong I am sure someone will educate us.  ECB does not loan to soveriens, instead loans to banks. This allows soveriens to fail, while supporting certain banks directly.  In getting the soverien debt off of their books they create a much larger lending ability that might be able to be kept off of the books? Screw it, I am on the short bus again and need a helmet.  Can someone sort us out on this?

Tue, 12/06/2011 - 21:03 | 1953284 francis_sawyer
francis_sawyer's picture

Eeeeehhhh!

Tue, 12/06/2011 - 21:43 | 1953372 pods
pods's picture

They need an incredibly complicated way of explaining how they are going to create new money out of thin air while not allowing default on the old money they created out of thin air.

Otherwise a critical mass of folks will realize that this is just all a shell game and there ain't no pea.  

Then we start seeing pig poles with bankster heads upon them on every corner.

pods

Tue, 12/06/2011 - 21:47 | 1953378 The Fonz
The Fonz's picture

Thanks Pods, you tha man! :) +1

Wed, 12/07/2011 - 00:29 | 1953767 ReallySparky
ReallySparky's picture

Excellent simplification. Thank you pods. I thought they were going to print and inflate, so do German stocks and bonds become more valuable because they are sound? Or does it all go up except bonds because the inflation is coming, or does it all explode in a heap in the spring?

Wed, 12/07/2011 - 00:28 | 1953766 dr.charlemagne
dr.charlemagne's picture

Hey Fonz and Tyler, here is my go at it, what do you think? The ECB has to some extent lent to sovereigns but further lending to these countries directly is politically a no go mainly due to popular resistance in Germany. Unfortunately, both European and US banks are very exposed to default of these countries, including German and (gasp) Swiss banks. This exposure is sufficient to cause a domino type of collapse in paper assets. From the ashes of this collapse would rise a new financial system without private central banking. Since the system is really by the banks, for the banks, the system must be saved. The banker can make it very very complicated, avoid popular resistance, and obviate treaty restrictions my lending to banks within sovereign nations in sufficient amounts that those banks in concert with their own central banks can bailout the sovereigns. In other words, enlarge the circle jerk until the chain of the bailout cannot fit in a sound bite and no one will know exactly what just happened and the bankers get/stay rich in the process.

Wed, 12/07/2011 - 23:23 | 1957133 The Fonz
The Fonz's picture

Thats a good simplification too, between you and pods I understand that I am not ment to understand. I suppose I should have figured that out when I read it.  Sometimes these market sheanigans can make a fellow wonder if he knows anything. I forgot that in the instances I do not understand something more often than not it is becuase I am not ment to. Thank you for regrounding me :) +1

Tue, 12/06/2011 - 21:30 | 1953341 tumblemore
tumblemore's picture

The ship leaving the sinking rats.

Tue, 12/06/2011 - 19:42 | 1953045 jomama
jomama's picture

I GROW TIRED OF THIS CHARADE

Tue, 12/06/2011 - 20:11 | 1953132 LeBalance
LeBalance's picture

I am overjoyed that you are growing as a result of this game.

Tue, 12/06/2011 - 20:58 | 1953271 Dugald
Dugald's picture

Some folk are easily pleased.....

Tue, 12/06/2011 - 20:27 | 1953184 I am Jobe
I am Jobe's picture

Agreed. So when does the hanging begin or can they all be sent to Pakistan? I think Afganistan or Pakistan is a good palce for all these fuckers. Start with US Congress

Tue, 12/06/2011 - 21:39 | 1953363 tumblemore
tumblemore's picture

Unfortunately in real life they'll all get away with suitcases full of diamonds and spend the rest of their lives spending the millions they stole on wine, women and song but in an ideal world poetic justice would insist on rendition as a fitting punishment.

Tue, 12/06/2011 - 19:46 | 1953052 Gunga
Gunga's picture

I have been reading the articles and comments at ZH for a couple of years now but just registered recently. I would like to thank the ZH crew and the thoughtful posters here for the insight they have shared. I've learned a lot since my first visit.

Tue, 12/06/2011 - 20:13 | 1953140 LeBalance
LeBalance's picture

we lunatics at ZH greet you with the spirit of insanity and mania, which is to say normalcy and steady as she goes.

Tue, 12/06/2011 - 20:53 | 1953235 Legal Beagle
Legal Beagle's picture

I also have been reading for a while now and recently joined. I wanted to let everyone know that I pulled my money out of an ALLY CD after the ZH post on Ally's decision to retaliate against Massachusetts. Only it took four days to process my request, so I'll tell y'all now. :D

Edit: Please, someone tell me: "We've been waiting for you, Legal Beagle."

Tue, 12/06/2011 - 21:06 | 1953291 francis_sawyer
francis_sawyer's picture

@Gunga & Legal Beagle

Fuck both of you & get a life! (now hopefully you'll REALLY feel welcome)...

Tue, 12/06/2011 - 23:48 | 1953647 Legal Beagle
Legal Beagle's picture

Well fuck you too. :D

Wed, 12/07/2011 - 01:24 | 1953912 Socratic Dog
Socratic Dog's picture

I'll fight both of you.

Tue, 12/06/2011 - 21:11 | 1953297 Freebird
Freebird's picture

Yes Legal Beagle, we've been waiting for you & your women.

Tue, 12/06/2011 - 21:48 | 1953379 pods
pods's picture

Welcome both LB and Gunga.  Lots of information here, no place like it.

But, now you will make it in another database.

pods

Tue, 12/06/2011 - 19:47 | 1953055 i be julia
i be julia's picture

If these banks are insolvent, aren't we talking deflation rather than inflation?

http://fucklloydblankfein.blogspot.com

Tue, 12/06/2011 - 19:51 | 1953064 potatomafia
potatomafia's picture

There is one way to make them solvent again....  and it will be inflationary.

Tue, 12/06/2011 - 20:01 | 1953105 kridkrid
kridkrid's picture

For a time. But in the end, deflationary depression in a credit money monetary system, I believe.

Tue, 12/06/2011 - 22:40 | 1953489 BigJim
BigJim's picture

There IS another way.

We all know that 'debts that can't be paid, won't be paid'.

So, although huge in monetary terms vis-a-vis GDP, as a proportion of actual tangible wealth, the amounts owed are manageable.

So the debts won't be paid with money (there isn't that much money). They'll be paid directly by the transference of the people's assets to the financial elites, through outright confiscation, or, more subtly, through privatisation, tax, and inflation.

Wed, 12/07/2011 - 00:29 | 1953768 adhoc99
adhoc99's picture

Mother of all stagflations?

Tue, 12/06/2011 - 19:58 | 1953088 High Plains Drifter
High Plains Drifter's picture

well if it is deflation that they want, then it will be the end of life as we know it , if that starts and it will be like a black hole sucking in everything around it.......seems to me, the only way to keep this scam going for a while longer is to at least attempt to inflate..........and i think they will .........the sheep don't understand it and most amerikans don't care anyway.......

Tue, 12/06/2011 - 20:04 | 1953111 kridkrid
kridkrid's picture

It'll work until it doesn't. Then look the fuck out.

Tue, 12/06/2011 - 20:13 | 1953141 Xanadu_doo
Xanadu_doo's picture

BRILLIANT!!!

 

((and >100% as insightful as some guest poists here recently, btw...))

Tue, 12/06/2011 - 22:58 | 1953530 WonderDawg
WonderDawg's picture

They've been trying to keep the bubble inflated for 3 years now. Look at everything they've thrown at the problem, trillions and trillions of dollars, and yet the equity markets are still well below their all-time highs. They have thrown trillions and trillions of dollars at the problem, and still the housing market continues to decline. They are coming up with new and creative ways to print money, yet the economy is still in the tank.

My conclusion: the debt/credit implosion will steamroll their attempts to keep the bubble from collapsing and we'll have a deflationary depression of epic proportions, likely to be followed by hyperinflation. But deflation first. But maybe it's just me.

Tue, 12/06/2011 - 21:42 | 1953369 tumblemore
tumblemore's picture

they'll keep going till they overshoot

Tue, 12/06/2011 - 23:25 | 1953585 UP Forester
UP Forester's picture

....and then make you clean the sheets....

Tue, 12/06/2011 - 19:52 | 1953068 Corn1945
Corn1945's picture

You really haven't presented any evidence of your claim. It's pure, 100%, total conjecture.

I don't see it. 

Tue, 12/06/2011 - 20:27 | 1953189 CPL
CPL's picture

It's not a thesis, those are the numbers they are running.  You can get them from the ECB website for fucks sake.

Tue, 12/06/2011 - 19:53 | 1953070 BigDuke6
BigDuke6's picture

You've got to be deeply troubled and pessimistic about the prospects for Europe to get itself out on this hole, and specifically for it to escape without defaults – of nations and/or banks. If Germany does a complete reversal and agrees to a massive money printing program by the ECB to support the Italian bond market and to recapitalise the banks by buying their bad assets, it may be possible to escape a big financial accident, but there are two big IFs here: if they do it, and if it works.

The announcement by the six central banks during the week was really just the Federal Reserve saying it is prepared to provide liquidity to European banks, except that it was dressed up as a global action to provide cover.

And the Fed would only do that if it was really worried that one or more European banks was about to go broke and freeze the financial system. There was, in short, a touch of desperation about the move, and if one or more European banks really is insolvent and about to collapse, last week's action won't stop that happening.

Many of Europe's banks are fundamentally bust because their sovereign customers can't repay their loans and unless something is done at an EU level to allow these loans to be counted as performing, they will inevitably collapse. That's what is up for discussion on December 9, along with how the countries in the eurozone can align their fiscal and wages policies to save Monetary Union.

This is a rally to sell into.

 

Tue, 12/06/2011 - 20:19 | 1953160 LeBalance
LeBalance's picture

I am just shaking my head at this pessimism.  This is going to be a major shitstorm and you have signed up to ride it down.  Now that you are all ready for this great opportunity you are having second thoughts?

There aren't second thoughts about reality.  You are here.  Its going to rip apart.  This place is not going to be the same.

Did you want it to be the same?

All these CBs know how to do to maintain control is PRINT.

then they crash the trains, WAR.

then they blow up commerce: FAMINE.

then they loose Disease: Pandemic.

then the Nuke Plants run out of parts and water: Glowing Ball of Rock.

As someone said in an earlier post: let's call the third party: MATH.

Refute my Math!  :)

Tue, 12/06/2011 - 21:12 | 1953299 francis_sawyer
francis_sawyer's picture

Yeah well AFTER she turned me into a NEWT... I got better!

Tue, 12/06/2011 - 21:27 | 1953330 BigDuke6
BigDuke6's picture

My comment was for people with retirement investments who've been hanging around inthe market longer than they should.  Like me i guess... although i only really have gold (obvious) and oil for when iran is attacked... so i share your pessimism but i'm not as off the scale as war, famine , pandemic blah blah.

Listen to yourself.

i say bullshit to your mad max scenario - you're just another board carrier walking the streets saying 'repent the end is nigh'

TPTB are playing this whole thing and a nice slow reaming and theft of capital from the middle class is whats being played out here.

just sayin'

Tue, 12/06/2011 - 22:21 | 1953455 kridkrid
kridkrid's picture

I hope you're right, but I fear he is.  I don't see an orderly write-down of the global debt ticking time-bomb... and what we are sitting on actually dwarfs what we sat on the last time around.  Only this time the planet has about 7 billion inhabitants instead of 2.  We have significantly advanced our ability to wage war.  We have become more dependent on the integrated global economy to feed and clothe us.  We have an entire class of people who have become dependent on the government for survival... I don't know if it's Mad Max... but that possibility doesn't fall outside the band of possible outcomes that one should consider, IMO.   

Tue, 12/06/2011 - 22:46 | 1953503 BigJim
BigJim's picture

I can see war, famine, and pandemics. The elites can protect themselves from all of those (bunkers, stockpiles, and vaccines).

What I can't see is 'them' wanting widespread nuclear power stations blowing up and spreading death across the entire globe. Not unless they're i) a suicidal death cult, or ii) have got a colony on Mars ready. And neither strikes me as being particularly likely.

Tue, 12/06/2011 - 22:53 | 1953517 BigDuke6
BigDuke6's picture

There will be a reckoning no doubt.  in the main i agree with you, it looks fucked,but it always has, and at the end you agree with me when you back track and admit its not that likely really.

Yes, the 7 billion great unwashed from the assorted shitholes of the world wanting to come to the west cant be shown the welcome mat forever.

but i see no point in 3 line posts talking about famine and pestilence... tough guys talking about their guns and ammo when they've never pulled the trigger on a live target... and would soil their pants if they ever did.

we'll see - we read here and learn.

 

Tue, 12/06/2011 - 23:42 | 1953618 kridkrid
kridkrid's picture

I didn't say it wasn't likely (some sort of Mad Max scenario)... I said that scenario lies within the band of possible outcomes that people should consider.  And by that I mean to suggest that people should be prepared. 

Tue, 12/06/2011 - 19:54 | 1953076 High Plains Drifter
High Plains Drifter's picture

the german's don't want any of it huh?  well what is it that bass keeps saying .....oh that the germans are in no position to do anything for anyone else with a 80 percent debt/gdp ratio at present...............they say they don't want any part of it. looks like they have much to try and share as well..........so relying on the germans would seem to me to be a empty proposition and a nil argument, no?

Tue, 12/06/2011 - 19:54 | 1953077 Snakeeyes
Snakeeyes's picture

Yes, plan B. Print trillions of Euros.

And have the Fed and IMF keep pumping in the $$$.

Ands WE will have to print like a banshee too.

At least that is what I will say in my testimony in the House Oversight Committee on this subject, Dec 15th at 10am.

Tue, 12/06/2011 - 20:01 | 1953100 High Plains Drifter
High Plains Drifter's picture

so it seems that they have two choices. 

either

 

deflationary black hole

 

or 

 

weimar

 

not so much because of unsustainable debts that cannot be repaid but those wascally unseen and untalked about (except around here of course)  derivatives.........

Tue, 12/06/2011 - 20:50 | 1953245 topcallingtroll
topcallingtroll's picture

I am surprised that so few people here see the possibility of a long, slow unoleasant muddle through.

Jimmy Carter's malaise for ten to 15 years.

Tue, 12/06/2011 - 21:17 | 1953310 francis_sawyer
francis_sawyer's picture

Jimmy Carter's malaise for ten to 15 years

So does that mean we 'boycott' London, Rio, AND [Rome; Madrid; Tokyo; Istanbul; Doha, Qatar; and Baku]?

Just asking... Because I want to set my training schedule...

Tue, 12/06/2011 - 21:57 | 1953399 pods
pods's picture

We simply cannot muddle along.  Japan is doing it, but they got by with a manufacturing base, savings, and the yen carry trade.  As well as the rest of the world in rather decent shape.

We are not going to be able to start it with no manufacturing, escalating entitlements, debt saturation, high unenployment, the idocracy effect, and no more oil supply increase to allow the "consumer" to push the ball any further up the hill.

I do hope you are right, but seems to me that I might have to find my copy of The Road.

pods

Tue, 12/06/2011 - 22:25 | 1953460 kridkrid
kridkrid's picture

Japan is what people want to cling to when they don't really want to consider all of the possibilities. They are bargaining with themselves.

Tue, 12/06/2011 - 22:57 | 1953528 tumblemore
tumblemore's picture

Plus Japan is full of Japanese. Even if they massively fuck up they'll still be doing ok by global standards.

Tue, 12/06/2011 - 23:05 | 1953547 WonderDawg
WonderDawg's picture

In the words of John Mauldin, Japan is a bug looking for a windshield. They're on borrowed time.

Wed, 12/07/2011 - 02:28 | 1953995 tumblemore
tumblemore's picture

brains and social cohesion > numbers on a graph

Wed, 12/07/2011 - 10:23 | 1954553 WonderDawg
WonderDawg's picture

Declining demographics, declining savings, nuclear catastrophe > brains and social cohesion

Thu, 12/08/2011 - 01:56 | 1957464 tumblemore
tumblemore's picture

in normal times maybe. in crisis times not a chance. America will be torn apart by diversity. Japan will get by even if at a lower level.

Tue, 12/06/2011 - 23:24 | 1953584 walküre
walküre's picture

Sorry to burst your bubble.

Debt matures sooner than that. Debt cannot be rolled over at this time which is why the ponzis are blowing up.

Try 1-2 years max before massive writedowns, reset, debt jubilee or the alternative ... revolution, elites hanging from the lampposts.

Many here seem to forget that the elite is only as powerful as long as their charades are uncovered.

Once the French peasantry figured out their overlords were bathing in champagne whilst they themselves were starving, the gig was up. The fact that a certain Marie A. was quoted as saying "Let 'em eat cake" (which may or may not have been what she actually said) got the party really started. So watch the news for the elite being quoted as making derogatory remarks about us plebs.

For every banker there's a wood shed.

Tue, 12/06/2011 - 23:27 | 1953588 walküre
walküre's picture

Still won't address the debt problem. The cat is out of the bag now.

Tue, 12/06/2011 - 19:54 | 1953079 Bansters-in-my-...
Bansters-in-my- feces's picture

Now I taint no rockit scientest or nuttin,but even Ziro headge tawt me dat lidquiditty don't sawlv "insolvency".

See,I'm catching on.

Tue, 12/06/2011 - 19:56 | 1953083 schadenfreude
schadenfreude's picture

Weidmann is a Merkel man.....so have a guess

Tue, 12/06/2011 - 19:58 | 1953087 chindit13
chindit13's picture

Plan B is the European Tautological Fund or ETF, where the ECB guarantees all EU member sovereign debt, thus enabling each EU member to fund itself more cheaply (it has worked for more than a week for Italy already) plus dedicate some portion of their debt proceeds to the EFSF bailout mechanism. The ECB itself issues additional debt, to be purchased by EU members, and which carry what is being called a Mobius Strip of coupons, receipt of which will allow sovereign EU nations to repay their own debt obligations. The overall fund is being leveraged by both the ECB and EU member states writing CDSs on their own notes and bonds.

Tue, 12/06/2011 - 20:55 | 1953265 topcallingtroll
topcallingtroll's picture

Ok lets all stand in a circle.
Now each guy reach to the right and start jerking off the guy next to you.

Somehow I dont think that is going to work out so well.

Tue, 12/06/2011 - 21:24 | 1953323 Freebird
Freebird's picture

Trolly manthing, maybe you're on the wrong site. Just google I guess
gay crap & you'll probably discover the stuff you seek. And before any faggots here junk me for being politically incorrect, perhaps first they can define political correctness. LOL

Tue, 12/06/2011 - 22:43 | 1953495 Dantzler
Dantzler's picture

It seems some one has never heard the term "Circle Jerk" or a construct known as metaphor.

Must not have been into punk in the 80's...

Open your mind and your ass will follow.

Tue, 12/06/2011 - 23:01 | 1953534 Freebird
Freebird's picture

Still a very fag exxpression & Troll goes one further by saying grab a member next to you. Ok I won't make anymore comments regarding chocolatemunchers as long as you curtail your open ass remarks & get back in your box, with or without the Troll OK?

Tue, 12/06/2011 - 20:55 | 1953267 The Fonz
The Fonz's picture

"European Tautological Fund" Sir I hereby award you my 100% WIN award for snarky title! WELL DONE!

Tue, 12/06/2011 - 23:11 | 1953548 RickyBobby
RickyBobby's picture

Guatemala is the bond buyer, no?

Tue, 12/06/2011 - 23:28 | 1953592 walküre
walküre's picture

European Tautological Fund or ETF

Does it come with 2x or 3x leverage?

I buy your debt, you buy mine. Or circle jerk like the other guy explained.

No growth, no future. Punk was right.

Wed, 12/07/2011 - 17:27 | 1956318 Econophile
Econophile's picture

Chindit, this is brilliant and funny. Thanks! If you don't mind, I am going to republish this on the Daily Capitalist. JH

Wed, 12/07/2011 - 21:34 | 1956938 Stock-Paper-Silver
Stock-Paper-Silver's picture

.

Tue, 12/06/2011 - 20:29 | 1953193 I am Jobe
I am Jobe's picture

Yeah right. He is too busy vacationing and his AG is running guns.

Tue, 12/06/2011 - 22:06 | 1953419 tumblemore
tumblemore's picture

to mass-murdering drug cartels

Tue, 12/06/2011 - 20:14 | 1953094 Big Ben
Big Ben's picture

I don't really understand how buying debt of banks that lend to sovereigns is all that different from buying the debt of the sovereigns directly.

Slightly OT, but does anyone have figures on the debt/GDP ratios of England, France, and other European nations immediately after the first world war? We know that these debt levels were unsustainable and lead to defaults via currency devaluations (which may have contributed to the great depression).

Update: I found this website for UK debt:

http://www.ukpublicspending.co.uk/uk_debt

It shows that UK debt reached 181% of GDP in 1923, with interest payments of 7% of GDP throughout the 20's.

It also shows that UK debt reached 238% of GDP in 1947, but interest payments were only around 4% of GDP throughout the 50's.

Tue, 12/06/2011 - 23:32 | 1953600 walküre
walküre's picture

I don't really understand how buying debt of banks that lend to sovereigns is all that different from buying the debt of the sovereigns directly.

 

Well how do you suppose the banks are going to make their fees? The banks will be made whole and the banks will continue to buy debt of the sovereigns. Those chosen few banks of course, the elite deem worthy to survive this.

All elites are not equal. There's a war among elites behind the scenes going on. Certain banks will disappear. Others will get stronger and more powerful. More power to the cabal!

Tue, 12/06/2011 - 20:06 | 1953098 ebworthen
ebworthen's picture

Key word in all of this is "TRILLIONS"

Un-payable, and likely beyond even the limits of inflation or hyperinflation.

Three words of reality for a solution:  Repudiation, Default, Jubilee.

 

Tue, 12/06/2011 - 20:01 | 1953101 chump666
chump666's picture

Excellent article ZH.  Best to date on the EU mess.  Very impressed.

Tue, 12/06/2011 - 20:02 | 1953106 RobotTrader
RobotTrader's picture

Anybody here know a short seller that lives as well as Sandy Weill?

How about a gold-shilling newletter writer?

Or what about guys who trade in bomb shelters, survival shelters, or gun dealers?

I don't know any "Doom and Gloomer" that has done as well as those on Wall St. that deal in "Paper".

Check out the latest Newsweek article, how the ultra-rich are getting even richer.

Even after the 2008 debacle, and even during the European debt crisis:

http://www.wallstreetbear.com/board/view.php?topic=91666&post=331535

Roubini has scored some booze, hookers, and a nice apartment in Manhattan, but he can't even come close to Sandy Weill's $88 million pad and the lavish lifestyle he has enjoyed.

 

Tue, 12/06/2011 - 20:09 | 1953126 ebworthen
ebworthen's picture

Are you trying to identify targets for the mobs and guillotines?

Tue, 12/06/2011 - 20:12 | 1953134 bob_dabolina
bob_dabolina's picture

Pretty sure George Soros shorted the pound

How's he doin'?

Pretty sure John Paulson did well shorting in 2008.

Jim Chanos

David Einhorn

etc etc

Tue, 12/06/2011 - 21:00 | 1953275 topcallingtroll
topcallingtroll's picture

And kyle bass.

However robo is right.

Going long risk has always paid best in the long run.

Burying your gold talent in your back yard not only makes baby jesus cry, it is a surefire way to remain in the 99%

Tue, 12/06/2011 - 21:45 | 1953376 Dr. Gonzo
Dr. Gonzo's picture

I disagree. On a long timeline most companies go broke, most sovereign nations default...at least a few times, all paper currencies go to zero, and all bubbles burst. So you better be an insider or a really dam good trader in today's market if you don't want to lose everything...and hope the whole interconected paper trade doesn't blow up all at once and leave you without any paper shelter to take cover in. 

Tue, 12/06/2011 - 22:47 | 1953504 chump666
chump666's picture

Momo trading is dead. pretty much died when Open Outcry ended.  These extended bull runs don't exist anymore.   You either have access to HFTs, or know how to trade broken markets.  Buy going long is dead as dead.

Tue, 12/06/2011 - 22:53 | 1953516 chump666
chump666's picture

like the momo trading end yr.  Desperate to run with that end yr rally, only to be fleeced by HFTs.  WHat three sessions where US stocks pull back from the close? 

Tue, 12/06/2011 - 21:03 | 1953280 willien1derland
willien1derland's picture

RT - I read your posts & I admire your conviction...However, I will add Kyle Bass as he shorted ABX & made a fortune...Keep swinging RT - Top Calling Troll - great minds -

Tue, 12/06/2011 - 21:05 | 1953290 chindit13
chindit13's picture

Satan pays up for souls.  No news there.

Tue, 12/06/2011 - 21:26 | 1953328 francis_sawyer
francis_sawyer's picture

@Robo

"Even after the 2008 debacle, and even during the European debt crisis"

---

While we're uncovering literature... Here's a story about how well the Romans did after the Vesuvius eruption & all the various glorius conquests...

http://en.wikipedia.org/wiki/The_History_of_the_Decline_and_Fall_of_the_Roman_Empire

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