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Michael Krieger Explains Why It Takes Only 5 Minutes

Tyler Durden's picture


From Michael Krieger

Power concedes nothing without a demand. It never has, and it never will.

- Frederick Douglass

Fairly quickly, Corzine accumulated a massive net long sovereign debt position that eventually totaled $6.3 billion, or five times the company's tangible common equity as of the end of its fiscal second quarter. I'm told Corzine's move was highly controversial within the firm. But no one overruled him, maybe because after all, he was Jon Corzine. In a mark of just how much Corzine mattered to the market, in early August, MF Global filed a preliminary prospectus for a bond deal, in which the firm promised to pay investors an extra 1 percent if Corzine was appointed to a "federal position by the President of the United States" and left MF Global.

Did accounting help sink MF Global?

It Takes 5 Minutes

Alright I am going to kick things off with Europe and get that out of the way as quickly as possible.  Nothing has changed and absolutely nothing has been accomplished.  There is no “solution” to the crisis that will not result in massive pain, confusion and wealth decimation.  The reason is patently obvious.  At least half the continent is completely and helplessly bankrupt.  There are only two outcomes to the entire situation.  Either the sovereign debts are written off aggressively and the banking system declared insolvent and restructured or the ECB decides to turn on those printing presses to the tune of trillions and destroys the purchasing power of the union in Zimbabwe-like fashion.  People will read this and think I am exaggerating .  The phrase “it takes 5 minutes” keeps running through my head because all it takes is a small amount of time to see the situation for what it is.  I am not that smart.  This is obvious.  The scary thing is that it is abundantly clear that the vast majority of U.S. investors have not bothered to take the 5 minutes necessary to understand how extreme and binary the outcomes to all this is.  Their clients will suffer massively in the months and years ahead as a result of their laziness and lack of macro curiosity. 

Remember, there is a very good reason that no “definitive solution” has been announced.  There is none.  What the Eurocrats are trying to do is pretend that lifelines to bankrupt nations will be enough to tide them over until strong growth allows them to wiggle out of the problems.  This has already been proven a failure after they tried it last year as Greece is now worse than ever.  So there are two choices and no one can be totally certain which outcome it will be but either one will result in massive wealth destruction.  The first choice is the one I prefer (hard defaults and a declaration of insolvency of the banking system followed by restructuring) because it will place the majority of the losses and pain on the elites that led us to this ruin and who own most of the financial assets in the world.  The second option (massive inflation and loss of purchasing power) will kill the poor and middle classes as well as the wealthy but financially illiterate.  The ruling oligarchs will be fine (until the masses come for their heads) as they understand what they are doing and will move to protect their assets.  Since the same criminal, crooked and morally bankrupt financial oligarchy is still pulling the strings worldwide you have to assume they will opt for choice number two, although unforeseen social and political events could throw a wrench into their twisted plans.  Gold is the only asset that should outperform in either scenario.       

Before I leave Europe, there is a must read article posted this week on Zerohedge that everyone needs to read and understand.

MF Global

What is there to say about this debacle that hasn’t been said already.  The main point I want to make is that the collapse of this firm and its crony capitalist CEO Jon Corzine fits in perfectly to one of my overriding themes regarding the current fourth turning we find ourselves in.  Namely, that the celebrated elites and “financial wizards” will be disrobed, disgraced and proven once and for all to be the frauds they always were.  If nothing else, the story of MF Global should make it crystal clear to all observers that the biggest problem the world faces today comes back to a small cadre of financial engineering misfits that continue to be recycled all over the world’s positions of power.  Most of them have Goldman on their resume or at the least JP Morgan.  I just find this hilarious considering that I don’t think the clowns at any of these banks could make a dime without government help.  When I write this I do not mean to insult individual rank and file people at these firms because I happen to know some of them to be capable and decent; however, come on guys.  How can you feel good about your paycheck or trades when you are just a ward of the state that  in reality owns you souls.  Let’s see how you do without the government backstop.  We just saw how Corzine did.      

So Corzine was as “insider” as you get and he blew his firm to smithereens because he made the mistake of working at a firm that was allowed to fail.  He represents everything that is ruining America today.  Guys like him are everywhere and their reputations and firms will all be plunging into the ground over the next several years.  The best part about this whole story is how Corzine was apparently being considered for Treasury Secretary of the United States.  I mean this doesn’t surprise me at all, but it should be a warning to everyone around the world that it is people exactly like Corzine that make all the important decisions in the world today.  While it takes a long time to run entire nation-states into the ground don’t you worry they are working hard and are well on their way.  You’ve got to read this gem

The State of the Union (and Financial Markets)

The one thing I feel more confident in than anything else right now is that the U.S. consumer is about to roll over.  The most interesting dichotomy lately has been the extremely depressed consumer confidence numbers (and falling) coupled with resilient consumer spending.  I believe this is about to reconcile itself via much lower rates of consumption.  Let’s start off with today’s Bloomberg Consumer Comfort reading. 

Bloomberg Consumer Comfort Reading 10 Year Chart

This chart tells us two things.  First the number was the second lowest on record.  People aren’t lying on these surveys.  They are being screwed and they know it.  The second observation is that it is clear there is basically no bounce since the recession supposedly ended.  Why?  Because we are in a depression.  Sadly, it is a depression in which Central Bankers are doing everything in their power to transfer more and more purchasing power to the elite financial oligarchs that already own everything via money printing.

Despite the horrific consumer confidence numbers and the recent stats showing a new food stamp participation record in the United States where we have about 15% of citizens needing government assistance to survive, spending has held up pretty well.  How has this happened? Well, it seems the main reason is a decline in the savings rate.    

U.S. Personal Savings as a % of Disposable Income 10 Year Chart

Ok, so what we see is that as confidence has dropped so has the savings rate as people scramble to maintain some semblance of a lifestyle that is gone forever.  Many will point to this and say, well look at the 2005 period where savings went even further south and kept the economy afloat.  Why can’t this happen again?  There are two reasons I think it won’t.  The main one is that in 2005 housing prices will still at their peaks and people thought they were much wealthier than they were due to these “assets.”  As a result, they were willing to dip into their savings.  That is not the case today and therefore I think people will only dip so far into their savings.  I think people are right here right now about to cut back.  The other reason relates to commodity prices.  Although the important ones have all have all shown large year-over-year increases, they have been more or less flat sequentially as of late.  I believe that is about to change and if the governments of the world continue to prop things up and sustain unsustainable consumption we will see oil and other commodities make another meaningful move higher in the months ahead.  Since I think a large percentage of U.S. investors are totally clueless about the real state of inflation and the consumer, once spending starts to get cutback it will catch markets completely flatfooted.  I think this is a near-term event.  As always, we shall see.    

Peace and wisdom,


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Thu, 11/03/2011 - 15:20 | 1842744 NOTW777
NOTW777's picture

wonder if retail will rollover

cnbc avoiding the less than stellar #s on retailers this morning



Thu, 11/03/2011 - 15:33 | 1842775 Chief KnocAHoma
Chief KnocAHoma's picture



Last night this conversation between Obama, Geitner and Bernanke was recorded in the Oval Office:


Obama: What seems to be the problem gentlemen? And it had better be important because Sports Center is about to give my pre-season basketball picks.


Geitner: Mr. President the global credit markets are seizing up again. All liquidity is being drained from the system because those greedy European peasants are demanding what was promised to them.


Obama: No problem Timmy. I'll give a speech in the morning with soothing words and caring faces. I'll put just the right emphasis on selected words and phrases. The press will fall all over themselves thanking me, and the markets will heal.


Bernanke: (Looking at Geitner with dumbfounded glare) Mr. President I think we may need to do more than that. I think we need to inject a significant amount of capital into the markets immediately. We can call it The American Re-Investment Act Phase 9. I'll print the living shit out of money, and create a lot electronically, then the system will free up. (A devilish grin appears.) Of course we will have to tax some one for the additional debt.


Obama: Is there any way we can exempt minorities, Muslims, single mothers and White Sox fans from the tax?


Geitner: I think that is called Obamacare.


Obama: Hmm... (scratching his chin) This is another hardship on the American people, and more importantly, it will hurt my poll numbers. Do you think we can blame Bush?


Bernanke: (Trying to keep a straight face.) Mr. President you will be viewed as a hero to thousands on Wall Street, which means big campaign dollars, and we can even blame it on the banks. They don't care...


Geitner: (Laughing out loud) Yeah... like they have souls anyway.

Thu, 11/03/2011 - 15:35 | 1842804 luna_man
luna_man's picture

"Chief KnocAHoma"...Nice to have the fly on the wall.:)

Thu, 11/03/2011 - 17:19 | 1843226 LeonardoFibonacci
LeonardoFibonacci's picture

Thank President Obummer for turning the US into a Zimbabwe economic powerhouse!

Thu, 11/03/2011 - 17:22 | 1843230 LeonardoFibonacci
LeonardoFibonacci's picture

For those  lovers of CHANGE from our leadership

Thu, 11/03/2011 - 17:40 | 1843281 Fake Jim Quinn
Fake Jim Quinn's picture

This is hateful sh*t dude. You really stepped over the line

Thu, 11/03/2011 - 17:47 | 1843299 knukles
knukles's picture

I'll second that.

Thu, 11/03/2011 - 19:06 | 1843505 mtomato2
mtomato2's picture

Yep.  The guy is on the wrong blog altogether.  He should have taken that left toin at Albecoiky.

Thu, 11/03/2011 - 17:53 | 1843318 beatus12
beatus12's picture

just simply appalling Leonardo, how can anyone be

complicit to this evilness...

Thu, 11/03/2011 - 17:58 | 1843338 LeonardoFibonacci
LeonardoFibonacci's picture

The facts are what they are.....they just luv to chimp out.  And i'm not even racist.  But lawlessness is just in their DNA.

Thu, 11/03/2011 - 20:50 | 1843649 Paul E. Math
Paul E. Math's picture

WTF?  Seriously, dude, get a life.

Thu, 11/03/2011 - 21:29 | 1843699 buyingsterling
buyingsterling's picture

They dont get any 'blacker' than Alan Keyes, Walter Williams, Thomas Sowell, Louis Farakhan. Are they chimps? If you say so, you're blind. The enemy isn't blackness, it's greed, sloth, entitlement, self-conceit, and indulgence.

Fri, 11/04/2011 - 20:26 | 1847137 tamboo
tamboo's picture

those guys are all jewgroes, without the jew blood theyd be chimps like the rest.

Thu, 11/03/2011 - 22:51 | 1843837 tickhound
tickhound's picture

I won't sit here and deny statistics... Or pretend that there would be more white dudes in the NBA if there were more basketball hoops in Bumbleweed Suburbia.

But try to judge people for what they do... For what they say... For who they are, as individuals...........Cuz I don't give a fuck what you say, Reggie Middleton kicks fucking ass.  He's smarter than you, he's smarter than me, and he could OWN you if he chose to... You Fucking Fuck.

Thu, 11/03/2011 - 22:21 | 1843760 dolph9
dolph9's picture

I personally learned alot from sites like chimpout and niggermania, even though they sometimes cross the line.

For example, have you ever wondered why so many blacks have so much to eat, and live in all these houses, even though many of them can barely count?  It's because they are handed food stamps and section 8 vouchers, paid for by all you supposedly enlightened people out there.  The fiat money printing continues the charade.

Ever encountered an incompetent black who clearly was out of their league, even in low level positions?  They are token blacks hired to keep the lawyers away, and they can only be fired for the most egregious, obvious stuff.  This lowers the quality of every place where they work.

Of course, at some point most people learn this on their own.  Whether it's a Teach for America newbie who has to deal with the ghetto schools, the unknowing middle aged people who put grandma in a nursing home full of affirmative action hirees, or simply the people who have to live amongst the worst blacks.  Or maybe someone who was mugged, beaten, robbed, raped, or had a friend or family member killed.

Eventually alot of people figure it out, the other half continue to insist we are "racist" and society is divided, and nobody can work together.

Well done indeed, America.

To all the people out there who claim racism, prove me wrong.  Live with, work with, do business with, befriend the people whom you claim to have nothing but love and tolerance for.  Otherwise, shut the fuck up and leave me alone.

Thu, 11/03/2011 - 23:26 | 1843889 tickhound
tickhound's picture

Ever wonder why an uber-wealthy fat fuck lives in his 6-car multi-faceted facilitated waste of a mansion?  Cuz people like you are more worried about denying someone who may be lesser than you, for whatever reason (biological, environmental, whatever), than those receiving Section 1,000 vouchers to the nth degree, golden parachutes, deception and crime (albeit more sophisticated).

Point is... If you LEARNED anything from those sites, then you were naive to begin with... Most here live in the real world, and can't deny what we see. 

Want to fight dependancy?  Want to fight entitlement?  Want to fight affirmative action for those people MORONS like you believe deserving?  Then wake up.  This isn't about racism.  You make it about that.  This is about fraud, on a level that crushes ANYTHING you can present to me based on biology. 

Bring it, bitch. 

Thu, 11/03/2011 - 23:29 | 1843899 awkward squad
awkward squad's picture

I see we Jews have taught you white Goys well....we must fight racism wherever we see it! Race? There is no such thing!

Thu, 11/03/2011 - 23:34 | 1843909 tickhound
tickhound's picture

Read my post again, uber-jew.

Thu, 11/03/2011 - 15:35 | 1842808 Pladizow
Pladizow's picture

I'm sorry Mr. Kreiger, I am a Harvard PHD - I dont understand, could you please explain?

Thu, 11/03/2011 - 15:56 | 1842876 Doña K
Doña K's picture

Problem is that they are all so terrified with the truth that they block it out. They just don't want to accept it.

That explains the expression "bitter truth" 

Thu, 11/03/2011 - 16:08 | 1842914 Nascent_Variable
Nascent_Variable's picture

It's also hubris.  These people build their entire sense of selves, not to mention their professional reputations, around being right about everything.

How does someone like that cope with the realization that they haven't just made a few mistakes in their calculations, but rather their basic, underlying assumptions are demonstrably false?

Thu, 11/03/2011 - 16:26 | 1843003 Drunken Monkey
Drunken Monkey's picture

"How does someone like that cope with the realization that they haven't just made a few mistakes in their calculations, but rather their basic, underlying assumptions are demonstrably false?"

Well, if they had any old school honor they would take a one way walk in the woods with a bottle of good wiskey and their fathers duling pistol, but that's way too much to hope for these days.

Thu, 11/03/2011 - 17:25 | 1843236 Henry Chinaski
Henry Chinaski's picture

Hubris is one of my favorite universal themes... and so apropos in these times.

In ancient Greece, hubris (ancient Greek ?????) referred to actions that shamed and humiliated the victim for the pleasure or gratification of the abuser.[1] The term had a strong sexual connotation, and the shame reflected on the perpetrator as well. It was most evident in the public and private actions of the powerful and rich. The word was also used to describe actions of those who challenged the gods or their laws, especially in Greek tragedy, resulting in the protagonist's fall.

Five minutes bitches!

Thu, 11/03/2011 - 19:08 | 1843513 mtomato2
mtomato2's picture

Math is the final abuser.  Always has been, always will be.


MATH, Bitchez.

Thu, 11/03/2011 - 20:05 | 1843602 Seer
Seer's picture

You're correct.  They've been bruoght up to believe that they're the exceptional ones and that they are responsible for the fate of others.  Of course, this allows them to live the high life, but they're earning it, really!

None of us here grew up knowing everything.  I didn't get most of what's going on until a bit later on in life.

When one is totally immersed in a paradigm one is totally immersed.  The trees are in the way!

Thu, 11/03/2011 - 15:40 | 1842821 wombats
wombats's picture


Thu, 11/03/2011 - 16:34 | 1843032 Killer the Buzzard
Killer the Buzzard's picture

No selling drugs to kids!  That's an infamnia.

Thu, 11/03/2011 - 16:53 | 1843139 IAmNotMark
IAmNotMark's picture

Is this a comedy, tradegy, or documentry?

I guess it was all three.  I liked the Marx brothers more.

Thu, 11/03/2011 - 17:16 | 1843216 GenX Investor
GenX Investor's picture

It's all three, kinda like Capitalism: A Love Story meets Wall Street: Money Never Sleeps.  The both got it wrong, but it was fun to watch.

Thu, 11/03/2011 - 17:03 | 1843184 TeamDepends
TeamDepends's picture

Obama aka Barry Soetero aka Harrison J. Bounel aka Bari M. Shabazz is the right men for the job.

Thu, 11/03/2011 - 17:36 | 1843272 chaartist
chaartist's picture

you made my day! thank you

Fri, 11/04/2011 - 10:09 | 1844960 Chief KnocAHoma
Chief KnocAHoma's picture

(bowing to the audience) Thank you... thank you... I'll be here all week. Be sure to fondle your waitress!


I am The Chief!

Thu, 11/03/2011 - 15:30 | 1842787 knukles
knukles's picture

Avioding #'s?  I was of the impression that CNBS only avoided news.

Thu, 11/03/2011 - 16:07 | 1842916 disabledvet
disabledvet's picture

Yeah no shit. How dumb do you think we are down here Mikey? The fact is all this Kick the Caan down the road bullshit doesn't represent an economic threat to the US is because there in the death throes of Bailout Nations instead of the USA's, well--I wouldn't call it mere since now every one knows bailouts fail too--successful bailout of Wall Street. The euro landers couldn't even handle a 5 billion dollar CDS. We had to deal with an 80 billion dollar one at Phuck nuts AIG! Anywho I would agree "there are security issues." and since I hate war and the people who start them with a passion (CN plucking N and Anderson Cooper--yeah that's right--I'm watching you phucker) I don't like what's going on over there and have an...enraged interest in it.

Thu, 11/03/2011 - 20:09 | 1843605 Seer
Seer's picture

Not in defense of the Euro Cluster Fuck, but they've got several countries acting in their own interest, whereas the US only has one.  Ah, the failings of democracy!

It's all pointed at the edge of the cliff, just that some will get there faster than others.

The EU will fragment.  So too will the US.

Fri, 11/04/2011 - 12:28 | 1845518 GoinFawr
GoinFawr's picture

eventually, that might be for the best anyway, no?

Thu, 11/03/2011 - 17:24 | 1843239's picture

Green shootz bitchez!!!!

Thu, 11/03/2011 - 15:20 | 1842747 kaiserhoff
kaiserhoff's picture

Quite right, but I think only Germany's vote counts.

Thu, 11/03/2011 - 15:21 | 1842750 Ancona
Ancona's picture

Very well said sir.

I'll do the same thing in one sentence:

We're fucking screwed.

Thu, 11/03/2011 - 15:23 | 1842756 tempo
tempo's picture

Its clear sailing until Thanksgiving with the market breaking out about 1260 spx because there is no hard news, just rumors.

Thu, 11/03/2011 - 15:24 | 1842758 Divided States ...
Divided States of America's picture

Yeah well in 5 minutes, the algos can pump the SPX up 20 points!

Thu, 11/03/2011 - 15:31 | 1842793 Ruffcut
Ruffcut's picture

It takes less than that on a good porn site.

Thu, 11/03/2011 - 15:25 | 1842764 Syrin
Syrin's picture

It only takes five minutes...


See, this is my point.   I am an MD, and much of what is discussed here is beyond my limited knowledge, yet I can still see the structural flaws as clear as day.   What baffles me is why others are so blind to the OBVIOUS ?!?!   If I can read the thoughts of bright financial minds, look at numbers, underdstand the basics of how an economy works (thanks Mises), then why can't others?   People I know that I consider very bright are in denial or are ignorant.  It's somehwat surreal.   I have given up trying to educate.   People hear what they want and no more.   I think it's willful ignorance for many.

Thu, 11/03/2011 - 15:31 | 1842785 Pool Shark
Pool Shark's picture




"It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair


Thu, 11/03/2011 - 15:43 | 1842831 Syrin
Syrin's picture

Excellent quote

Thu, 11/03/2011 - 16:15 | 1842938 SPONGE
SPONGE's picture

It's called cognitive dissonance

Thu, 11/03/2011 - 16:40 | 1843062 Bastiat
Bastiat's picture

It's called knowing where your bread's buttered.  When you can't deal with how that conflicts with your idea of yourself and the world, then it's called cognitive dissonance.

Fri, 11/04/2011 - 07:40 | 1844340 Orange Pekoe
Orange Pekoe's picture

People are so greedy and so stupid they will believe anything if they think it gets them what they want. The bigger the greed and stupidity, the bigger the lies they will believe and tell. Unless they figure out a better thing to want and a better way to get it. In other words, people are dumb monkeys.

“Education is teaching our children to desire the right things.” 



To wit, the monkey trap: 



monkey trap (plural monkey traps)

  1. (literally, probably folk-lore) A cage containing a banana with a hole large enough for a monkey's hand to fit in, but not large enough for a monkey's fist (clutching a banana) to come out. Used to "catch" monkeys that lack the intellect to let go of the banana and run away.
  2. (figuratively) A clever trap of any sort, that owes its success to the ineptitude or gullibility of the victim.


I am sure that monkey totally believed he could get that banana. (haha)

Thu, 11/03/2011 - 15:32 | 1842796 john39
john39's picture

same thing is true in the medical industry.  and yet the "professionals" don't get it.  strange that.

Thu, 11/03/2011 - 15:53 | 1842864 Vergeltung
Vergeltung's picture

seems like a false comparison to me. care to elaborate?


Fri, 11/04/2011 - 23:00 | 1847609 UP Forester
UP Forester's picture

Guess what your brain is made of:  cholesterol.

Second best selling prescription drug:  Zocor (cholesterol-lowering drug)

Rate of Alzheimer's in aged population:  1 in 8

Number of objective studies showing high cholesterol statistically increases risk of heart disease:  Try to find one

Thu, 11/03/2011 - 15:48 | 1842844 Crack-up Boom
Crack-up Boom's picture

Normalcy bias is insidious.  Unless you see the ticking time bomb, it's hard to believe that all of this is going to blow up at some point.  And unless you really study it, why should you believe smoeone who tells you that the economy isn't going to get better soon?  Remember Y2k -- all of our computers were going to stop working and the world as we know it was going to end... but it didn't.  All the Y2k'ers looked like Chicken Little runnung around yelling "the sky is falling!"

I have to admit that, though the fundamentals make absolutely no sense to me, even I doubt my own eyes when it looks like everything is about to fall apart ... but it doesn't.  How long can this go on?  Days?  Weeks? Years?  It's just nuts.


Thu, 11/03/2011 - 15:57 | 1842879 wombats
wombats's picture

You are not alone in your thoughts, concerns.  It should have already blown up.

However I've heard increasing voices stating to never bet against the FED, ECB ability to print their way out of any mess.

Thu, 11/03/2011 - 16:44 | 1843089 Calmyourself
Calmyourself's picture

Mike's most importatn point is that it will take years or at least the pain will last for years.  Do not try to time this mess, they will keep the plates twirling on the sticks for quite some time..  After all every sheep in the world will help spin the plates for the wolves, normalcy bias is a powerful thing..

Thu, 11/03/2011 - 17:00 | 1842889 whstlblwr
whstlblwr's picture

But why is stock market evidence of healthy economy? It's all fake. How do MF Global investors feel? Will they get money back? Country can go in toilet and governemt will control money into stock market to try to prevent bank run. Stock market is up so must be okay.

I'm sure, I'm not only one who took all the cash out of bank.

Sometimes wonder if only reason stock market crash in 2009 because Wall Street afraid Obama was honest man.

Thu, 11/03/2011 - 17:26 | 1843242 GenX Investor
GenX Investor's picture

Thu, 11/03/2011 - 16:08 | 1842918 earleflorida
earleflorida's picture

i'm glad your not a psychiatric,... for if you were, i'd fire you

just kidding

no seriously

just think of herd mentality,... it's that simple 

lemmings at em,...

Thu, 11/03/2011 - 18:28 | 1843408 New_Meat
New_Meat's picture

Syrin, yep,  I'm no finance guy but enjoy hangin' around to learn.

"People I know that I consider very bright are in denial or are ignorant.  It's somehwat surreal. "

I've looked into "normalcy-bias" and that seems to be fruitful.

"I have given up trying to educate."

I taught for a while, and always thought that I could put the guys in the way of what I was trying to "teach/train", but could never "impose" teaching on them.

My approach now is to ask: a) "How much food do you have on hand?" and then b) (like last weekend, where we had up to two feet of 'global warming' dumped on us, trees with leaves, power outages still ongoing) ask "Don't you know that the grocery stores only have 3 days of food on hand?"

Hurricane recently has helped.

Good luck to you and yours.

- Ned

Thu, 11/03/2011 - 20:20 | 1843618 Seer
Seer's picture

Well, the "problem" is is that people think that they know it all.  Even Mises misses the BIG PICTURE.

It's all a big con job.  OK, it's all a big DISTRACTION.  People like to be lied to in order to feel that all is well and fine.  Those willing to lie earn an easy living: they are appointed to be the scapegoats, they will defend the failings, manufacturing all sorts of reasons, and will propose "fixes" (and another round is served).

The point at which people require there to be a god or a master is the point at which they've given up responsibility/control of themselves.

But, surreal it most definitely is.  I had fun encounters with all positions on the political wheel; everyone had their reasons why housing prices wouldn't fall (yeah, I bet against them all).

It's easy to leap past all these folks by challenging the fundamentals: again, even Mises fails here (but is closer than most).

Fri, 11/04/2011 - 07:41 | 1844337 Orange Pekoe
Orange Pekoe's picture


Fri, 11/04/2011 - 07:40 | 1844339 Orange Pekoe
Orange Pekoe's picture




Thu, 11/03/2011 - 15:25 | 1842765 preppin.for.the...'s picture

Good stuff.  And Mike is absolutely correct - it ain't rocket science.  It doesn't take an ability to "read the tea leaves" to figure out that the current debt levels and unfunded liabilities are gargantuan. 

And maybe that's the problem - the numbers are SO big, it may be too hard for most people to comprehend. 

Our leaders need to grow a set and get after it asap - if it's not already too late.

Thu, 11/03/2011 - 16:02 | 1842898 Doña K
Doña K's picture

You mean to tell the truth to the sheeple? That's anathema. What kind of politicians to you think they are?

Thu, 11/03/2011 - 17:51 | 1843311 preppin.for.the...'s picture

Fair enough... obviously, most are the kind who keep expecting everyone to swallow the blue pill.

And maybe most people will, but from personal observation, I notice more and more people choosing the red pill.

There is hope.

And, if hope runs out, I've prepared for that, too.

Thu, 11/03/2011 - 15:26 | 1842768 Turd Ferguson
Turd Ferguson's picture

The money shot of the piece:

"The scary thing is that it is abundantly clear that the vast majority of U.S. investors have not bothered to take the 5 minutes necessary to understand how extreme and binary the outcomes to all this is.  Their clients will suffer massively in the months and years ahead as a result of their laziness and lack of macro curiosity."

Thu, 11/03/2011 - 15:33 | 1842799 Jeff Lebowski
Jeff Lebowski's picture

When playing musical chairs, you only lose when the music stops...

Thu, 11/03/2011 - 15:41 | 1842827 Max Hunter
Max Hunter's picture

They are playing musical chairs but do not realize the building is on fire.. When the smoke starts coming into the room, then, and only then, will we see the appropriate response from these clowns..

Thu, 11/03/2011 - 20:30 | 1843632 Seer
Seer's picture

Well, we're all part of this, therefore we're all part clown too.

Economies of scale were always going to falter eventually, and when they go into reverse it's going to crush the entire paradigm*.  Very few will escape the massive consequences: that is why I believe that the ONLY tactic is DELAY- that's what you do to minimize any impact, you slow it down, you absorb the collision slowly (and that's really what's going on- worthless assets ARE being marked down, worthless jobs ARE being eliminated).  But, no matter, the system requires critical mass, and since this will kill that mass the system too will be killed.

* Machine output to available human consumers was always going to hit the wall.  And, growth was always going to end: this applies both to physical and virtual (economic) growth.

Thu, 11/03/2011 - 15:52 | 1842859 The Big Ching-aso
The Big Ching-aso's picture

It's getting serious.    As a Banana Republic we are running short of bananas.

Thu, 11/03/2011 - 15:58 | 1842885 Ignatius
Ignatius's picture

"The road will seem so straight and fair travel, you will kick yourself for stumbling through the brambles for so long, and wonder at your neighbors who still can't see the path, though it is truly a freeway." 

(Aristotle, courtesy of FOFOA)

Thu, 11/03/2011 - 18:47 | 1843465 New_Meat
New_Meat's picture

Turd: You and Mike are absolutely correct, greenie on ya, 5 on Mike.

"Their clients will suffer massively in the months and years ahead as a result of their laziness and lack of macro curiosity."

However, they (as it stands today) will suffer no professional sanction.  Why?  Funds are measured vs. their "benchmark."  Advisors  have no discretion under MPT and CAPM.  "You can't time the market!"  Etc.  Retail industry advisors are well protected (that is, the Barrons' list of 100 top blah blah blah won't be hurt.)

Mike: Laziness and lack of macro curiosity.  Yep, but not viewed by them as lazy, they work their asses off.  Macro curiosity?  Malkiel, Fama, and the rest of the Chicago school killed that off.  Plus professional sanctions for non-believers who hadn't made their bones with the Guild.

The whole thing is more incestuous on a systematic level than I would have believed as a small little piglet.

- Ned

{OT, can't resist.  Setting: exclusive New England Girls Prep School, first dance of the year.  Headmistress: "Now girls, there are going to be boys around here, and, well, you know how they are.  So, I don't want you to throw your whole life away for five minutes of pleasure."  Suzie, in  the back: "Uh, Ms. Smythe, could you tell us all how to make it last five minutes?"}


Thu, 11/03/2011 - 15:28 | 1842771 hedgeless_horseman
hedgeless_horseman's picture

Lazy investment managers?  Come on, they read the reports from the ratings agencies, or at least look at the pretty colored charts.

Thu, 11/03/2011 - 16:42 | 1843083 CPL
CPL's picture

Empire building one PowerPoint at a time.

Thu, 11/03/2011 - 16:53 | 1843129 knukles
knukles's picture

And many of them really believe all the shit that they've memorized and regurgitated for their CFA designations.  About a Billion Years Ago I was starting to attend courses for the CFA exams and during the first few minute of the first course, we began to be lectured about Economics.  The lecturer posed a question which I proceeded to answer. 
Bzzzzzt!  Wrong, Knukles! 
The answer is blah, blah, blah Neo_Keynesian Clap Trap when the question had to do directly with Monetary Policy....  (My God! Shades of the Bernak!) 
Which I disputed viz; monetary policy and applied the appropriate analysis. 
Bzzzzzt!  Wrong, Knukles!
So I got up and left.
Well, my boss at the time was a high ranking Muckety Muck in CFA World and the next morning asked me why I'd left.  I'd not told him, BTW.  So, somebody thought....  And I mean I'd not even had my first cuppa....

So I told him that I saw very little reason to memorize and regurgitate that which has so efficiently promised the majority of the universe active managers to underpreform their benchmarks.  

Ah, was the Beginning of a Beautiful Relationship.
Bzzzzzt!  Wrong, Knukles!

Thu, 11/03/2011 - 17:12 | 1843206 I am a Man I am...
I am a Man I am Forty's picture

"So I told him that I saw very little reason to memorize and regurgitate that which has so efficiently promised the majority of the universe active managers to underpreform their benchmarks."



Thu, 11/03/2011 - 18:51 | 1843478 New_Meat
New_Meat's picture

lmao, at least you didn't get ulcers for the wrong reasons ;-) - Ned

Thu, 11/03/2011 - 20:37 | 1843641 Seer
Seer's picture

"And many of them really believe all the shit that they've memorized and regurgitated for their CFA designations."

They're programmed to "serve."  Another cog in the backstopped wheel...  Doing "God's" work!

We're all in the System.  It's all we really have to work with, or so we're programmed to believe.

Yeah, the "answer" is 42!  OOPS!

Thu, 11/03/2011 - 15:27 | 1842772 Mark123
Mark123's picture

Great article.

Why is the consumer spending more while confidence is tanking?  Simple - sub-prime lending is being used again to goose the economy.  This decreases the savings rate and increases consumption.  I really doubt if anyone with real savings has suddenly decided to go on a spending spree.



Thu, 11/03/2011 - 15:43 | 1842790 hedgeless_horseman
hedgeless_horseman's picture



Simple - sub-prime lending is being used again to goose the economy. This decreases the savings rate and increases consumption.

That is a bingo!

We are Ally Financial — a company with a rich history and a new approach.

Our job back then was the same as it is today: to fuel the auto industry with loans that help dealers build their businesses, to support vehicle manufacturers with innovative sales programs, and to provide affordable financing to customers wishing to buy a car or truck.


As years turned to decades, we added more products and services like vehicle service contracts, home mortgages and insurance. In 2006, the next chapter was written when GMAC Financial Services became an independent financial services provider.


Then we took a major step forward. In 2008, we transformed into a bank holding company (so they could get bailed out). That action set us on the path that would eventually lead us to Ally Financial — a company focused on understanding customer concerns and providing a better way to do business.


In 2009, we took the market in a new direction with our online retail bank, Ally Bank (Member FDIC). With it, we introduced 24/7 live customer care and an online savings account that has been named best in 2009 by Kiplinger's and "Best Savings Account" by Money Magazine in 2010.


When you wish upon a car, makes no difference what your credit are, any GM your heart desires we'll make it come true.


Thu, 11/03/2011 - 15:48 | 1842845 Mark123
Mark123's picture

It feels so good driving home with that brand new car.  Everyone deserves to feel that way....and when these new subprime loans go belly up the lenders deserve to be bailed out again by the taxpayers.  And when the EZ credit dries up, then the car companies deserve to be bailed out again by the taxpayers.


Thu, 11/03/2011 - 16:06 | 1842857 hedgeless_horseman
hedgeless_horseman's picture



Then we took a major step forward. In 2008, we transformed into a bank holding company.  That action set us on the path that would eventually lead us to Ally Financial — a company focused on understanding customer concerns and providing a better way to do business.



Forward?  Spin for the mother fuckin' win! 

"...a better way to do business."  Using taxpayer's money instead of retained earnings or raising capital like our free-market competitors.



"Best Savings Account" by Money Magazine in 2010.


Best because your savings deposits are loaned out ten times over to sub-prime borrowers!  This time will be different...our management team is sure of it!

Thu, 11/03/2011 - 16:59 | 1843162 knukles
knukles's picture

And makin' all of the same fucking substandard types of loans that they made last time.
But this time IS different.
Last time, they were a private company that was admonished for sucking ignorant poor underpriviliged people into usurious loans that financially enslaved them and then went belly when they couldn't pay.  (BTW which is called fraudulent conveyance, which is against the law in which remedies are provided, but has the government moved to... oh, never mind.)

This time around it's a company Which At The Direct Behest of The Government is making all of the same fucking... oh never mind.

Thu, 11/03/2011 - 16:34 | 1843031 s2man
s2man's picture

Stupid me.  I just bought an '87 pickup for cash ('cause the '63 died).  What was I thinking?

Thu, 11/03/2011 - 16:47 | 1843096 GoinFawr
GoinFawr's picture

Who the hell in good conscience would down tick HH for that beautiful bit of corroboration?

I want reasons:

<crickets, Jiminy>

Thu, 11/03/2011 - 15:27 | 1842773 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

@ Ancona...a lucid distillate

Thu, 11/03/2011 - 15:27 | 1842774 cdude
cdude's picture

"Either the sovereign debts are written off aggressively and the banking system declared insolvent and restructured or the ECB decides to turn on those printing presses to the tune of trillions and destroys the purchasing power of the union in Zimbabwe-like fashion."


Central Banks = TPTB ....... Hmmm, I wonder which direction this will take....Anyone....Anyone?

Thu, 11/03/2011 - 15:28 | 1842776 wombats
wombats's picture

Are you really sure MF is done?  There is still plenty of time for Ben and Tim to bail him out.

Corzine is still a long long way from a jail cell.  At this point there is no reason to believe the feds will ever actually send him on a perp walk.

What we see is not necessarilly reality.  It may be nothing more than another act in the grand illusion.


Thu, 11/03/2011 - 15:43 | 1842832 undercover brother
undercover brother's picture

i'll bet you any day now, the cftc and the cme announces they've found all that money and it was simply miscategorized.  you watch. 

Thu, 11/03/2011 - 15:46 | 1842838 wombats
wombats's picture

I may be mistaken, but I think I already heard something to that effect on CNBC a little while ago.

Thu, 11/03/2011 - 16:13 | 1842932 bsdetector
bsdetector's picture

No statement from Corzine yet. That means he is waiting to see what the regulators and prosecutors will find. If he was in the clear and knew it he would be out front in this matter showing everyone how their fears are simply mistaken. Yes, although we have constitutional rights to maintain our silence a person with an ego the size of Corzine's would not remain silent unless he was afraid to speak.

Thu, 11/03/2011 - 15:29 | 1842779 Bam_Man
Bam_Man's picture

The only problem with "hard defaults and a declaration of insolvency of the banking system" is that it wipes out depositors along with bank equity and bond holders. Whatever meager deposit insurance fund there is would be grossly insufficient to make depositors anywhere near whole and the defaulting governments wwould be in no position to provide any backstop whatsoever.

You think there is social unrest now? Wipe out bank depositors in all the PIIGS and you ain't seen nothing yet.

This is the "elephant in the room" that no one notices or talks about.

Thu, 11/03/2011 - 15:32 | 1842797 wombats
wombats's picture

The FED and ECB are probably unlikely to allow anything like this to happen.  They didn't setup those fancy printing presses to be decorations.

If necessary they will print as much as it takes.  Inflation is vastly preferable to TPTB than allowing defaults.  No matter how bad inflation may get they can always create more digital euros or dollars.

Thu, 11/03/2011 - 15:42 | 1842826 Bam_Man
Bam_Man's picture

Ultimately, the respective Central Banks will wind up owning virtually the entire stock of debt of the hopelessly bankrupt sovereigns. That is clearly the path we are on. Hard defaults and banking system liquidations will not even be considered, for the reason I stated above (among others).

Thu, 11/03/2011 - 15:39 | 1842817 sabra1
sabra1's picture

like the 53T transfered by BAC to the FDIC?

Thu, 11/03/2011 - 15:46 | 1842839 Dick Darlington
Dick Darlington's picture

Well, the resulting inflation from massive printing WILL wipe out depositors too and WILL result in social unrest.

Thu, 11/03/2011 - 17:00 | 1843165 RichardENixon
RichardENixon's picture

It will come down to a situation of damned if they do and even more damned if they don't. I think they will decide that  printing will be the lesser of the damnations.

Thu, 11/03/2011 - 15:30 | 1842782 docmac324
docmac324's picture

For the powers0that-be to remain where it is, , a zero sum is their only solution.  Anything else, and Oakland is nothing in comparison to what is coming.  When people do not get their dialysis, or their meds or start feeling real hunger, watch the hell out.

Thu, 11/03/2011 - 15:34 | 1842801 wombats
wombats's picture

As long as there is Dancing w/Stars or tabloid shows on the Kardashians or other distractions you are unlikely to see REAL revolt in America.

Thu, 11/03/2011 - 19:53 | 1843586 Great Dane
Great Dane's picture

'Skank'-ardashians!.... Get it right next time, k?

Thu, 11/03/2011 - 15:30 | 1842783 PEanal_yst
PEanal_yst's picture

Having just come back from China I am quite amazed at the lack of coverage of the Chinese property crash in the western media. It seems like everyday there is somehting on the news about the developers giving away huge discounts as they scramble for cash.  Major cities have probably tanked close to 10-15% and transactions largely bidless.  Mix this with the fact that municipal governments have levered up massively with land as collatoral and a massive shadow banking system fueled by private trusts, why it should send far more shivers down the backs of investors than what is going on in Europe. After all, everyone expects Europe to stagnant, but if China stalls, that'd make a huge dent in the growth premium of equity valuations. 

Strange world indeed. 

Thu, 11/03/2011 - 15:37 | 1842814 wombats
wombats's picture

Nobody in the west cares about China's economy.  As long as they continue to supply cheap crap to Walmart nobody cares what else may be going on there.

Thu, 11/03/2011 - 18:46 | 1843467 ToddGak
ToddGak's picture

Instead of "supply cheap crap to Walmart" you might want to say "supply cheap crap to American consumers."  Walmart is mererly the middle man, if people boycotted Chinese goods, Walmart and their ilk would be immediately bankrupted.  Unfortunately we've gotten used to $10 polo shirts so we are dependent on the cheap stuff like a junkie for heroin.

Thu, 11/03/2011 - 16:55 | 1843144 bahaar
bahaar's picture

There's been news about China real estate crash almost everyday in Western Media until the Greek tragedy hit (once again).  That said China has enough reserves to paper over 10-15% crash.

Thu, 11/03/2011 - 17:53 | 1843314 Fake Jim Quinn
Fake Jim Quinn's picture

No they don't. Their banks are over extended beyond the reserves. Even if they could cover most of it, there won't be any left to build ghost cities, rails to no where, and ghost shopping malls. That means the commodity engine which supports USA Midwest, Australia and Canada will have cardiac arrest. And the German capital goods and fancy auto export business will be hammered, dragging down Europe's engine. Germany is already slowing or in recession because of the slowing Chinese machine. China's incredible growth was put on steroids by credit expansion. All credit expansion booms end, well you already know the ending

Thu, 11/03/2011 - 16:55 | 1843146 bahaar
bahaar's picture

There's been news about China real estate crash almost everyday in Western Media until the Greek tragedy hit (once again).  That said China has enough reserves to paper over 10-15% crash.

Thu, 11/03/2011 - 18:12 | 1843280 CTG_Sweden
CTG_Sweden's picture


Having just come back from China I am quite amazed at the lack of coverage of the Chinese property crash in the western media. It seems like everyday there is somehting on the news about the developers giving away huge discounts as they scramble for cash.  Major cities have probably tanked close to 10-15% and transactions largely bidless.  Mix this with the fact that municipal governments have levered up massively with land as collatoral and a massive shadow banking system fueled by private trusts, why it should send far more shivers down the backs of investors than what is going on in Europe. After all, everyone expects Europe to stagnant, but if China stalls, that'd make a huge dent in the growth premium of equity valuations. 

Strange world indeed. 


I am not sure whether the scale of the real estate bubble in China is exaggerated on various web sites. But apparently there is some property which is hard to sell despite a huge demand for housing. The problem seems to be that many apartments are too expensive for the consumers. I think that it should have been possible to increase wages and the average productivity in the Chinese economy more than they have done over the past 5 or 10 years. I also suspect that there are people who know what should be done. But in order to make things happen it is always the right people, the decision makers, who has to realize what should be done. And decision makers are not always decision makers because they come up with better solutions than others but because they are better than others on the combined package of talent and other factors that make a person to rise to the top.

This is not just a problem in governments but also in large corporations. I think that a large part of the success of Apple can be attributed to the fact that a true product guy was the leader of the companies. Presidents, CEO:s and chairmen are usually very bad on products. Therefore, Apple got an edge in a very unique respect.

I remember back in early 1996 when I discovered an easy way for a large multinational company to save about $1 billion per year. Since my idea was strongly related to product the top management had no clue. Still, I managed to persuade the chairman to take a look at the problem. The CEO called me and a vice-president interrogated me for 2 hours. But then nothing happened since my solution would have made their former decisions look really stupid. The new CEO which took over a couple of years later probably realized the problem since he sold the subsidiary where he could have cut costs. That was probably a really smart move. But they could probably have got a better bid from other investors if they had cut costs before they sold the subsidiary.

Well, I guess that was a little off-topic.

One problem in China is probably that most investors can´t do anything by themselves to increase the number of people with sufficient incomes. And those who realize what should be done can´t make any money on that and they also realize that it would be hard to persuade any decision maker about what should be done. 

Edit: By the way, can you name a few big real estate companies in China which have more unsold property in their balance sheets than other companies? And which ones have a large government or local government owner stake? 

Thu, 11/03/2011 - 21:17 | 1843682 Seer
Seer's picture

No matter how you slice it it's UNSUSTAINABLE.  Further, increasing wages WON'T solve a fucking thing!  The numbers of people working that could benefit and therefore apply said benefits in the form of real estate purchases just aren't enough!  Oh, and who the hell is China going to sell to when everyone has declared insolvency?

Other than some different coloring, this is the exact same over-extension of credit fiasco that the rest of the world brought upon itself.

If you can't control your expenses then it really doesn't matter how much you earn.

Fri, 11/04/2011 - 18:17 | 1846778 CTG_Sweden
CTG_Sweden's picture

No matter how you slice it it's UNSUSTAINABLE.  Further, increasing wages WON'T solve a fucking thing!  The numbers of people working that could benefit and therefore apply said benefits in the form of real estate purchases just aren't enough!  Oh, and who the hell is China going to sell to when everyone has declared insolvency?

Other than some different coloring, this is the exact same over-extension of credit fiasco that the rest of the world brought upon itself.

If you can't control your expenses then it really doesn't matter how much you earn.


Of course wages in China can not rise unless the average productivity also rises. And by that I don´t mean producing toys and shoes more efficiently but rather produce things that can be produced more efficiently than toys and shoes.

Thu, 11/03/2011 - 15:32 | 1842788 SDRII
SDRII's picture

The mouthpieces at CNBC saying the US is leaning on the Germans to change the ECB mandate. Liesman got his talking points this morning that Draghi was "sounding" more and mroe like the Bernanke stance re inflation. Few days ago Merkel reminded Draghi that the ECB mandate was price stability. Stark and Weber knew exactly what was coming and the 25bps this am just punctuates the point.  Meanwhile the US will begin to focus on its debt to GDP in the middle of the decade per G20 draft. Cant make this stuff up

Thu, 11/03/2011 - 16:11 | 1842923 reload
reload's picture

EVERYBODY is leaning on the ECB and the Germans `to change their mandate` and become a printer extraordinaire. Mr Market is behaving to me as if its a case of when, rather than if, this will happen.

And I agree, thats whats going to happen. Mr D will put his Italian loafers up on his new desk and get on with doing Gods work. Help out his buddies and damn the consequences.

Thu, 11/03/2011 - 15:31 | 1842789 zebrasquid
zebrasquid's picture

Christmas has got to be bleak this year.  Last year there was some of the "let's have some fun, we deserve it after two bad years", it's more like the feeling you get as your car is skidding on ice.  No control, frozen in dread, happening so fast you believe it must be a bad dream....

That mindset in a 70% consumer spending "economy" and you are left with the idea that you should be buying the hell out of XRT puts..

Thu, 11/03/2011 - 15:36 | 1842811 Ruffcut
Ruffcut's picture

I don't give a shit,I'll have a great christmas. Socks and ammo is all I need. ANd a few trusted souls that know what the fuck  is going on.

Robo will have a Lulu of a christmas, eating TV dinners with mom.

Thu, 11/03/2011 - 15:32 | 1842795 oogs66
oogs66's picture

yes, it seems horrible, and is only getting worse

Thu, 11/03/2011 - 15:32 | 1842798 Manthong
Manthong's picture

And the market just keeps going up.

Something is very rotten in Denmark.

Thu, 11/03/2011 - 15:34 | 1842800 undercover brother
undercover brother's picture

Whatever, every single sell off is bought and reversed. bernanke has mandated that stocks go up and up and up and up. .....and until they no longer do that, and people actually feel some pain, you really don't have a shot at convincing anyone that anything bad is going to happen any time soon.   for the masses it will be too little too always.

Thu, 11/03/2011 - 15:34 | 1842802 bernorange
bernorange's picture

gold bitchez?

Thu, 11/03/2011 - 15:36 | 1842810 apberusdisvet
apberusdisvet's picture

The cradle of democracy is now going to discover that the fascists are in control.  "referendum?"; you don't get no sticking referendum.  We own you sheeple".

As for America: the middle class will disappear within 3 years; the final shearing will commence after the 2nd Amendment is overturned.

Thu, 11/03/2011 - 16:57 | 1843153 bahaar
bahaar's picture

Bull.  America will reinvent itself.

Thu, 11/03/2011 - 21:20 | 1843686 Seer
Seer's picture

Just click those heels togeher! (no, I wasn't one of the red flaggers)

Thu, 11/03/2011 - 15:37 | 1842813 Dick Darlington
Dick Darlington's picture

Thanks for a great article! It's guaranteed The Institution of Zee Price Stabeeleetee now headed by an ITALIAN EX-GOLDMANITE will blink and start stelth monetization. It's after that when it gets interesting. Already two germans have left from ECB because of "sterilized" SMP-program. That's a clear warning shot. When ECB will start the printers in size, Germany will react. Did u watch the ECB press conference today? One German reporter started asking nasty guestions abt the implications of monetization to zee price stabeeleetee...

Thu, 11/03/2011 - 15:40 | 1842818 bobm2626
bobm2626's picture

Michael Krieger Explains Why It Takes Only 5 Minutes

Michael Krieger Explains Why It Takes Only 5 Minutes and common sense.

Fixed it.

Thu, 11/03/2011 - 16:29 | 1843016 WonderDawg
WonderDawg's picture

Gave you a down arrow for attempting to "fix" a quote that didn't need "fixing". If I could give another down arrow for use of a fucking tired old blog comment device, I would.

Thu, 11/03/2011 - 17:37 | 1843262 GoinFawr
GoinFawr's picture

there, I undertook that action for ya

Sun, 11/06/2011 - 12:08 | 1849808 bobm2626
bobm2626's picture




Sun, 11/06/2011 - 12:13 | 1849809 bobm2626
bobm2626's picture




Thu, 11/03/2011 - 15:40 | 1842820 SWRichmond
SWRichmond's picture

I almost copied this and emailed it to my friends, but it would just hurt them and make them mad at me.


Thu, 11/03/2011 - 15:43 | 1842830 wombats
wombats's picture

Print copies and distribute to the protesters at Brown's Island...if there are still any left.

Thu, 11/03/2011 - 16:55 | 1843143 equity_momo
equity_momo's picture

Foresight is a lonely island. A beautiful desert island with plenty to sustain yourself. But it will be invaded and raped bare by those same idiots who arent listening to you now. And they will not remember a word you said amd proclaim they found the islans first.
You need to find a more remote island. Or welcome the dieoff. Or both.

Thu, 11/03/2011 - 17:33 | 1843190 GoinFawr
GoinFawr's picture

-Feeding Evil-

"...Some friends are safe to leave behind,

Giving peace enough to hide behind.

Needlessly weak,

A waste in real time...

...A truer beauty deep inside. Justice of the darker kind." -Lou Barlow

Thu, 11/03/2011 - 21:23 | 1843694 Seer
Seer's picture

I'm slowly tossing folks overboard.  They've been warned, and if they have not got it by now...  I've got to expend energy as though the future depends on it.

Thu, 11/03/2011 - 15:40 | 1842823 centerline
centerline's picture

Good stuff MK.

I have been pointing it out for some time now that it is all about cash flow.  No different on a soverieng level than it is for a primary dealer or a household.  There is no magic that makes it any different.  Just more layers of complexity.  Games, games and more games keep the system running only so long.  Until somewhere in the chain we experience a liquidity shock big enough to create a domino effect.

I agree that we are most likely faced with a binary set of outcomes.  Deflationary wipte-out or inflationary crack-up boom (then the deflationary crash afterwards).

Alternative outcomes include a long, miserable slog over several decades into a new, lower standard of living (maybe terminal decline) - and war.  I dont give much creedance to the "long slog" outcome simply because there are too many competing global interests at play.  Too many egomaniacs and sociopaths in positions of power.  Therefore, war is more likely.  Nonetheless, the long slog outcome is what TPTB are trying to engineer at this point.  I am certain of it.

On the consumer side, I think people are starting to get nervous.  Kind of like animals sensing that something is wrong in the forest.  The relentless pace of life has reached a fever pitch and the people who are still running the rat race are starting to burn out.  The same people, I believe, are quickly nearing the end of the proverbial rope in terms of being able sustain a lifestyle that even resembles what we had a few years ago.  Minor deleveraging is easy.  Each step down though gets harder and harder.  The rat race builds a sense of entitlement to luxuries.  Nonetheless, the deflationary feedback loop is still firmly in place at this time.

Thu, 11/03/2011 - 21:00 | 1843662 Great Dane
Great Dane's picture

I believe we have to look at the longer term objectives of the PTB in that entry level jobs in technology has far exceeded earth's citizenry and it is time for a major global culling. Far too many people are demanding the benefits of tech (& resources) in all it's forms, while having not nearly the skills to equate into a 'net producer' in a new world order social system.  Millions, dare I say Billions, lack the aptitude needed to advance the 'earth's I.Q.', and in minds of the PTB, those 'non-producers' are essentially dragging the averages down.  All wealth is being consolidated to finally end the old world sovereign ideals, and the 2 main questions to ask is which 'farm-animals' have to go and which to keep, and how soon will the blatant dominoes begin to fall in earnest.

Either they can successfully filter the two sets of animals from each other and bring on the end game, or completely pull the plug and the entire game is over, all over.  They won't give up after 2 centuries of effort.

Here is an interesting movie preview from 1989 and considering that so many people are becoming sterile, and birth rates are down 30% on the west coast due to fukishima fall-out, and the all-seeing eye is obviously placed on the makes me wonder.

Thu, 11/03/2011 - 21:36 | 1843711 Seer
Seer's picture

It has to do with unsustainable practices.  Too MUCH consumption.  Bad news for economies that are measured and revered for their consumption.

Production is like revenue.  If you cannot control your consumption (expenses), then it doesn't really matter how much you produce (you'll be consuming it all, and then some, up to a point).

As for an Earth IQ, well... the earth just is, it doesn't measure anything, it's just the medium that energy circles.

Oh, and putting resources in parenthesis instead of technology is a big mistake.  Your ordering is backwards: if you can't get the fundamentals straight then you cannot get anything straight.  Technology is a PROCESS, it cannot operate without the use of physical resources.

Thu, 11/03/2011 - 22:48 | 1843832 Great Dane
Great Dane's picture

I used the word tech out of place.  Too many are demanding the 'standards' of the western nations (ipods, better food, infastructure) and the PTB will not allow new growth when population reduction is the objective.


What I meant concerning earth's 'I.Q.' was the culmative average of it's inhabitants, and in that too many are too far behind the entry level into the productive economy, meaning the positions available in a global socialist vision.  Think Brave New World.  I believe Eugenics was only concealed and not concluded and the end of WW2.

Fri, 11/04/2011 - 05:01 | 1844222 green888
green888's picture

Mother Nature bats last

Thu, 11/03/2011 - 15:41 | 1842824 Mark123
Mark123's picture

From the WSJ:

Banks issued 5.4 million new credit cards to subprime borrowers through June, up 64% from a year earlier, according to the most recent data from credit bureau Equifax. The company defines a subprime borrower as having an origination risk score--a proprietary definition--of less than 660.

From Equifax:

According to the most recent monthly report, there were 854,800 auto finance company-originated loans in July 2011 vs. 581,300 for July 2009. Auto loans to subprime borrowers now account for 38.5% of all auto loan originations for auto finance companies and 17.6% for banks and credit unions – numbers that are quickly approaching pre-recession levels. By contrast, 820,200 loans were originated by banks and credit unions for the same period in July 2011 vs. 832,000 for July 2009. (a decrease of less than 2%)

Thu, 11/03/2011 - 15:45 | 1842835 wombats
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Free $ for the masses?  Could the FED be encouraging a back-door "stimulus plan"?

Thu, 11/03/2011 - 15:49 | 1842847 sabra1
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get as many credit cards as possible, highest credit limit for each, buy nothing but gold, bury it, never make a payment! you got the gold, they don't get the cash!!!

Thu, 11/03/2011 - 21:52 | 1843737 Seer
Seer's picture

I get the sentiments, but know this, I will not do business with anyone who has done stuff like this.  People do not have any reason to play ignorant about being offered "free" money.  If you intentionally don't meet your contractual obligations because you don't like someone/some entity then why would I trust dealing with you?

I want people to evolve.  Your "strategy" isn't evolving, it's no more different than the greed demonstrated by the likes of Jamie Dimon.

Thu, 11/03/2011 - 15:45 | 1842836 lolmao500
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Already a classic :

Max Keiser: 'Greece run by financial terrorists'


Thu, 11/03/2011 - 15:46 | 1842837 bill1102inf
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If you still have credit, go ahead and max out your cards and buy gold.  When the new currency is issued, you will actually be able to convert it.

Thu, 11/03/2011 - 15:47 | 1842840 Odin
Odin's picture

By this point they're definitely running scared... G Pap almost fucked over there consolidation this week... If they can't continue to manipulate OWS, and these people start to learn more about the Bankster Cabal, then they are fucked... If people really start to acquire phyzz, they are fucked...China is already pissing them off... If China decides to publicly blow the lid on them, they are fucked...  They have never been closer and yet further away from their main goal.

Thu, 11/03/2011 - 15:51 | 1842854 sabra1
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if you do some research, you'll find out that G-Pap is part of the IMF!

Thu, 11/03/2011 - 15:49 | 1842841 LouisDega
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Like Alexander the great, They will cry when there are no more worlds to conquer. Good luck gents . Stay on the road. Keep clear of the moors


Thu, 11/03/2011 - 15:50 | 1842851 wombats
wombats's picture

Alexander the Great died shortly thereafter too.

Thu, 11/03/2011 - 15:53 | 1842867 Sudden Debt
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And all he had to do was look west and start with Italy to take the rest of Europe.




Thu, 11/03/2011 - 18:27 | 1843401 gmj
gmj's picture

Italy wasn't an attractive prize until much later.  Just a bunch of ragged peasants fighting with each other over farmland.  Northern Europe was barely civilized.  Persia was a dangerous enemy and very wealthy.  Alexander went the right way.

This is fascinating:

Note that northern Europe isn't even mentioned until 105BC.

Also note that the 99%/1% battle was in full song back then.  "Tiberius Gracchus elected tribune in Rome and proposes land reform; Murdered by aristocratic opponents"   "Gaius Gracchus proposes price controls in Rome, sparking aristocratic opposition...Gaius Gracchus killed during insurrection"    "Saturnus and Glauca propose price controls in Rome; Both are mudered with support of Gaius Marius"

As long as human nature remains the same, history will repeat.

Thu, 11/03/2011 - 21:54 | 1843738 Seer
Seer's picture

Capitalism has no more outlets to dump its excesses.

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