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Presenting The Only Beneficiary From Record Global Leverage

Tyler Durden's picture




 

If you thought that the siren-call from the sell-side for more QE, more credit, and more monetization was lowest-common-denominator thinking on how to fix the Keynesian end-game, think again. As Morgan Stanley shows, it is much more about self-preservation (bonuses) as the extreme correlation of banker's relative pay to Debt/GDP clearly shows the reliance on the perpetuation of the credit super-cycle if 'lifestyles' are to be maintained. As MS notes, the rise of relative pay in the finance sector was highly correlated with the expansion in economy-wide leverage. A similar rise had occurred in the credit boom that culminated in the Great Depression. The deleveraging phase that followed that bust went hand-in-hand with declining relative compensation in finance, as the clearest beneficiaries of the credit super-cycle, credit providers (and implicitly their employees) clearly face the biggest structural problems in a deleveraging phase.

 

As Morgan Stanley's Gerard Minack goes on to note, "the rising relative pay of finance has been
correlated with the growing income inequality, at least in the US (Exhibit below). I am not implying that the finance sector was the sole reason why inequality increased – several factors were at play – but likewise it did contribute to this trend."

 

 

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Thu, 02/02/2012 - 11:40 | 2119972 Cdad
Cdad's picture

More pink slips in the useless and criminal financial services industry, please.

Thu, 02/02/2012 - 12:09 | 2120098 Zadok
Zadok's picture

Just a quick checkup on the real state of Retail and Food Service sales.  Green and blue lines are different strengths of Kool-Aid, Red line is deflated using 1980 BLS statistical formula.  

Trend: Steep down trend un-interupted with minor and statistically insignificant deviations about the mean decline.  Situation normal and unaltered.  

http://i1140.photobucket.com/albums/n579/bearasaur/January%20Census%20Da...

Thu, 02/02/2012 - 16:04 | 2121028 flattrader
flattrader's picture

It seems like every time I drive down a major secondary artery, I notice that yet another restaurant has gone out of business.  Most are locally-owned, occasionally a chain closes its doors.

It's a high failure rate business to begin with and I have to question the sanity of anyone opening a new place in this environment.

Thu, 02/02/2012 - 14:18 | 2120662 spastic_colon
spastic_colon's picture

Per bloomberg tv barclays capital planning 25-30% pay cut for bankers

Thu, 02/02/2012 - 11:45 | 2119981 Cognitive Dissonance
Cognitive Dissonance's picture

Why does Dallas Fed president Richard Fisher own $1,000,000 in paper Gold? I though they didn't believe in the barbarous relic......albeit only a (worthless) paper promise?

 

Richard Fisher, president of the Dallas Fed, is one of the richest of the 12. He accrued a portfolio of at least $21 million after working 22 years in the financial industry as a banker, stock broker and hedge fund manager.

Fisher owns more than 7,000 acres in Texas, Georgia, Iowa and Missouri, in addition to more than $1 million in SPDR's Gold Trust, and at least $50,000 in platinum and uranium each.

http://money.cnn.com/2012/02/02/news/economy/federal_reserve_stocks/index.htm?iid=HP_LN

Thu, 02/02/2012 - 11:46 | 2120003 LawsofPhysics
LawsofPhysics's picture

"Fisher owns more than 7,000 acres in Texas, Georgia, Iowa and Missouri, in addition to more than $1 million in SPDR's Gold Trust, and at least $50,000 in platinum and uranium each."

Do as they do ignore what they say.

Thu, 02/02/2012 - 11:57 | 2120043 Dr. Engali
Dr. Engali's picture

I wonder how much physical he owns.

Thu, 02/02/2012 - 14:00 | 2120597 Sandmann
Sandmann's picture

Richard Fisher married very, very well

http://www.cox.smu.edu/web/collins-center/james-m-collins   Father-in-law Jim Collins

 

http://www.nndb.com/people/482/000166981/

 

The family business was Fidelity Union LIfe Insurance of Dallas acquired by Allianz SE of Munich in 1979

Thu, 02/02/2012 - 11:56 | 2120040 GeneMarchbanks
GeneMarchbanks's picture

Wow.

Wonder why he 'invests' that way?

Thu, 02/02/2012 - 12:18 | 2120135 Dr. Engali
Dr. Engali's picture

To me the real question is: Why would he let anybody know? Unless he is sending a signal.

Thu, 02/02/2012 - 12:21 | 2120157 Rainman
Rainman's picture

FOIA suit by Bloomberg

Thu, 02/02/2012 - 13:11 | 2120391 Bananamerican
Bananamerican's picture

"Overall, the financial disclosures don't necessarily offer a complete picture of each Fed member's total worth.


Dudley, for example, at first appears to own a minimum of $8.6 million in assets. But after the Fed also said Dudley's $1.45 million in TIPS amount to less than 5% of his assets, it's clear his portfolio is worth at a minimum, $29 million"

are all the FED chairs active "boaters" too?....

Thu, 02/02/2012 - 13:16 | 2120416 DavidC
DavidC's picture

CD,
This would be for the same reason that the MPs here in the UK who most espouse public education send their children to private schools.

DavidC

Thu, 02/02/2012 - 11:43 | 2119986 CitizenPete
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They are worth every inflated zinc penny.  (Just don't pay them in PM)

Thu, 02/02/2012 - 11:46 | 2119990 LawsofPhysics
LawsofPhysics's picture

Ah yes, the margins for companies that push paper continues to look great, while the margins for those that actually manufacture/grow and deliver a real product continue to get crushed.  We all know how this will turn out.  Hedge accordingly.

Thu, 02/02/2012 - 11:45 | 2119999 Dermasolarapate...
Dermasolarapaterraphatrima's picture

The record high billion dollar bonuses are trickling down to the masses as you write.

Thu, 02/02/2012 - 11:45 | 2120000 dcb
dcb's picture

been saying this for three years, that the distinction in society is determined by those whose incomes increase with leverage, Vs those with real incomes, this is what causes the wealth inequality, which is promoted by the federal rewserve. I even said it on this site two days ago with the papaer from the san fran fed on how it doesn't effect unemployment. tried to explain it to krugman so many times I can't count. this is why tax increases on this segment are deserved, because they benefit so much from this federal reserve tax payer subsidy.

Thu, 02/02/2012 - 11:45 | 2120001 prains
prains's picture

CHART OF THE YEAR and it's only Feb

Thu, 02/02/2012 - 11:54 | 2120024 RobotTrader
RobotTrader's picture

There are more "beneficiaries":

 

Anybody who was fully invested in consumer discretionary stocks like SBUX, CMG

Or REITs like SPG made "vast fortunes" the last 3 years.

Thanks to Ben Bernanke, the Greatest Central Banker of all time.

Thu, 02/02/2012 - 11:55 | 2120031 Cdad
Cdad's picture

Robo...coming through with today's top tick.  Atta boy.

Thu, 02/02/2012 - 12:11 | 2120086 SheepDog-One
SheepDog-One's picture

'Holders' of stocks are NEVER 'beneficiaries' at all! Not until theyre sold....until then its all just 'Vast Fortunes' in theory, and all of it can vanish in an instant. 

Thu, 02/02/2012 - 12:51 | 2120297 dcb
dcb's picture

Not as much as you think, because those that benefit from the leverage (it would include ceo pay tied to stock prices) are alos the ones who can buy most of the assets (i believe the us figures are 10% own 40% but n9ot sure), hence they benefit times two the vast majority own little or no assets, and are net loosers as the gains they make don't make up for the loss of purchasing power.

 

I used to have the assett distrubution numbers easily handy, sorry not now. the vast majortiy of IRA, contain little or no money in relative terms.

Thu, 02/02/2012 - 12:55 | 2120320 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Don't diss RT because he points out the emperor has no clothes. It is a pile of sh*t and everyone with any sense knows it.

Thu, 02/02/2012 - 11:57 | 2120041 mktsrmanipulated
mktsrmanipulated's picture

any rumors causing this piece of shit euro rally

Thu, 02/02/2012 - 11:58 | 2120051 Cdad
Cdad's picture

Yep.  Greece will be fixed again...in a matter of hours...or days...

Thu, 02/02/2012 - 12:01 | 2120057 mktsrmanipulated
mktsrmanipulated's picture

where did you see that

Thu, 02/02/2012 - 12:08 | 2120093 SheepDog-One
SheepDog-One's picture

Yep Cdad, its all gonna be good, any minute now...

Thu, 02/02/2012 - 11:58 | 2120049 mktsrmanipulated
mktsrmanipulated's picture

other than pinning the 1.32 for tomorrows weekly option expire

Thu, 02/02/2012 - 12:09 | 2120103 SheepDog-One
SheepDog-One's picture

Look at all these trillions upon trillions theyve printed, yet Euro and dollar are all about even thru the whole thing. What a joke.

Thu, 02/02/2012 - 12:01 | 2120058 Shizzmoney
Shizzmoney's picture

Just sign up for an account at FirstCityWideChange bank:

"All the time, our customers ask us, 'How do you make money doing this?' The answer is simple: Volume. That's what we do."

http://www.hulu.com/watch/4253/saturday-night-live-first-citywide-change-bank-2

http://snltranscripts.jt.org/88/88achangebank2.phtml

http://www.hulu.com/watch/4258/saturday-night-live-first-citywide-change-bank-1

Thu, 02/02/2012 - 12:14 | 2120119 unrulian
unrulian's picture

rumors?...really...who cares

Thu, 02/02/2012 - 12:42 | 2120257 AndrewCostello
AndrewCostello's picture

Ignore what they say, and watch what they do.

 

The Central Banks and Rich are buying up physical gold and silver as fast as they can, while telling the public how they consider them "barbaric relics".  That alone should tell you that a gold standard and revaluation of gold is coming.

The peasants will be caught with worthless paper, while the rich shall walk away with gold that is worth between $10,000 and $20,000 an ounce.

 

 

Read:

http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref

Thu, 02/02/2012 - 13:00 | 2120340 dcb
dcb's picture

can anyone explain the tumble in crude,

Thu, 02/02/2012 - 13:02 | 2120346 dcb
dcb's picture

meaninwhile the long bond isn't dropping so I detect the hand of the fed on long term interest rates, because they should have been going up as th edollr has been dropping. I hate this fixed market.

Thu, 02/02/2012 - 13:29 | 2120474 dcb
dcb's picture

regarding the euro and the algo's since most put their stop loss on the day before, the computers pick up on this and trigger and then buy, you have to take the line of lowest lows, and then draw a paralell line from highest highs. that is the "trading line"

if you trade und you will see this line at higher line got touched at 11:00 AM.  now if you trade this line and things turn against you you loose less. be aware though udn hasn't broken the speed line, but the daily macd is going the right way with currencies and the daily macd works rather well in currencies.

the algo's trade sell at the this top line, whic is why over and over you will see a drop, then the next day up, but along the line of lower highs, and the next day drop tp a lower low.

which means the euro which closed at the open yestterday, and open lower and finsih higher that yesterday (but hit a lower high of the day)

Thu, 02/02/2012 - 13:41 | 2120515 Stax Edwards
Stax Edwards's picture

Thanks TD & MS!

Thu, 02/02/2012 - 13:52 | 2120561 AldoHux_IV
AldoHux_IV's picture

Banks are in the business and profit from destroying our economy with leverage.

Thu, 02/02/2012 - 13:57 | 2120584 spazz
spazz's picture

But class warfare is evil and really just about envy, right?!?

Thu, 02/02/2012 - 18:13 | 2121444 sidkof
sidkof's picture

my buddy's step-sister makes $68/hour on the internet. She has been without work for 8 months but last month her paycheck was $7255 just working on the internet for a few hours. Go to this web site and read more.. LazyCash9.com

Thu, 02/02/2012 - 18:34 | 2121491 ucsbcanuck
ucsbcanuck's picture

Das ist porn? 

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