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Why Corporate Balance Sheets Just Don't Matter In The New ZIRP Normal

Tyler Durden's picture


By now everyone knows that Chesapeake is a slow motion trainwreck: whether it is internal management issues, which eventually will culminate with the long overdue termination of the company's head (something the company had much control over and could avoid, but didn't, and should result in the sacking of the entire board for gross negligence), or plunging gas prices (something it had far less control over, but could have hedged properly, yet didn't), what is absolutely certain is that the firm's cash flow just isn't what it used to be. In fact, according to some, it is quite, quite negative. What, however, people do not know is that under ZIRP, when every basis point of debt return over 0% is praised, and an epic scramble ensues among hedge for any yielding paper no matter how worthless, the balance sheets of companies just do not matter. In other words, for companies that have massive leverage, high interest rates, negative cash flow, which all were corporate death knells as recently as 2008, the capitalization structure is completely irrelevant. We said this a month ago when we cautioned, precisely about Chesapeake, that "to all those scrambling to short the company: beware. CHK has a history of being able to fund itself with HY bonds and other unsecured debt come hell or high water. If and when the stock tanks, the short interest will surge on expectations of a funding shortfall. Alas, courtesy of the Fed's malevolent capital misallocation enabling, we are more than confident that the firm will be able to issue as much HY debt (unsustainably at 10%+, but that is irrelevant for the short-term) as it needs, crushing all short theses. What this means, simply, is that anyone who believes traditional fundamental analysis will and should work in the CHK case is likely to get burned." Sure enough, we were again proven right: Chesapeake just announced, following today's epic drubbing, that it is refinancing its secured debt facility (with its numerous restrictive covenants) with $3 billion in brand new Libor+7.00% unsecured paper (courtesy of Goldman and Jefferies). In doing so, CHK just got at least a one year reprieve.

The full just released PR:

Chesapeake Energy Corporation Enhances Financial Flexibility with $3.0 Billion Unsecured Loan to Be Repaid from 2012 Asset Sales


Chesapeake Energy Corporation (NYSE:CHK - News) today announced it has entered into a $3.0 billion unsecured loan from Goldman Sachs Bank USA and affiliates of Jefferies Group, Inc. The net proceeds of the loan, after payment of customary fees and original issue discount (if any), will be utilized to repay borrowings under the company’s existing corporate revolving credit facility.


The new facility, which ranks pari passu to Chesapeake’s outstanding senior notes, matures on December 2, 2017 and may be repaid at any time this year without penalty at par value and carries an initial variable annual interest rate through December 31, 2012 of LIBOR plus 7.0%, which is currently 8.5%, given the 1.5% LIBOR floor in the loan agreement. During the remainder of the year, Chesapeake plans to complete asset sales totaling $9.0-$11.5 billion and intends to use a portion of the proceeds from these asset sales to repay the loan. Chesapeake has received strong interest from prospective buyers of its Permian Basin asset sales process and its Mississippi Lime joint venture process, and the company expects to complete these two transactions in the 2012 third quarter.


Management Comments


Aubrey K. McClendon, Chairman and Chief Executive Officer, said, “This short-term loan from Goldman and Jefferies provides us with significant additional financial flexibility as we execute our asset sales during the remainder of 2012.


As previously announced, Chesapeake’s business strategy is evolving in 2012 from the unconventional resource play identification and leasehold capture strategy of the past seven years to a strategy now focused exclusively on developing the 10 core plays in which we have built a #1 or #2 position and on continuing our transition from natural gas to liquids, reducing capital expenditures and paying down long-term debt. We believe Chesapeake has built the nation’s best collection of E&P assets, and we are 100% committed to delivering on the very substantial growth and value embedded in these assets for our shareholders through a relentless focus on developing our 10 core plays.”

Reading between the lines, what just happened, is that the Fed, due to its policy of destroying the cost of capital as an indicator of corporate health, forced lenders to agree to less protections in exchange for preserving a comparable cash interest stream from Chesapeake. What it also did, is allow CHK to engage in even more stupid behavior as the elimination of secured creditors as a class, means the company will no longer have to preserve EBITDA and Free Cash Flow over a certain level, nor will it have to engage in prudent hedging.

The end result of course is that CHK will merely do more of the same kind of stupidity that dragged its stock down to 1 year lows today, but not before another vicious snapback as shorts expecting a prompt burial, will be forced to cover. In the meantime, the firm will engage in even more equity destroying behavior, until one day it no longer can refi its debt (maybe they can get some pointers from Europe on how to deplete the collateral value of their assets in record time). But that will happen after some time: first it will refi all its HY bonds with in kind bonds having a longer maturity but higher interest, until little by little the entire estate if bled dry of all asset value and is paid out in the form of interest expense to the firm's creditors.

It also means that since the firm will preserve its inefficient production profile, much more natgas than equilibrium will be pumped out of the ground, pressuring the overall natgas price lower, for longer, than in a normal world, free of ZIRP... and of Bernanke.

Then, when the CHK bankruptcy finally does come, it will be straight to Chapter 7, do not pass 11, full blown liquidation, and zero recoveries for anyone as there will be absolutely no salvageable asset value left in this shell of a companies that was just "Greeced" for the benefit of its creditors. Finally, do not be surprised to see Goldman and Jefferies refi the firm's entire balance sheet - all that means is that the two investment banks are progressively stealing more and more value from equity, until one day, inevitable, they are also the DIP lenders.

Thank you Fed.


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Fri, 05/11/2012 - 21:16 | 2419112 NewThor
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Fri, 05/11/2012 - 21:48 | 2419157 vast-dom
vast-dom's picture

I've been commenting for well over a year here that funduhmentals have become absolutely irrelevant. Which is scary for obvious reasons....

Fri, 05/11/2012 - 22:40 | 2419267 Cdad
Cdad's picture

Not scary at all.  Look, just get yourself a super computer and set it up in the room next to where Duncan Niederauer takes his afternoon dump [when he is not otherwise pimping absolute crap Chinese IPOs].  After that, set up an RS feed from the Fed.  Then just start front running everything, especially when everything turns out to be today's session, in fact.

You'll be on your way to millionaire status in no time which will, apparently, cause you to regularly take pictures of your dinner table and twitpic the picture to the world, for some odd and unknown reason.  You will also be able to lay claim to being smarter than everyone around you even as you say incredibly stupid things on television because...well, because other people are also saying those same things.

Fair warning, however, you will also likely be prone to running and plunging off of cliffs without really knowing what you are doing, not unlike how snipe run into a paper bag where a flashlight beam is being pointed.  Also, you will have an affinity for shiny bobbles, even if said bobbles are directly in the path of moving buses and trucks.

Unless, of course, you like spending your time digging through the details to figure out the facts about a company.  Pffffft.   

Good luck, future little urban achiever.  

Sat, 05/12/2012 - 00:13 | 2419408 Yen Cross
Yen Cross's picture

I have a lot of respect for you" Cdad". I wrote your comment down. I'll break the post down as well.

  Attitude adjustments, on my behalf, are welcome.

Sat, 05/12/2012 - 01:32 | 2419471 slewie the pi-rat
slewie the pi-rat's picture

hey, Y/C!  xlnt!

i move that we rename this piece tyler'sOligarchianRhapsody

hoist the jib!

Sat, 05/12/2012 - 02:28 | 2419506 Yen Cross
Yen Cross's picture

Where in the heck have you been? Shit Slewie ! 

  I told ya I'm  "Singapore"!

Sat, 05/12/2012 - 00:21 | 2419416 Pure Evil
Pure Evil's picture

Wow, a whole new and improved dimension into corporate raiding. Not only is the enemy a fifth column at the highest level of the corporate executive structure, but they get to collect bonuses while they keep the fire burning using Goldman and Jefferies accelerant.

If they're lucky they can slowly constrict CHK until every drop of blood is squeezed from that stone.

Sat, 05/12/2012 - 00:44 | 2419433 Oh regional Indian
Oh regional Indian's picture

Excellent stuff CDiddy!


Sat, 05/12/2012 - 07:19 | 2419612 ToNYC
ToNYC's picture

ZIRP asset dis-covery is the Goldman and myrmidon sequel to "Invasion of the Body Snatchers". Aubrey McClendon is no Kevin McCarthy but the pods are filling the asset trunks of USA with the backtested-to-nofuture BurnedHanky.

Sat, 05/12/2012 - 10:02 | 2419676 Hulk
Hulk's picture

ZIRP == Keynsian endgame. The financial system is blinfolded, its interest rates tied behind its back and is at the end of the plank, of a sinking ship...

Fri, 05/11/2012 - 21:18 | 2419117 Gloomygus
Gloomygus's picture

Off topic entirely, but an entirely important topic - really the very most important topic of all:

Family photos - note the striking family resemblance.  It's an amazingly strong blood line.  If only we had such royalty here in the US we would not have so many problems.  Is there anyone we could nominate to just be King?

Fri, 05/11/2012 - 22:16 | 2419223 Western
Western's picture

Are you joking? How do the kings/queens of Siam at all resemble something we want in north america? I don't need or want a monarch.

Fri, 05/11/2012 - 21:21 | 2419119 I should be working
I should be working's picture

All I have to say is stay away from companies who buyback shares to meet EPS targets and finance it with debt. Growth fades, debt lasts forever...

Sat, 05/12/2012 - 00:53 | 2419444 Oh regional Indian
Oh regional Indian's picture

"Growth fades, debt lasts forever..."

A quotable Quote...well said.


Sun, 05/13/2012 - 12:10 | 2421057 I should be working
I should be working's picture

I was thinking specificallly of companies like: AZO, CHK, PM and TPX.  

They have become Frankenmonsters with negative shareholder equity (who knows what the equity of CHK is??).

For example, did TPX stock collapse by 50% last week because they failed to raise guidence?  Or is it because the hedge funds that ran the price through the roof understand that with negative shareholder equity, TPX can no longer finance buybacks by mortgaging it's future.

But, S&P rated TPX a strong buy, PM is a strong buy, Goldman told the muppets AZO is a strong buy.  A week ago the 'intellegent investor' in the WSJ recommended CHK, are you kidding me??

Analysts clearly do not care about shareholder equity, but if you are meeting a Wall St. CAGR estimate by increasing you debt burden how sustainable is that?  Although I have to admit, if you can find a company in the early stages of it destroying it's balance sheet to buy back shares you can make good money.  How do you think Eddie Lampert got so rich.  Anyone want to buy SHLD? They are in the early stages of destroying their stockholder equity.  21B in assets down from 28B 5 years ago with a reduction of their sharecount of 40%.

I'm sure Sears can solve all it's problems by buying back shares and selling debt to do it.

But Tyler is right, I would never short any of these companies, it is impossible to know how long until you run out of road.  And it's like stall speed on a plane, if you grow faster than your debt you take off and never run out of road.  I guess if you don't everyone who bought those BBB rated 3.75% bonds gets screwed, along with your shareholders...

Fri, 05/11/2012 - 21:24 | 2419121 Gloomygus
Gloomygus's picture

When the media is 98% captive, and when we are 98% captive, we resort to blogs. Thank the Lord for Zerohedge. Now nominate a King.

Sat, 05/12/2012 - 16:56 | 2420265 Umh
Umh's picture

Would you like to be King for a day?

Sun, 05/13/2012 - 21:19 | 2422477 Gloomygus
Gloomygus's picture

I'll dispense with the double-speak - does this man look like our President - does this man's parents look like they might be our President's parents:

Look at at them - they are the world's richest monarchy. Our President acknowledges schooling in Indonesia, which is immediately below Thailand. The very noise that is generated in response to me is confirming. Look at these people in wonder and sorrow:

Now read the wikileaks data on our state department and Thailand.

Disclaimer: all of the foregoing is speculative political speech expressed by a United States citizen, protected under the 1st amendment of the United States Constitution. These political opinions are being expressed inside the United States, specifically in Wisconsin.

Sun, 05/13/2012 - 21:29 | 2422485 Gloomygus
Gloomygus's picture

Additonally, the man in the photos, the crown prince of Thailand, has a father who was elevated to the crown after his elder brother was shot in England - the last man to see the Decedent alive was the current King of Thailand. I feel my initial satire could only have been wilfully misinterpretted by those intent on obfuscation.

Obviously I am the last person in this country who wants a King like Thailand's, and I say we're painfully close to already having one.

Fri, 05/11/2012 - 21:26 | 2419126 lizzy36
lizzy36's picture

Mispriced risk = horrible capital allocation.

In a normal capitalist system, a company like CHK, would be forced into Chapter 11. Consequences for its horrible financial mismangement. The Board of Directors, would all be held liable for gross neglience, and breach of fiduciary duty. And LESSONS would be learned.

Instead under this POS central planning, Companies like CHK get $3B of unsecured lifeline. Brilliant.

Fri, 05/11/2012 - 21:35 | 2419134 disabledvet
disabledvet's picture

you and the TD's assume "control" where no control exists. What should be pointed out is the classic "my trade was spot on until i was forced to exit" claptrap. In other words "we got big sharks in this Ocean" and "how common is it for a CEO (or an average everyday trader of course) to be played like he was a Stradavarius." And of course "that is our weakness." ALL of our weaknesses actually. "we really believe" don't we? But only God can tell us "if we are right or wrong" yes, yes? We have no control over such things...

Fri, 05/11/2012 - 21:38 | 2419136 Xkwisetly Paneful
Xkwisetly Paneful's picture

Gamblers fallacy?

If only I had done this instead of that somehow I could beat the house.

Also hysterical.

Fri, 05/11/2012 - 22:09 | 2419188 lizzy36
lizzy36's picture

That is exactly the problem with creates gamblers (with the houses money in many cases) instead of investors.

Why average investors are fleeing the equity markets en masse.

Sat, 05/12/2012 - 00:56 | 2419446 Oh regional Indian
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One read of Antal Fekete and the Knife-edge of falling interest rates and it's clear why ZIRP was a Shigawire on the world economy's neck. Intended, brutal and is clearly having the intended consequences.


Sat, 05/12/2012 - 02:02 | 2419490 slewie the pi-rat
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slewie had been saying that one of the intended consequences of FED policies is to finance theTreasury

the checks will be in the mail

Fri, 05/11/2012 - 22:08 | 2419183 lizzy36
lizzy36's picture

I can't speak to what TD thinks.

I can speak to what I think.

I don't believe God tells us anything, specifically if we are right or wrong. I assume religions (all) indoctrinate us to believe that crap, so we end up as sheeple. I also believe that religion is generally the way the elites control the masses, by keeping them divided based on religious affliation.

As to this world, Bernanke is far more powerful than some abstract notion of god. Bernanke knows exactly what he is trying to do with ZIRP and successive QE's. Force everyone out the risk curve and try to create "wealth effect" and hope it trickles down. The completly foreseeable consequences to ZIRP is everyone taking on more and more risky credit in an attempt to reach for yield. Mispricing of credit risk occurs, when credit has ZERO risk, like in a ZIRP enviroment. 

JPM got played like a "Stradavarius" by a number of Hedge Funds in the past month. Completely forseeable given that once a "whales" positions are exposed, they will be attacked. As Jamie Dimon said yesterday if there was one thing he should of being doing in the past month it was reading newspapers (they had the story of what was going on, not JPM's internal risk people).

I have been saying for the last 6 months, once natural gas started its descent, CHK was a disaster in the making. I was told over and over again by people much smarter than myself that it was but CHK would get last far longer than i expected because of ZIRP. Because banks/insitutional investors are looking for 8% and they don't care if it comes unsecured on a balance sheet that is 3x LTD/EBITDA. 

There are perfectly known consequences of mispriced risk and interest rates that are held to low for too long. We have seen those consequences again and again in the last 12 years. You can choose to believe that we have "no control" or you can choose to believe that the one thing we absolutely can control is out reaction to the enviroment we find ourselves in. 

Fri, 05/11/2012 - 22:59 | 2419298 NewThor
NewThor's picture

Your avatar is HOT.

Is that really you?

Sat, 05/12/2012 - 10:07 | 2419683 Hulk
Hulk's picture

That information will cost you a nickel...

Sat, 05/12/2012 - 13:55 | 2419982 NewThor
NewThor's picture

The doctor is in, aye Dr. Banner?

Fri, 05/11/2012 - 23:03 | 2419300 Buckaroo Banzai
Buckaroo Banzai's picture

Religion didn't turn people into sheep, genetics did. The Sumerian word for people is "Lu Lu" which transliterates into "Sheep Sheep".

Based on this insight into the sheeply nature of humans, the Sumerians created a control system called the Mystery School (which the Egyptians perfected). This control system is symbolized by the pyramid, for reasons which should become obvious upon reflection. It's still the way humans are controlled today...not that one person in a million can discern it, of course. Masons, Illuminati, and organizations like the Russell Trust Association are the modern descendants of the ancient priesthoods.

The old ways are the best ways.

Sat, 05/12/2012 - 00:15 | 2419409 bahaar
bahaar's picture

So that's were the name Lululemon comes from.  I always wondered at the company's success.  'Sheep (to whom) we sell lemon'.  Interesting.

Sat, 05/12/2012 - 09:20 | 2419650 GMadScientist
GMadScientist's picture

You would know.

Sun, 05/13/2012 - 05:36 | 2420831 StychoKiller
StychoKiller's picture

"Have Fun at Work", ISBN 0-937063-05-3, by William L. Livingston, F.E.S. Books

Explains the pyramid much better than you.

Sun, 05/13/2012 - 05:40 | 2420833 Psyman
Psyman's picture

Over 90% of humans believe in some kind of mysticism based belief system.


'Nuff said.  Over 90% of humans are so stupid that they believe all of existence is ruled by some invisible monster in the sky.


This includes over 90% of Zero Hedge readers.  They may talk a good game, but at the end of the day they are a bunch of fucking retards.

Sun, 05/13/2012 - 09:43 | 2420959 BeetleBailey
BeetleBailey's picture

....and your 90% comes from.....?

Calling 90% of ZH readers "fucking retards" is retarded.

I suppose you think of yourself as the "other 10%". I doubt you fit into any elite category.

Sat, 05/12/2012 - 00:59 | 2419451 Oh regional Indian
Oh regional Indian's picture

"Well" said Lizzy.

Now the thing is, who will be sitting with their hands in the till when NatGas finally  finds it's "real" value. 


Fri, 05/11/2012 - 21:43 | 2419149 francis_sawyer
francis_sawyer's picture


is that like?


Sat, 05/12/2012 - 02:11 | 2419495 slewie the pi-rat
slewie the pi-rat's picture

have you been cloned too, now, _sawyer?

Fri, 05/11/2012 - 21:29 | 2419128 Sequitur
Sequitur's picture

What's wrong with debt?

- John Corzine

Fri, 05/11/2012 - 21:33 | 2419132 Xkwisetly Paneful
Xkwisetly Paneful's picture

Hedged properly?

Whoa! Hedging bad that is speculation.

Bastards how dare they flood the market with cheap gas!

Note ZB praying for higher relative commodity prices now leads to the promotion of higher energy prices.

But woe are the people.

GMAFBA you are in the 1% and now openly promoting  the destruction of the poor and middle class via the same means the ultrarich have been using for quite a while.

Fri, 05/11/2012 - 21:41 | 2419145 Tyler Durden
Tyler Durden's picture

Did you even pretend to read the article? The "low" gas prices are precisely the same artifact of central planning that will lead to gas prices at the pump soaring to $6 when QE 4 is announced. As for low prices, why sure, excess supply will lead to $0.00 nat gas, at which point the entire supply side will go bankrupt, and gas will go from $0.00 to infinity.

It is precisely this myopia, that promotes short-term benefits at the expense of long-term pain, that all those advocating central planning exhibit day in and day out.

And when the day comes to pay for the "short-term benefits"... why it is someone else who will pay for that.

Fri, 05/11/2012 - 22:17 | 2419185 Xkwisetly Paneful
Xkwisetly Paneful's picture


they would be significantly lower in price without the money spewing,

so the high prices are directly the result of the central planning committee.

Without the money printing all the commodities would be priced at what they cost to get out of the ground plus a modest profit.

So the premise is false to start with they are artificially overpriced not underpriced.


As far as the rest, misallocated capital is a byproduct of the bubble economy,

central planning committee or not. The bubble economy insures lesser likely to succeed ideas get funding from time to time and since mankind does not advance in a straight line as in no one can dictate what should get funding and shouldn't the bubble economy is generally preferred.

The key is to ignore the benefits like being the first nation ever to have a "poverty stricken" underclass that are obese and own homes and cars and to focus on the Ivy league flunky who conned the game out of billions.

the only people paying beyond the inflation tax so far are the people paying 99.98% tax on interest income to the tune of trillions in lost earned interest.

Besides the entire problem are the hundreds of trillions in unfunded social obligations,

not the banks, not the current crop of central planners, not the military and yet never once actually saw a piece here detailing such.

Face it the perpetual promotion of the commodities is exactly the position of the ultra wealthy as usual using the government to bury the poor and middle class.

Fri, 05/11/2012 - 22:21 | 2419228 lizzy36
lizzy36's picture

Just an FYI....CHK is NATURAL GAS....the ONLY commodity that actually trades supply and demand because of the way it is stored.

So when you start spewing crap about commodities in DOESN'T APPLY TO NATURAL GAS.

So now go back and read the post again. Attempt to understand that natural gas has hit MULTI-DECADE lows, due to oversuppply which is not being curtailed, as it normally would be, in a NON central planned economy. 

A company like CHK wouldn't be able to drill and flood the market with unprofitable natural gas, if they couldn't get these UNSECURED loans. 

The decades low natural gas price is as much a by-product of ZIRP and QE as $100 oil. The cause us exactly the same, the effect is different.

Fri, 05/11/2012 - 22:47 | 2419286 Cdad
Cdad's picture

Agreed, lizzy.  Ah, but a fickle Fed shall decide for us hold tight to your news feed and "invest" as the great Oz tells you to "invest."

Fri, 05/11/2012 - 22:53 | 2419293 Xkwisetly Paneful
Xkwisetly Paneful's picture

Not true.

Before the plummet gas prices continued escalating despite dropping demand and constant supply.

Without any of that speculation the producers would have received lower proceeds in every commodity, gas included. Which would mean less extraction which follows the same train and results in the same place. 

Fri, 05/11/2012 - 23:16 | 2419321 lizzy36
lizzy36's picture

So the massive discovery of shale gas reserves in the US (estimates of natural gas reserves doubled in the US between 2006 and 2011)  coupled with the massive advances in fracking and horizontal drilling had nothing to do with plummeting nat gas prices.

Good to know.

Can you explain to me like i am a child how speculation affected the price that a NATURAL GAS producer recieved for his/her product?

Further can you explain to me how if your theory is correct that absent speculation, prices would have been lower and thus caused LOWER nat gas production. Because we hit multi-decade lows 3 weeks ago, and yet nat gas production for the first 4 months of 2012 is higher than it has ever been.

Fri, 05/11/2012 - 23:32 | 2419342 Xkwisetly Paneful
Xkwisetly Paneful's picture

Ad Hom like a pro.

Hardly see a mention of the new discoveries in your first post, only something about ZIRP related drilling causing unabated oversupply as if the new discoveries alone would not have resulted in oversupply and depressed prices.

My theory is correct, money spewing went everywhere including into NAT GAS.

The result is more gas all else equal regardless.

Now try not to spin until your head falls off. 





Sat, 05/12/2012 - 06:59 | 2419602 piliage
piliage's picture

Let me focus this discussion a bit.

Cheap money = funds to drill and transport

No cheap money = no funds to drill and transport

The money isn't going into commodities futures, it is buying actual pipes, trucks, rigs, to drill and transport shale gas.

More money = more supply = lower prices.

When inflation comes back (which it will when the Chinese have no more money to spend on cheap US debt), the cheap money to drill and oversupply stops and a bunch of companies living off 0% money go bust as they can't pay the costs of operation.

Where I disagree with a few on this website is that BP, Exon, Shell, GE, and other will then swoop in, buy the things cheap, and cut back on supply and gas will come back to a sustainable price.


Sat, 05/12/2012 - 12:00 | 2419782 Matt
Matt's picture

there was no ad hom.

She wasn't calling you a child, she was asking you to explain your position as if you were explaining it to a child. 

What causes bubbles, if not malinvestment due to central planners giving away cheap money?

Whether it is the federal government paying bonuses for each mile of railway track laid, or whether it is the Federal Reserve giving away (virtually) free money, both are centrally planned and both cause bubbles.

How can a bubble occur without cheap money to speculate with?

Fri, 05/11/2012 - 23:31 | 2419343 Atomizer
Atomizer's picture



Hello Xkunwisely Painful Fuck Knob, this is Atomizer chiming in.

Why don't you suck down more of that Marxist Kool-Aid the [soon to be booted] US President feeds your sorry ass. Have a look..

VW Passat 78.5 MPG (Imperial gallon) 65.2 MPG US gallon in the Uk

VW TDI Drives 1,531 Miles On One Tank

I really don’t give a fuck about your ‘save the planet clown car’ types. My question to you, how is it possible for technology to be built in the US and you cannot buy this product? You better ask the Messiah nicely or you’ll be labeled as racists.

Here’s an idea, just ask him the question and quickly declare your gay while lodging your tongue down his throat. That should score you points.. LOL.

Good luck Xkunwisely Painful Fuck Knob.

Fri, 05/11/2012 - 23:37 | 2419349 Xkwisetly Paneful
Xkwisetly Paneful's picture


Next time just go squat in your living room like usual.

Marxist Kool Aid? You could not be more off base if that was the plan.


Sat, 05/12/2012 - 00:01 | 2419397 Bicycle Repairman
Bicycle Repairman's picture

Smartcar in Europe = 85 mpg.  Smartcar in USA = 35 mpg.  It is a glorified golfcart and should get 85 mpg.  WFT?  Look around.  Is 35 mpg some kind of ceiling in the USA?

Sat, 05/12/2012 - 12:09 | 2419790 Matt
Matt's picture

Never drive over 50 Miles Per Hour. Fuel economy drops exponentially after that point. Cruising down the highway at 75 MPH uses much more fuel. Especially with the high coefficient of drag for the smart car of 0.38.

Apparently, European Diesel has more Cetane in it, so you get better fuel economy with a diesel engine in Europe than in North America.

Sat, 05/12/2012 - 16:03 | 2420200 Bicycle Repairman
Bicycle Repairman's picture

My comment isn't about changing driving habits.  And it isn't about Cetane or any other malarkey.

It's about the blockade on high mileage cars in the USA.  And it is very telling about what the game is all about.  These cars are available now and would change the whole game right now.

Sat, 05/12/2012 - 17:13 | 2420282 Umh
Umh's picture

Diesel isn't considered logically in the U.S. Most eople aren't all that logical anyway, but our Green/Liberal activist never actually thinks anything through. Maybe it's because they can see the stain on old diesel vehicles and they think they can see pollution.

Sat, 05/12/2012 - 21:40 | 2420524 Bicycle Repairman
Bicycle Repairman's picture

I doubt it is liberals or greens preventing the importation of these vehicles.

Mon, 05/14/2012 - 15:02 | 2424570 Matt
Matt's picture

The different diesel standard is exactly what caused VW to change the fuel programming on the cars. these two factors cause lower fuel mileage.

Are you comparing apples to apples? do the European Fuel Mileage standards get determined using the exact same testing methodology as the EPA uses?

Skoda, a branch of VW, makes a small car with a 1.2L diesel that gets ~98 MPG. VW chooses not to sell it over here, since it would directly compete against the VW Golf TDI. The market does not buy enough small diesel cars, so there is no profit to be made selling more of them over here. I do not think there is a conspiracy to make Americans use more fuel; I think the market is what it is.

Fri, 05/11/2012 - 22:21 | 2419229 Cdad
Cdad's picture

@ Xdwisetly

Which is it:

a) you have been drinking heavily

b) you are off your meds

c) you are cutting and pasting this stuff from the Hufpo of China [soon to be IPO'd at the NYSE]



Fri, 05/11/2012 - 22:22 | 2419231 sitenine
sitenine's picture

Some people just don't want to understand.  Maybe you're not ready to accept that what you think is money is nothing more than what someone told you was money.

Tyler is right on.  So much truth on one website overwhelms me sometimes.

The real problem here is that we will be paying for for this print fest with blood and tears, not with money as most presume.  That's what happens at the end of an exponential curve - I really love the Chris Martenson threads on ZH btw; he really knows his shit.

Oh, and thanks Tyler - It's starting to make more and more sense that, at only three years, LTRO really is long term.

Fri, 05/11/2012 - 22:34 | 2419271 Xkwisetly Paneful
Xkwisetly Paneful's picture


Mean this will end with inflation marginalizing the debt and the future obligations thereby screwing the poor and middle class?

Who could have ever guessed?  Just so great to have a site around to point out the dirt is brown.


ZIRP obviously promotes business today at the expense of business tomorrow.

Growth comes from the leading edge, which is mostly supply side and speculator driven.

It doesn't come from creating more grocers and is largely not demand driven.

Maybe ZH should tackle the question of why the leading edge is currently hoarding cash, collecting lint on it instead of creating growth.




Fri, 05/11/2012 - 22:45 | 2419283 Cdad
Cdad's picture

It's either B or C...not sure yet.  Keep posting...and we'll get 'er figured out.

Fri, 05/11/2012 - 22:54 | 2419294 brewing
brewing's picture

give me "a" for $800 cdad...

Fri, 05/11/2012 - 23:11 | 2419310 Cdad
Cdad's picture you down for 8 bills on "drunk as a monkey"

Fri, 05/11/2012 - 22:44 | 2419284 sitenine
sitenine's picture

You think money creats growth?  Really?

mmmk...  I'm done here.

Fri, 05/11/2012 - 23:05 | 2419299 Xkwisetly Paneful
Xkwisetly Paneful's picture

No it comes out of thin air.

Access to capital has nothing to do with anything.

and the governments just started manipulating markets a few years ago.

likewise all human innovation and advancement is a birthright.

has nothing at all to do with government economic policy.

Just a massive coincidence that the computer chip proliferated the globe following global easy money.

Just so detached, venture capital 30yrs ago was 1% month and half the net,

yesterday it was lint, but that has nothing to do with whether more ventures are created or not,

they just come out of thin air.

The governments dictate the markets and have since dirt turned brown,

and if not the government than whomever was the largest stakeholder,

this romantic notion that the markets were at any point free and somehow the government was governing and not dictating is fucking hilarious.  Very pervasive here and very hilarious each time.




Fri, 05/11/2012 - 23:05 | 2419302 Cdad
Cdad's picture

Access to capital has nothing to do with anything.


With statements like that, @brewing might be on to something taking the over on  "A"

Fri, 05/11/2012 - 23:13 | 2419315 Xkwisetly Paneful
Xkwisetly Paneful's picture

The bottomline never changes.

The academic fukktard wants an ordered existence, he thinks he can hang in the ivory tower and dole out resources effectively, while anyone with a brain knows even if 90% of new ventures fail the current system blows away the delusional dreams of the academic fukktard.

Fri, 05/11/2012 - 23:23 | 2419327 Cdad
Cdad's picture

Now this comment augers for both "a" and "b".

First, notice the disassociation between the first line and the second paragraph.  In the first line, a completely ambiguous declaratory statement is made.  However, the second paragraph moves on to "fukktards."  I'm not sure there is an association between the absolute "bottomline" [not to be confused with "Econoline"...which he used to love]...and the noted "fukktard."  In a world full of those, it is impossible to associate the bottomline with fukktards without knowing which fukktards he is talking about...or which bottomline, for that matter.

The spelling of "fukktard" is also interesting, which could, in fact, auger for "c"

Keep commenting...we're closing in on the problem.

Sat, 05/12/2012 - 00:32 | 2419407 Xkwisetly Paneful
Xkwisetly Paneful's picture

We're? There is more than one obsessive, compulsive whining testicle dangler?

BTW thanks for pointing out above the advent of front running and further the idea that things are not what they seem. Afterall the airlines have been oil trading hedge funds for years and years now and front running was just invented with the HFTS. This all being a new and novel experience of course.



Sat, 05/12/2012 - 00:29 | 2419421 mendigo
mendigo's picture

Your feeding the troll.
But I think you're wearing him down as posts are getting shorter.

Sat, 05/12/2012 - 00:23 | 2419417 Xkwisetly Paneful
Xkwisetly Paneful's picture

So access to capital matters?

How about did the governments just start manipulating markets and economies yesterday?

Does human innovation and advancement have anything to do with government economic policy?

So why do I read posts here daily to the contrary?

Sat, 05/12/2012 - 00:44 | 2419426 sitenine
sitenine's picture

Dude, pay attention.  You're still confused about a very fundamental concept.  Capital is not money.  Capital is the means of production.  Look up Adam Smith, and get back to us when you've educated yourself if even just slightly.

[edit] If you still don't get it, then you are a hopeless troll and ZH is just not the place for you - maybe you would enjoy Krugman's blog a little more:

Sat, 05/12/2012 - 01:04 | 2419442 Xkwisetly Paneful
Xkwisetly Paneful's picture

It is called modern vernacular.

Access to resources is access to opportunity.

Governmental  financial/monetary whatever policy dictates not the inverse.  Sorry as much as you and the other idiot want me to promote this behavior that is hardly the case,

it is reality and has been reality since the creation of markets and if not for the governments the largest stakeholder would be next in line.

So access to capital matters? YES

How about did the governments just start manipulating markets and economies yesterday? NO they have been manipulating markets since the advent of both.

Does human innovation and advancement have anything to do with government economic policy? YES

Now your turn, maybe you can hang your hat on some semantics again and go for tail wagging dog no matter how ludicrous it happens to be.

 BTW I thought you were done? That is called obsessive compulsive disorder dude and all to show me how smart you were with your textbook definition of capital as if -oh that changes everything.






Sat, 05/12/2012 - 01:40 | 2419459 sitenine
sitenine's picture

The modern vernacular for productive capital is "cash", i.e. "money"?  No!  Hell no!  It is not semantics.  The government does not create factors of production. Period.  Unless you are arguing that the U.S. is in fact a fascist State, which I think you actually may be...  The government's little bitch Timmy along with his accomplice the Bernank print fiat paper to keep banks solvent because people like you fucked everything up somewhere around 1913ish by proclaiming somehow (by fiat) that paper is money.  It's as simple as that.  Can you say inflation, debasement, default risk, or maybe even unfunded liability?  No, I didn't think so.  You seriously don't get it.  Arguing differently is just stupid and obstinate at this point.  We get you.  Really, we get exactly what you're about, hence, "I'm done here."  The name calling really doesn't help either.

Sat, 05/12/2012 - 01:47 | 2419474 Xkwisetly Paneful
Xkwisetly Paneful's picture

Any business news search of the word "capital" shows many, many other stupid people around.

You must be the smartest guy on planet earth.

Back to the semantics? Factors of production?

The US government is the largest consumer, employer, lender, borrower, landlord and tenant in the economy.

What are we calling the inputs to satisfy that demand?  Imaginary means of production.

Not even including manipulative, monetary, fiscal, regulatory et al policy.

They control the means of production in too many industries to count.

Your turn, more semantical bullshit? followed by  some projective idiomatic insult yet again denying the sky is blue?

mmmmmk that is all for me for real.



Sat, 05/12/2012 - 02:00 | 2419479 sitenine
sitenine's picture

The factors of production going into this now fascist beast you love so dearly are MY labor, my children's labor, and their children's labor, assuming that they can find work at all; and that's just to pay off what we already owe today!  You want to feed it some more?  You want it to get bigger?  You want more money printed so we can somehow magically feed this beast another day?  Do you understand what you are advocating?  Do you ever stop to think for yourself?  Did you ever think that maybe you can take care of yourself through your own labor instead of relying on the government to 'provide the means of production'?  Let's just say that your perfect fascist world is not my idea of a good time.

Sat, 05/12/2012 - 06:43 | 2419600 Shibumi2
Shibumi2's picture

The use of "FUCKTARDS" and other derogatory expressions seems very INAPPROPRIATE...not for any reason of morality...but for reasons of MATURITY,


The occasional FUCK for emphasis is just good old fun, but these new generation POSTERS attempt to replace VULGARITY for REASON and substitute BLUSTER for ARGUMENT.


There is a COST for everything, including EXCESS.


Keep in mind ZH'ers that many stay on the sidelines who could add much to the discussion, but don't because they have no interest in participating in a Kindergarten FOOD FIGHT.


Bring the game up a NOTCH or TWO?

Sat, 05/12/2012 - 09:37 | 2419662 GMadScientist
GMadScientist's picture

You're gonna break that caps-lock key typing angry like that, Empy-Animal-Food-Trough-Wiper.

Fri, 05/11/2012 - 23:32 | 2419344 modest_proposal
modest_proposal's picture

This is the same pattern of practice as the telecomms in the early 2000s. I worked at Global One while MCI/WorldCom was riding high. There were also a number of 'zombie telcos' (mostly old baby bells that had gone bankrupt, and discharged/renegotiated all encumbrance from their infrastructure buildouts) - and these guys were eating our lunches. Every bid, every project, they were undercutting us. They seldom did a good job, but rarely a poor enough job to lose the business. We had no idea how they were working for the rates they were, and still cover their costs.

Well... it turns out they weren't covering their costs. They were cooking the books. But even seeing the eventual cummupance for MCI was poor comfort. Revenue at Global One was never what it needed to be. Eventually Global One was absorbed entirely by France Telecom. The same basic story played out with most other honest telecom and network providers. If you weren't lying and cheating, or hadn't played finance and bankruptcy games, you starved for oxygen.

The same thing will happen in the nat gas industry. The zombies and the frauds will suck all the oxygen out of the industry, and all the honest, healthy business will suffocate.

Sat, 05/12/2012 - 05:24 | 2419583 falak pema
falak pema's picture

Central planning in the interest of corpocracy; Central planning could be a tool in the interest of "we the people". Don't blame the tool, blame the mindset and power structure behind it.

You don't have a permanent civil service bureaucracy culture of "we the people" in the USA. You only have the election on short term of Corpocracy shills parading as civil servants. The inner workings of the PAX Americana construct since the death of JFK; when it morphed first; and of Reaganomics, when it remorphed again, to supply side "funny money" economics bigtime; are now exposed to the world. 

Sat, 05/12/2012 - 09:15 | 2419647 RiverRoad
RiverRoad's picture

Fer sure, Tyler.  The entire world will be awash in high yield debt before this travesty is over.  Anybody out there remember when the Asian Tigers got their tails caught in a crack and those 15% rates it cost them?  And now we've globalized it.  Thank you central bankers.



Sun, 05/13/2012 - 05:41 | 2420834 Psyman
Psyman's picture

Tyler mad.

Fri, 05/11/2012 - 21:34 | 2419133 grunk
grunk's picture

Sorry, O/T

Per Gordon Chang, John Batchelor show, WABC...

Chinese electicity output rose 0%.

Chinese growth stats are a lie. 

Fri, 05/11/2012 - 21:39 | 2419138 Gloomygus
Gloomygus's picture

They are the richest monarchy in the entire world, but alas they are taken - maybe they could suggest someone for us, or have a twin or clone we could adpt as our own. That would be great.

Fri, 05/11/2012 - 21:41 | 2419142 Yes_Questions
Yes_Questions's picture



it is refinancing its secured debt facility (with its numerous restrictive covenants) with $3 billion in brand new Libor+7.00% unsecured paper..

Unsecured? My ass if Goldsquid is involved.  Not in this Buy when there's blood in the streets enviro..

Fuck the PR.

What, they make paper too, now?

I call squidshit!


Fri, 05/11/2012 - 21:42 | 2419148 Gloomygus
Gloomygus's picture

All you goldbugs will be encouraged, as the Thai central bank is currently buying more gold than any other:

That Royal family sure knows its stuff. Why oh why can't we have a monarch just like theirs?

Sat, 05/12/2012 - 09:39 | 2419665 GMadScientist
GMadScientist's picture

The Constitution.

Fri, 05/11/2012 - 21:46 | 2419156 Bohm Squad
Bohm Squad's picture

I come up with FCF (2011) = -$11,447,000,000

I'd say those who argue the cash flow is negative have a good case...unless I've screwed up.

Fri, 05/11/2012 - 21:53 | 2419159 Cabreado
Cabreado's picture

Energy meets Ego.

Bad news from the get-go; takes time to rear its ugly head.

We are earning our demise -- no energy required -- just an innate self-absorption in all the wrong places, all at once.

Fri, 05/11/2012 - 21:53 | 2419161 buzzsaw99
buzzsaw99's picture

God damn the pusher man. [/steppenwolf]

Fri, 05/11/2012 - 22:42 | 2419280 Yen Cross
Yen Cross's picture

Nice post! Gotta Love { Steppenwolf} !

Fri, 05/11/2012 - 22:00 | 2419162 Cdad
Cdad's picture

Excellent post Tyler.  Tying the pieces together now...the centrally planned pieces.  I would highly encourage you to continue to do this.  Just as the CONTEXT model provides sign posts for the various moving parts of the market, so to does this analysis of CHK per cheap money provide the context for the scourge known as the FED.

I know you have done this before...just want to encourage it.

What the hell will it take for people to finally understand this fundamental truth about the Fed?  All it has to offer are our degraded dollars and its decision by fiat [pun intended] via market intervention.  There is NOTHING ELSE THERE!

Sat, 05/12/2012 - 09:24 | 2419653 RiverRoad
RiverRoad's picture

And god help us all when the Sheeple finally realize that.

Fri, 05/11/2012 - 21:58 | 2419170 Extremist Tan
Extremist Tan's picture

Keep the good posts coming.

Fri, 05/11/2012 - 22:03 | 2419174 booboo
booboo's picture

They are ALL Allied Capital now.

Fri, 05/11/2012 - 22:03 | 2419176 Gloomygus
Gloomygus's picture

Anyone calling everyone else Sheeple on this blog needs to consult his or her conscious - satire (and an obsession with capital markets, what's left of them anyways) is well and good but can any of you do anything? Do any one of you know any honest individual that could raise the issue of our needing a King just like Thailands - to look into whether anyone might just fit that bill precisely who is already well positioned to be our King? It is very very important, really nothing is more important, as I stated above. The curtain is parted and you need only look. Also, if you need any further assurance the Wikileaks excerpts of the state department communiques regarding the potential elevation of the crown prince of Thailand indicate that we (meaning the executive branch of the US, not us) really really don't want that to happen, as the crown prince's familiar face would be splashed across the papers of the world. And so the Germans seize his jet and the MSM otherwise brand him as unfit to rise. Look at the man and you will know why. Now, do something if you can, as I have done all I can.

Fri, 05/11/2012 - 22:44 | 2419282 lizzy36
lizzy36's picture

Gus, might want to stop with the bong hits. Think you have probably hit your limit for the year.

Fri, 05/11/2012 - 22:51 | 2419292 Yen Cross
Yen Cross's picture

MEDa-bong-SNAPS...  Nice quote Lizzy!

Fri, 05/11/2012 - 22:57 | 2419296 Global Hunter
Global Hunter's picture

That aint bong hits, the herb doesn't make a man start worshipping syphilitic and boil infested inbreds, quite the opposite infact.

Sat, 05/12/2012 - 09:49 | 2419668 GMadScientist
GMadScientist's picture

"The more man smoke herb, the more Babylon fall." - B. Marley


Fri, 05/11/2012 - 23:25 | 2419332 Tyler Durden
Tyler Durden's picture
Fri, 05/11/2012 - 23:40 | 2419360 infinity8
infinity8's picture

Maybe I should start watching this clown show - LOL! Bet. 1:13 - 1:20 he says "tweaked" and "coming off the rails". Baldy is twacked out of his mind! And then there's bow-tie and shit-face. Love it.

Fri, 05/11/2012 - 23:45 | 2419364 Atomizer
Atomizer's picture

Its an old clip. Beaker has been long gone

Fri, 05/11/2012 - 23:59 | 2419392 Cdad
Cdad's picture it A, B, or C?  

I don't know...because it is so painful to watch, I can only make it a few Mackie's in before I shut it off.

Sat, 05/12/2012 - 00:35 | 2419425 Atomizer
Atomizer's picture



D) Basel III Accord goes online later this year. Hence, Dimon in the rough crib tantrum media stunt. 

I'd like to ask everybody to please turn off their phone. Please don't put it on vibrate; just turn it off altogether…..

(Chuckles to myself thinking, OK jackass)

Sat, 05/12/2012 - 01:36 | 2419473 Yen Cross
Yen Cross's picture

 Is trading ?  3, 5 wave?

Sat, 05/12/2012 - 10:23 | 2419695 xela2200
xela2200's picture

Tyler please add dates, so we can have context. This video seems to be from Jan 14, 2010 as per You Tube upload date.

Sun, 05/13/2012 - 20:15 | 2422383 Gloomygus
Gloomygus's picture

Okay - either the site is not what it appears to be or, far more likely, you are all being watched - all I ask is you return to the original photos that accompanied my first comment - based on the response to my original post, I would be very careful. It is too late for me. Ignore the comments and use your own eyes. And think you magnificent minds.

Fri, 05/11/2012 - 22:08 | 2419182 Gloomygus
Gloomygus's picture

The NATO summit is in 2 weeks ...

Fri, 05/11/2012 - 22:17 | 2419222 covert
Sun, 05/13/2012 - 20:57 | 2422456 Gloomygus
Gloomygus's picture

It's not strange - it's confirmation that my original post is indeed true. Now, again if any of you have the power to act, please please do, as I can do nothing beyond point out the truth, which I have done. As of today it is not a crime in this country to point out the truth.

Fri, 05/11/2012 - 22:32 | 2419269 Yen Cross
Yen Cross's picture
Why Corporate Balance Sheets Just Don't Matter In The New ZIRP Normal

  This Shit is comical!  The market is short, now the GIANT " Sphincter Squeeze" , SqueeZE<   comes!

   I can hear the " Helicoptors" , on Sunday!

Fri, 05/11/2012 - 22:36 | 2419273 mendigo
mendigo's picture

The value of money becomes indeterminant where it can be borrowed at no cost or negative cost.
How many companies are walking dead won't die and make room for new growth because they have nearly unlimited access to free debt.
Take Sears as example but how many retail outlets do you see where it obviously cannot be paying its bills with the meager floor traffic - it is not a particularly recent development but the bills are pilling-up. It will blow-up some day and the execs will be blameless and taxpayers will realize the loss. GM is prime example - it was headed for bancruptcy long before 2008 used the financial termoil as cover of incompetence.

Fri, 05/11/2012 - 22:37 | 2419276 Yen Cross
Yen Cross's picture

" Blankfein to Dimon" , Quote; "Is it your turn in the [ barrel ] this week Jamie?"

Fri, 05/11/2012 - 22:47 | 2419289 pissing_excellence
pissing_excellence's picture

Bong hits and pale ale sound great after reading about all this sparkle motion bs over the last 2 days.

Just 2 bil, just a fucking flesh wound right?

Sat, 05/12/2012 - 07:22 | 2419610 Element
Element's picture

mmm ... Pale Ales ... I'll pass on the bucket-bong though ...

It's just that people don't want to face that Sovereign default can occur, and will occur, as soon as it can no longer be prevented.  This inability for it to be prevented will come from the street, and from the street alone, just like it is in Greece, and Spain, and not from the political dumbfuck-in-chief, of the day.  Every move to staunch the blood simply creates pressures for more ruptured arteries elsewhere within the Great-Malaise (GM ; where GM is to a Depression, what Purgatory is to Hell).

Now, if you had some mushies ... this would all make spectacularly beautiful sense.



Fri, 05/11/2012 - 23:11 | 2419309 jimmyjames
jimmyjames's picture

Debt/Swaps masquerading as cash on corporate balance sheets is wide spread-

Corporations seen what happened during the last credit lockup and when it unthawed--they borrowed to the max at zirp and hedged with TBT etc.--which in turn had CNBC marveling  at all the corporate sideline cash waiting to be deployed-

John Hussman did a good job of flushing it out-


Fri, 05/11/2012 - 23:21 | 2419328 Yen Cross
Yen Cross's picture

 The , CNBS /Dimon  ( pol;e smoking) was epic! 

   CNBC needs to quit advertising,! Period.

Sat, 05/12/2012 - 10:58 | 2419696 GMadScientist
GMadScientist's picture

Too bad all that 'cash' is going to be eroded by their margins getting squoze by the effect of loose money on their inputs, but...

"who cares IBGYBG" - Aubrey

And I thought every company that had extra cash implicitly created jobs...the supply-siders depend on it. LOL

Excellent link though...Hussman explains the charade better than most.

Fri, 05/11/2012 - 23:35 | 2419347 Thunder_Downunder
Thunder_Downunder's picture

Gotta give the IBs thumbs up for innovation.


LBO method of theft was lost to them, but they've found another way to fleece shareholders with the support of greedy incompetent management.


Surely the lack of activism is a reflection of the ETF'isation of the market.. shareholders shouldn't permit this kind of action.


Sat, 05/12/2012 - 00:44 | 2419435 mendigo
mendigo's picture

Or is it possible the dumb money isn't anymore.
Well that and they're broke.

Fri, 05/11/2012 - 23:35 | 2419348 gwar5
gwar5's picture

I just hit me today that we are now living under 'State Capitalism'.


This is it. This is not going to be some temporary condition of manipulated markets due to a short term liquidity emergency.

Sat, 05/12/2012 - 05:16 | 2419580 dognamedabu
dognamedabu's picture

You have a point.. But.. Why rock the boat? AT least we are not Greece.. 



Sat, 05/12/2012 - 09:37 | 2419663 RiverRoad
RiverRoad's picture


Fri, 05/11/2012 - 23:51 | 2419376 williambanzai7
williambanzai7's picture

I think it's fair to say that history will look at these types of data points as unheeded harbingers of the disaster that will follow. Bernanke really is a fool.

Sat, 05/12/2012 - 00:13 | 2419405 jimmyjames
jimmyjames's picture

I think it's fair to say that history will look at these types of data points as unheeded harbingers of the disaster that will follow. Bernanke really is a fool.


Can they find a way to blame gold this time like every other time?

I wonder if this time-the first time- in a world of global competing paper currencies if it will be gold that finally stabilizes the unwind-

Oxymoron's do happen-

Sat, 05/12/2012 - 09:54 | 2419672 RiverRoad
RiverRoad's picture

"They" will worship gold when the fiat currencies are dust.  The central bankers accumulate it against that day, and they always drive the price down first when they want to buy more.

Fri, 05/11/2012 - 23:56 | 2419385 mjk0259
mjk0259's picture

Almost every large company is going to be in trouble when ZIRP ends. Profits are going to disappear for a lot of them when they have to pay normal rates if that ever happens..

Sat, 05/12/2012 - 00:37 | 2419427 Xkwisetly Paneful
Xkwisetly Paneful's picture

Corporate America is sitting on massive piles of cash or cash equivalents currently collecting next to nothing or basically the direct opposite of what is posted.

Sat, 05/12/2012 - 05:56 | 2419589 piliage
piliage's picture

Yes, but due to wonderful US tax policy, most of those piles are in Europe and can't be moved back stateside or they take a huge hit. This leads to wonderful strategies like paying infinity times earnings for companies like Skype by MS.

Now, given they were earning next to nothing on that money in Europe, even infinity times earnings for Skype might turn out OK if the Samsung/MS phone is as good as it seems to be, and they can integrate it with Skype for a seamless user interface. However, given MS's track record in customer experience, this is a longshot...

The point is, just because they are sitting on mountains of cash, doesn't mean they can use it productively in this economic climate. Who the hell wants to invest in Europe right now? And they can't move it back to the states or they eat a third off it in taxes.

Sat, 05/12/2012 - 09:58 | 2419674 RiverRoad
RiverRoad's picture

There's always Australia for awhile 'til the Fat Lady, Chindia, sings and that money has to move on to....where?

Sat, 05/12/2012 - 11:05 | 2419731 GMadScientist
GMadScientist's picture

Corporate America is sitting on $7.2T of junk credit.

Grow a cortex.

Sat, 05/12/2012 - 15:29 | 2420149 azusgm
azusgm's picture

They are both the same thing. That is what is so sick.

Assets are liabilities, liabilities are assets. Strength is weakness, weakness is strength. Retirement of debt shrinks the asset pool.

Sat, 05/12/2012 - 00:18 | 2419411 Bicycle Repairman
Bicycle Repairman's picture

This is all about supporting the status quo, no matter what.  Yes?

Welcome to the USSA.

Sat, 05/12/2012 - 01:11 | 2419432 Yen Cross
Yen Cross's picture

 We all appreciate, the ENVY of our Peers.

  I appreciate " excellence &  Diligence".  

     More often, then not) ?  We/Stumble upon our " True Love}>  Dog/Cat/ Lizard/Snake?



Sat, 05/12/2012 - 01:30 | 2419468 Peter K
Peter K's picture

"What, however, people do not know is that under ZIRP, when every basis point of debt return over 0% is praised, and an epic scramble ensues among hedge for any yielding paper no matter how worthless, the balance sheets of companies just do not matter. In other words, for companies that have massive leverage, high interest rates, negative cash flow, which all were corporate death knells as recently as 2008, the capitalization structure is completely irrelevant."

Spot on. And this phenomenon carries over into other asset classes. For example, the levitatin of the EURO currency versus the USD. If it was not for positive carry (i.e. ECB 1.00% vs. FED 0 - .25%), the EURO would be a dead parrot resting on the trash heap of history alongside it's still born sibling, the ECU.

Sat, 05/12/2012 - 03:25 | 2419534 Central Bankster
Central Bankster's picture

So Euro banks borrowing dollars at .25% converting to euros and collecting 1%?  What could go wrong, lever it up 100x!

Sat, 05/12/2012 - 06:44 | 2419591 piliage
piliage's picture

Ah yes. What could go wrong indeed. Let's all go buy Landrovers like the folks in Iceland 5 years ago, shall we? Get this party started, WHOOOT! Booyah! (yes, this is sarcasm)

Sat, 05/12/2012 - 11:08 | 2419732 GMadScientist
GMadScientist's picture

Shall we use the client funds?

Sat, 05/12/2012 - 02:19 | 2419499 Yen Cross
Yen Cross's picture

Let's discuss "Trends"" & Intensity!   

Sat, 05/12/2012 - 04:22 | 2419567 cathrynm
cathrynm's picture

It seems a little dangerous, but could it be that in the zombie-economy high yield bonds are the place to be?   If we have companies, with little real growth, but being kept alive with endless credit, that  maybe this is where the money is? 

Sat, 05/12/2012 - 10:04 | 2419682 RiverRoad
RiverRoad's picture

There will be mucho high yield bonds, far as the eye can see, for a long, long time for sure.  Better have one hell of a ladder though.

Sat, 05/12/2012 - 09:02 | 2419640 JohnKozac
JohnKozac's picture

It's a bad sign the Directors knew about these unethical (if not illegal) loans and actually endorsed them.

Reminds me of Enron.....

BTW, whatever happened to Enron?

Sat, 05/12/2012 - 10:06 | 2419685 RiverRoad
RiverRoad's picture

Whatever it was won't happen to Jamie and his ilk.  You can bet on that.

Sat, 05/12/2012 - 11:10 | 2419734 GMadScientist
GMadScientist's picture

Quick, drum up the "one bad apple" speech so they stop looking into the rest of our "9th hole backscratches".

Sat, 05/12/2012 - 13:10 | 2419896 gnomon
gnomon's picture

Before Bernanke is  executed by the new regime-to-be so as to appease the roiling masses bereft of Welfare and Jobs Bernanke will sob that he bought us a few more good years, that it was a valiant effort, but that "x" event short-circuited the recovery just as it was getting traction.

That is how it will end.

Now I know why mobs howl with glee when they see the spray of blood and hear the thunk of the guillotine.

Sun, 05/13/2012 - 08:41 | 2420916 lakecity55
lakecity55's picture

Well, that is how the Mafia works.

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