From Extend-And-Pretend To Lie-And-Deny

Tyler Durden's picture




 

Submitted by Mark J. Grant, author of Out of the Box,

“People think that a liar gains a victory over his victim. What I’ve learned is that a lie is an act of self-abdication, because one surrenders one’s reality to the person to whom one lies, making that person one’s master, condemning oneself from then on to faking the sort of reality that person’s view requires to be faked…The man who lies to the world, is the world’s slave from then on…There are no white lies, there is only the blackest of destruction, and a white lie is the blackest of all.”
 
           -Ayn Rand, Atlas Shrugged
 
What I have been attempting to point out for years now is that Europe lies to us with great regularity. Whether it is the way they count their debt to GDP ratios or what is not told to us as a matter of course. In the baffling minds of the EU leadership the preservation of the Eurozone comes first no matter the cost, no matter the deception and no matter the lies that must be told to further that goal.
 
“Anything is better than lies and deceit!”
 
     -Leo Tolstoy, Anna Karenina
 
The problem here is not so much that the lies are told but that the lies are believed. Every politician on the Continent trumpets and echoes what they want you to hear and believe and then they expect you to act upon what you are told. Every media publication, as an example, repeats the official debt to GDP ratios as a matter of truth because that is what they are told. Then everyone is, "Shocked…Shocked" when the numbers do not add up and the bills that must be paid are so high because what is uncounted or what is lied about still has to be dealt with in the end.
 
“In thy foul throat thou liest.”
 
                 -William Shakespeare, Richard III
 
All of this then brings us to the article in the Financial Times today about the plight of Italy. It was more than two years ago when I wrote a piece about the derivatives contracts in Italy. The numbers were first exposed in the Italian Parliament but apparently they have been forgotten. The numbers for the total amount of derivatives contracts for Italy was more than $200 billion. The FT comments about sixteen percent of these today as I am highly dubious that the rest have been forgiven or paid off in the meantime. The Italians did the EU dance, "extend and pretend" or "lie and deny."
 
“And once when we were walking on Bredon Hill, we met a bedraggled and exhausted fox. 'Oh, poor thing,' Jack said. 'What shall we do when the hunt comes up? I can already hear them. Oh, I know -- I have an idea.' He cupped his hands and shouted to the first riders, "Hallo, yoicks, gone that way," and pointed in the direction opposite to the one the fox had taken. The whole hunt followed his directions. There followed a long discussion about when lying was morally justifiable, but he boasted delightedly later to my wife that he had saved the life of a poor fox and showed no trace of guilt.”
 
               -George Sayer, Jack: A Life of C.S. Lewis
 
No matter; the bills must be paid. No matter; the debt to GDP of Italy is more than 236% without the derivatives and only God and perhaps Mr. Draghi knows what the real numbers total. I certainly do not but I would guess they are crushing. In the meantime, because everyone was baffled, bamboozled and fooled; the yield on Italian sovereign debt dropped. I do not argue with this reality and money was made but I will say that the behavior of investors has been idiotic in believing the nonsense that we are handed and then in acting in this manner upon it.
 
“I lied," I said. ...
"I know it," he said.
"Then do something about it. Do anything, just so it's something."
"I cant," he said.
"There aint anything to do? Not anything?"
"I didn't say that," Grandfather said. "I said I couldn't. You can."
"What?" I said. "How can I forget it? Tell me how to."
"You cant," he said. "Nothing is ever forgotten. Nothing is ever lost. It's too valuable."
 
            -William Faulkner, The Reivers
 
Please recall that the Italian government, after paying off one derivatives contract to Morgan Stanley, said that there were no more derivative settlements that would be forthcoming. Another, "Obviously not the truth statement." Then there is Mr. Draghi who was head of the Italian Treasury during the time when many of these derivatives contracts were concocted. All of the credibility of a snail who proclaimed that he would not be cooked and was later found on a plate of escargot.
 
“Sin has many tools, but a lie is the handle which fits them all.”
 
            -Oliver Wendell Holmes Sr., Autocrat of the Breakfast Table
 
In my mind the "lie and deny" about the Italian derivatives contracts is the smallest of the issues. The larger issue would now be Mr. Draghi who can no longer be trusted but that is still not the largest of issues. The largest problem, in my way of thinking, is the delusional state of investors.
 
It is quite obvious, based upon where the markets have been, that we have swallowed and continue to swallow the rancid meat we are handed and told to eat and further told that it will keep us all healthy. The dislocation between the markets and economic fundamentals, as I have said so many times before, is enormous. The dislocation between the real, truthful and honest economic fundamentals, as exemplified by the Italian derivatives contracts, and the markets is now enormous squared.
 
Will this ever be really recognized; I have no idea. Will people ever wake up; I cannot say. I can say this though. If they do Dante's Inferno will look like Paradise Lost.
                            

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Wed, 06/26/2013 - 09:20 | 3694314 imapopulistnow
imapopulistnow's picture

We are becoming a nation of liars where lying is acceptable so long as it achieves an ideological (or financial) purpose.

Wed, 06/26/2013 - 09:30 | 3694340 SheepDog-One
SheepDog-One's picture

Oh sure, it's Planet of the Apes, primates with fancy shit who need to make moar, control moar, get moar power.....same shit as for thousands of years with primate humans too big for their britchez.

Wed, 06/26/2013 - 09:46 | 3694392 CH1
CH1's picture

The problem is obedience. Americans obey their overlords, no matter what. They may complain, but they never stop obeying.

As long as everyone obeys, why should any abuser bother to change?

Wed, 06/26/2013 - 12:17 | 3695365 g'kar
g'kar's picture

One again the movie "They Live!" comes to mind

Wed, 06/26/2013 - 12:37 | 3695471 NotApplicable
NotApplicable's picture

I was once the only person out of a room full of fifty potential jurors that refused to swear to obey the judge's every command, regardless of what it might be. Given that it was her attempt to squelch any potential nullification issues, I was not amused.

Wed, 06/26/2013 - 09:47 | 3694397 johnQpublic
johnQpublic's picture

only difference is ape shall not kill ape

 

 

other:crap....no dry powder left...and silver below 19 bucks

Wed, 06/26/2013 - 09:54 | 3694423 salimmk
salimmk's picture

when you look at it all in prospective, we really should be panicking right now

Wed, 06/26/2013 - 10:00 | 3694452 BigJim
BigJim's picture

I've run out of dry panic powder, too.

Wed, 06/26/2013 - 10:30 | 3694613 DaveyJones
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I remember an early lecture on peak oil and peak debt. I can't remember who it was. He said if a "candidate" spoke the truth on these issues, he would never get elected. He said, hell, I wouldn't even vote for him.

A lot of folks around here talk about the failed attempts to convince family and friends. Some of these ears are even pretty "smart." It's a huge neurotic cake. Nobody wants to believe their parent or any other private or public person to whom they lay they trust out is raping them blind or worse, could care less whether they live or die.  But it's a hard reality and always has been. At some point, it breaks. THe funny thing about these global criminals is the very thing that makes them strong makes them weak. They have a hard time hiding their tracks when they impact so much and so many. Personally, I don't know the formula but the edward snowdens, brazilian poor, Iranian middle class, and american bus driver all have limits.   

Thu, 06/27/2013 - 07:54 | 3698559 thestarl
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How long before a critical mass?

Thu, 06/27/2013 - 08:02 | 3698579 Bearwagon
Bearwagon's picture

Depends on what you plan to achieve.

- delayed criticality: Nuclear reactor   -   takes time

-prompt criticality: Nuclear bomb        -   must happen fast

See the similarities?

Thu, 06/27/2013 - 07:54 | 3698561 thestarl
thestarl's picture

How long before a critical mass?

Thu, 06/27/2013 - 07:55 | 3698562 thestarl
thestarl's picture

How long before a critical mass?

Wed, 06/26/2013 - 10:02 | 3694461 CPL
CPL's picture

No fear

...just let it happen, watch it and take notes on the who/where/when/how so it's well documented for why we don't want to do this historically ever again.

Wed, 06/26/2013 - 10:13 | 3694499 BigJim
BigJim's picture

I like the sentiment, but I'm inclined to agree with Kyle Bass - memories in finance seem to be in the 2 year region.

Wed, 06/26/2013 - 11:14 | 3694777 CPL
CPL's picture

This is going to last a little longer than that.  Took around 1200 years the last time after Rome and the Catholic church influence to put it back together in Europe.

Currently there is no such mechanism in place right now that is close to operational, organised well enough or has the available resources to hedge the conditions of 7.2 billion people because the majority of them are subscribed to this idea.  The issue is scale.

Bass has the right idea.  He's got nickles that are made of real nickle, he has gold and silver that he's vetted, he has land and he talks about his family in the media I've seen of him.  His family is worth more than all the wealth he's collected and he recognizes that.  Whenever people smarten up and figure it out, he'll probably be one of the first guys people will see because he's in the position to become a nickle broker.

Ever read one red paper clip?  A couple of lads out in Newfoundland, flat broke, make a bet that they can trade a single red paper clip into a house.  Took about two years but through a coordinated effort and nicely harassing everyone, they managed to trade a single red paper clip into a house in Saskatchewan. 

That's how business gets done.  It's got zero to do with t-bill or bonds or paper.  It has to do with will and all the supporting personal traits that go with it along with the community/family behind the person.  I'm pretty sure we'll be hearing about Bass for a while.  He's very sharp as is his Scottish counterpart Hugh Henry.

Wed, 06/26/2013 - 14:27 | 3696103 MisterMousePotato
MisterMousePotato's picture

Just remember (regarding your paper clip story) ... the opposite is true, too, which is well known to every married man.

Wed, 06/26/2013 - 15:10 | 3696314 CPL
CPL's picture

lol!  Very true.  Man starts with ahouse and ends up with a paper clip.  Over the last five years I understand that is how the profession of investment banking works now.

Wed, 06/26/2013 - 11:22 | 3694975 justamousesquared
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Oh, but we will we just can't help ourselves because this time it will be different

Wed, 06/26/2013 - 10:12 | 3694483 BigJim
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Actually... I was feeling a little downcast, myself. So I went to King World News! Here are the headlines:

Richard Russell - A New Monetary System & End Of The Fed

One the heels of last week’s propaganda by the Fed, the Godfather of newsletter writers, Richard Russell, writes about the end of the current monetary system, the bond market collapse, volatility in...

  Global Chaos Signals World Currency System Will Be Recast

As the two-year cyclical bearish phase in the gold and silver markets is coming to an end, today John Embry told King World News increased global chaos now signals “the entire world currency system”...

  The World Has Never Seen Anything Like This In History

On the heels of incredibly turbulent trading in key global markets, today 40-year veteran, Robert Fitzwilson, put together another extraordinary piece.  Fitzwilson, who is founder of The Portola...

Michael Pento - The World Is Now Headed Into A Depression

Today one of the top economists in the world told King World News that despite bounces, stocks will continue to crater and he has positioned his clients short for a collapse in global markets. Michael...

Leeb - There Is Outright Panic & Liquidation Now Taking Place

On the heels of continued chaos in global markets, today acclaimed money manager Stephen Leeb told King World News there is outright panic and liquidation now taking place. Leeb also told KWN the...

The World Is Now On The Edge Of Total Collapse

With investors around the world concerned about the tremendous turbulence in global markets, including gold and silver, today Egon von Greyerz warned King World News that “the world is now on the edge...

Incredibly Important Developments In Gold & Silver Markets

Today King World News is reporting on incredibly important developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini spoke with KWN about the action in both of...

Former US Treasury Official - Fed Orchestrated Gold Plunge

Today a former US Treasury Official told King World News that the U.S. Federal Reserve orchestrated Thursday’s massive gold plunge which shocked market participants. Dr. Paul Craig Roberts also warned...

Maguire - World Just Witnessed Massive Shift In Physical Gold

Today whistleblower Andrew Maguire told King World News that the world has just witnessed a massive and irreversible shift in the global balance of physical gold. Maguire, who recently appeared in the...

Nigel Farage - The Government Is Going To Steal Your Money

On the heels of yesterday’s drubbing in the gold and silver markets, MEP Nigel Farage spoke with King World News about recent turbulence in key markets, and also warned KWN readers to expect more...

“Criminal” Paper Derivative Selling Used To Crush Gold Market

Today a legend in the business told King World News that we are in the final stages of a war to push gold and silver prices lower and it is being facilitated through the “criminal” use of paper.

Anyway... I think you can see that, as owners of physical PMs, our troubles will soon be over... I mean, KWN have been saying the same thing for the last year.. alright, 2 years... alright 3/4/5/6/7 years, so they're surely going to be right sometime soon?

If you don't need to sell your PMs, don't worry, you won't have lost anything when the price eventually goes back up.

I do wish I'd bought a little less at $1580, though... 

The big problem as a PM holder is that it can incentivize a 'wish-the-world-would-crash' mindset, which is probably not too healthy. But whatchugunnado? Buy TEPCO?

Wed, 06/26/2013 - 13:14 | 3695682 Thisson
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Indeed, I recommend you panic.

Wed, 06/26/2013 - 10:50 | 3694776 KnightTakesKing
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I have about 40% dry powder left but I feel the need to have a large cash cushion. I also think the way this abnormal situation is playing out that Au and Ag has some more downside to go. I may drop another 20% if Au goes below $1000 and Ag goes below $17. Dollar cost averaging is helping until the metals explode...

Wed, 06/26/2013 - 13:17 | 3695702 Thisson
Thisson's picture

1) Sell puts on silver products (e.g. slv).  2) Use proceeds to purchase more physical.  It's a win/win!

Wed, 06/26/2013 - 09:45 | 3694385 wolfnipplechips
wolfnipplechips's picture

These are not the droids you're looking for.

Wed, 06/26/2013 - 09:51 | 3694413 Headbanger
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I've noticed latelty the more I exaggerate about what I do, what I drive, where I live... the more people who ask me want to believe it while my favorite bar tenders try to keep a straight face.  And I've realized these people WANT to be told how great and wonderful somebody else has it so they can believe they'll have it too instead of facing their bleak prospects in reality. The entire country is that way now.

Wed, 06/26/2013 - 10:32 | 3694623 indygo55
indygo55's picture

There's a couple of guys at work that when I mention Edward Snowden or Ben Bernanke they don't even know who they are. They only marginally use computers and shun any discussion about anything to do with the internet. They are in their 40's and the thing they talk about is what was on "America has talent." The response to me is always "what can I do about it? Nothing!"  Not only do they have no clue but they are willfully ignorant of anything outside their immediate comfort zone. I have tried to explain some basic issues and now I just could't give a shit how stupid and ignorant they are. But I will not stop trying to get a discussion going with others about these important world changing issues because in my opinion getting a lively discussion going is the easiest way to begin a state of awareness and that can be the critical mass that this nation and world needs. 

Wed, 06/26/2013 - 12:42 | 3695514 NotApplicable
NotApplicable's picture

Ignore them. They are far too old (and comfortable) to accept the change of perspective required to accept that their conventional wisdom is nothing but lies.

Instead, find the twenty-somethings who seem to care, but are disillusioned to the current solutions. They are our future. Also, ignore anyone of any age who promotes politics as a solution to anything.

Wed, 06/26/2013 - 11:33 | 3695052 Lordflin
Lordflin's picture

We live in an age where truth is hated, wisdom brings laughter, bondage to immorality and decadence is called freedom, and demonic hate is called love...

What could possibly go wrong?

Wed, 06/26/2013 - 14:38 | 3696156 mt paul
mt paul's picture

i infactualy deny

that i did not lie...

 

an ETf 2x short

 on truth

Wed, 06/26/2013 - 09:21 | 3694318 fonzannoon
fonzannoon's picture

Even Mark is starting to come around to QE4eva.

Wed, 06/26/2013 - 09:27 | 3694336 SheepDog-One
SheepDog-One's picture

Controlled global financial takedown is all it is, everyone will be Corzined 1 morning and left saying 'Whoa, I was sure we'd just squeak by 4eva'.

Wed, 06/26/2013 - 12:44 | 3695523 NotApplicable
NotApplicable's picture

TINA told him.

Wed, 06/26/2013 - 09:23 | 3694321 BigPerm
BigPerm's picture

How about a investment play? I need to keep myself busy until gold finally stops falling. 

Wed, 06/26/2013 - 09:22 | 3694322 BigPerm
BigPerm's picture

How about a investment play? I need to keep myself busy until gold finally stops falling. 

Wed, 06/26/2013 - 09:24 | 3694325 max2205
max2205's picture

bank coin...thats all folks

Wed, 06/26/2013 - 09:24 | 3694326 SheepDog-One
SheepDog-One's picture

I'm completely out of this clownshow, just watching the juggling monkeys from the stands. Whatever.

America deserves no better than what's happening to it.

Wed, 06/26/2013 - 09:48 | 3694405 NidStyles
NidStyles's picture

Many of us are doing the same.

Wed, 06/26/2013 - 10:28 | 3694589 BeetleBailey
BeetleBailey's picture

Getting close here...got smoked in my small FX account with silver......I hate fucking bankers.....

I agree...I am astounded by how completely fucking dumb Americans are.....

I have stood on my congressman and senators ears.....most complain...but yet do nothing...and are dumb as dirt as to what is really happening (massive theft).....

 

Until Americans rise up (not likely), this shit is continuing unabated....

Wed, 06/26/2013 - 09:26 | 3694330 Investor-1
Investor-1's picture

"Dante's inferno". That is an accurate discription of the situation on the financial markets today. Personally, I am lost in all the volatillity and crisis after crisis. It's hard to make money on the financial markets today. I am luckey to have found some good traders to follow.

Wed, 06/26/2013 - 09:57 | 3694439 BigJim
BigJim's picture

Did they make $17,243 in one month just sitting in front of their computer?

Because it seems there's a load of people whose sisters/aunts/hamsters do that... month after month!

Wed, 06/26/2013 - 09:34 | 3694353 yogibear
yogibear's picture

Those in the Washington and in the Fed believe if you lie long enough it becomes the truth.

Any ethics are gone. 

Look at all those politicians with scandals which were re-elected by the voters.

The US has become a banana republic.

Wed, 06/26/2013 - 09:44 | 3694383 SheepDog-One
SheepDog-One's picture

Oh no doubt, long ago! The country totaly deserves just what it's getting, and the far worse things in coming days.

Wed, 06/26/2013 - 09:35 | 3694357 Uncle Zuzu
Uncle Zuzu's picture

Ayn Rand needs to lighten up.  Oh wait, she is dead.

Wed, 06/26/2013 - 09:58 | 3694443 BigJim
BigJim's picture

We all get to explore Keynes' 'long run', eventually.

Wed, 06/26/2013 - 10:04 | 3694468 francis_sawyer
francis_sawyer's picture

Can't ignore the consequences of ignoring reality...

Wed, 06/26/2013 - 10:00 | 3694453 Petrus Romanus
Petrus Romanus's picture

The ultimate diet plan, she smells terrific!

Wed, 06/26/2013 - 09:41 | 3694374 viator
viator's picture

Why are there so many lies and liars? Because people love lies. Lies are far sweeter and less nerve racking than the truth which many times can be bitter. So politicians, pundits, economists and academics churn out lies to meet the demand. But lies have a finite shelf life. Reality will finally intrude at some point, unexpectedly.

Wed, 06/26/2013 - 09:46 | 3694390 lakecity55
lakecity55's picture

Somebody has been reading those Onion articles again.

Wed, 06/26/2013 - 09:46 | 3694393 Stuart
Stuart's picture

This post absolutely nailed it!  

Wed, 06/26/2013 - 09:57 | 3694438 shovelhead
shovelhead's picture

Enjoy your horse meat lasagna special with a nice Chianti.

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