It was a confluence of magnificent proportions that led six agents from the joint terrorism task force to knock on my door Wednesday morning. Little did we know our seemingly innocent, if curious to a fault, Googling of certain things was creating a perfect storm of terrorism profiling. Because somewhere out there, someone was watching. Someone whose job it is to piece together the things people do on the internet raised the red flag when they saw our search history. All I know is if I’m going to buy a pressure cooker in the near future, I’m not doing it online. I’m scared. And not of the right things.
Two months ago we first observed the scramble by various hedge funds, in this case Blue Mountain, to take advantage of the peak sentiment in housing, and specifically rental housing (which just hit an all time high as reported previously) by rushing to capitalize on recent investments and dump exposure to the witless public. Specifically, we envisioned the then just announced IPO of the aptly named American Homes 4 Rent (yes, with a "4" not "for"), also known as AMH, which however came at precisely the wrong time for the market: just as mortgage rates were soaring and Colony American Homes postponed its own parallel IPO. Two months later, with the market about to pass 1700 and fears about the housing market put back in the shelf despite a glaringly obvious collapse in mortgage demand, these IPOs are back and with a vengeance, although now reflecting a far more subdued, tapered if you will, view about the house leasing sector. Not surprisingly, AMH priced overnight, selling 44.1 million shares at a price at the bottom of the $16-18 range to raise a total of $706 million: a 44% discount to the $1.25 billion suggested in the prospectus filed back in June.
We suppose it just wasn’t enough that our allies, “the rebels” in Syria, have significant Al-Qaeda elements to them. No, we are the USA! USA! Best country ever. Defender of human rights. City on a hill. We must do far more than that. So we did. This story below from Bloomberg, highlights a 236-page report by the U.S. Army Suspension and Debarment Office, which shows that military contracts have been granted to the Taliban and Al-Qaeda in Afghanistan. Yep, this is exactly what happens when an empire gets too big, too corrupt, and ends up in the hands of a bunch of sociopaths.
Today’s bizarre confluence of negative real interest rates, money printing, eurozone sovereign default, aberrant asset prices, high unemployment, political polarization, growing distrust… none of it was supposed to happen. It is the unintended consequence of past crisis-fighting campaigns, like a troupe of comedy firemen leaving behind them a bigger fire than the one they came to extinguish. What will be the unintended consequences of today’s firefighting? We shudder to think.
NSA Spying Directly Harms Internet Companies, Silicon Valley, California … And the Entire U.S. EconomySubmitted by George Washington on 07/31/2013 13:47 -0400
Mass Surveillance Is “Killing Our Most Productive Golden Goose”
It just keeps going form bad to worse for William Ackman. The so-called retail expert tried to diffuse the situation today by announcing a massive $2 billion position in Airgas, only for Herbalife to go right back front and center, following news moments ago from CNBC that none other than George Soros has taken a long stake in Herbalife, and not just any stake but a "top 3" position. We haven't done the math but the float out there must be getting dangerously low for Ackman: low enough to where the Volkswagen scenario we predicted in early January (just as we predicted the imminent epic short squeeze) may finally come in play as there is not enough float to cover Ackman's short, and certainly not when the longs decide to pull all the borrow. If and when the Ackman margin calls hit, we hope that Soros will accept shares of Airgas as deliverable. In the meantime, the stock is up 173% since December, or when we said to go long following Whitney Tilson's "short."
There are certain potential catastrophes that can be so threatening we must take steps to insure ourselves even though the probability of one actually occurring is slim. It’s like keeping a small fire extinguisher under your kitchen sink and hoping you never have to use it. We cannot put our life savings and our family at risk by trivializing dangers potentially on the horizon. While CNBC may want to pooh-pooh the probability of something similar happening in our country, we all know that creating massive amounts of currency out of thin air always results in the currency collapsing, or at the very least being revalued in a way that most of us will suffer from. A prudent investor (particularly one on either side of the cusp of retirement) would do well to take out some insurance. That is generally done by investing in metal, farm land, and other forms of hard assets.
When one observes the decline in Deutsche Bank's two net derivative exposures since 2011, one notices something curious: over the past year, the nominal net exposure of the bank's positive and negative derivative market values has collapsed from a combined total of €1.678 trillion to just €1.253 trillion, with consecutive declines over each of the past 4 quarters for a cumulative net deleveraging of €425 billion.
There was a time when Jamie Dimon liked everyone to believe that his JPMorgan had a "fortress balance sheet", that he was disgusted when the US government "forced" a bailout on it, and that no matter what the market threw its way it would be just fine, thanks. Then the London Whale came, saw, and promptly blew up the "fortress" lie. But while JPM's precarious balance sheet was no surprise to anyone (holding over $50 trillion in gross notional derivatives will make fragile fools of the best of us), what has become a bigger problem for Dimon is that slowly but surely JPM has not only become a bigger litigation magnet than Bank of America, but questions are now emerging if all of the firm's recent success wasn't merely due to crime. Crime of the kind that "nobody accept or denies guilt" of course - i.e., completely victimless. Except for all the fines and settlements. Here is a summary of JPM's recent exorbitant and seemingly endless fines.
We take a new look at Japan from the 1980s to today in order to decipher what “Abenomics” might do to this fragile nation. We argue that moving Japan from its current stable, but unsustainable equilibrium, through activist monetary policy risk a run on the sovereign. We present part I and part II here today. We hope you enjoy it.
If our leaders could have recognized the signs ahead of time, do you think that they could have prevented the financial crisis of 2008? That is a very timely question, because so many of the warning signs that we saw just before and during the last financial crisis are popping up again. Many of the things that are happening right now in the stock market, the bond market, the real estate market and in the overall economic data are eerily similar to what we witnessed back in 2008 and 2009. It is almost as if we are being forced to watch some kind of a perverse replay of previous events, only this time our economy and our financial system are much weaker than they were the last time around. We have been living so far above our means for so long that most of us actually think that our current economic situation is "normal."
Based on media reports over the past few weeks, there are two clear front-runners in the competition to be named Ben Bernanke’s successor as Fed chairman. Current Vice Chair Janet Yellen sits in one corner, former Treasury Secretary and National Economic Council (NEC) Director Larry Summers in the other corner, and pundits are actively placing their bets. Yellen is "soft-spoken, even-tempered, 100% mainstream academic economist who boils the world down to simplistic concepts," so similarities between Bernanke and Yellen are far stronger than the differences. A hand off from one to the other would be about as eventful as a rainy day in Seattle. Compared to Yellen, Summers has a longer history as a heavyweight policymaker but as Charles Ferguson wrote, “rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy." And that’s what it seems to be coming down to: a choice between a yawn and a hiss. Why not appoint someone with a track record of getting things right, you ask? Well, that would require a culture of accountability in the White House. Does anyone remember when we last had that?
If we analyze inflation by these two metrics (purchasing power - which declines as real income stagnates and prices rise - and by exposure to real costs), we find the middle class is increasingly exposed to skyrocketing real-world prices. Pundits in the top 5% have the luxury of pontificating on the accuracy of the CPI while those protected by government subsidies and coverage have the luxury of wondering what all the fuss is about. Only those 100% exposed to the real costs experience the full fury of actual inflation.
We need to think about lessening the economic “skin-in-the-game” for RMBS and focusing anew on enforcing US securities laws...
Fed Economist Fired for Investigating Suspicious 9-11 Cash Transfers; and Steve Keen Exposes Financial FallaciesSubmitted by EB on 07/25/2013 07:23 -0400
Tens of billions in cold, hard cash was shuffled around just prior to 9-11 by none other than the Fed itself, then the Fed economist who exposed it was fired.