Archive for November 23rd, 2011
It’s pretty-much over at this point….
This morning Germany had a failed Bund auction. That’s not particularly noteworthy; it happens from time to time.
But what’s noteworthy is what happened to bond yields everywhere through Europe in response: They blew out.
The Greek and Italian “problem” is no longer about Greece and Italy. It has been creeping into Spain and more-recently France, but this morning jumped into Germany and everywhere else “all at once.”
Capital has said “no more” to the lies in Europe. While this does not mean an instant implosion it does mean one important thing: The willingness of capital holders to continue to permit deficit spending is coming to an end, and with it the false “GDP” that this lie has “supported” will also come to an end.
Our lawmakers, for their part, continue to sing a happy song about how we’ll get it done — but not today, since the supercommittee was an abject failure. Covering up the failure was the fact that there were departments that had 10, 20 even 30% increases in the funding found in the appropriateions bills that were passed in the House even while the “committee” was trying to find a way to “cut” spending.
Folks, this political game of lie, lie and lie some more cannot go on forever. Eventually the waiter appears with the check and you either pay it, wash dishes, or get arrested for theft. In the political world that “arrest” comes in the form of capital holders saying that they no longer believe you will ever pay and borrowing costs go up — way up.
The Fed cannot “print” out of this and neither can the ECB. If either try that they will engender an all-on revolt, never mind that as purchasing power falls the fixed costs of staying alive go up relative to incomes and the war is lost anyway.
Reality must eventually be faced. That day is here for Europe and it will soon be here in the US. We have permitted the lies and stealing — both indirectly and now, as we’ve seen, it appears directly through MF Global — to go on for too long.
To those Seniors (and soon-to-be-Seniors) and others who say “but we were promised!” and “I vote damnit – you better give me what you said I’d get” respond: The till is empty and your check is going to bounce.
Occupy Wall Street? Well sure, but while you’re at it, why aren’t the Seniors encircling the Capitol and refusing to leave? Why isn’t the underlying truth being discussed and why aren’t the jackals that led to this happening being forced from office and run out of town on a rail?
I’ll tell you why: Because everyone thinks that they can manage to somehow “get theirs” while “someone else” will take the hit.
I’m sorry to tell ou that it isn’t going to work out like that.
There’s no point in continuing to play this game. MF Global showed us — you’re right, you hedge or you place your bet, you still lose your money! How many farmers, airlines, industrial producers and other legitimate entities using the market for risk management got screwed by that little game and why is it that Corzine is not in handcuffs? FINRA? What’s that — it appears Corzine didn’t have a valid (and required) securities license. Self-regulation not only failed so has any resemblance of actual law enforcement.
The same game was run over in Europe with sovereign CDS. You hedge, you bet right, the ISDA declares that you were “voluntarily” exchanging your bonds and the hedges you bought were worthless. Your “exchange” was as voluntary as is handing over your wallet when there’s a gun up your nose, but that doesn’t matter — the word “is” can be redefined any time the people in charge want, and they want.
Your money, that is.
It will not be long ladies and gentlemen, when the bulk of the folks running the algorithms deduce that they’re exposed to the same risks – they have to post margin too, you know, and if it can be stolen then their capital isn’t safe either. These deposits aren’t supposed to be “at risk” when there’s no position actively open — that’s a performance bond against possible failure to pay, but is supposed to be exactly as safe as a bank deposit in a checking account under FDIC limits.
Well, it wasn’t. The CDS you bought on Greece wasn’t. And it will only take another event like this or two before people conclude that everything is unsound as the jackals running the game will redefine the meaning of words to suit themselves and, failing that will simply steal the money.
30+ years of lawless behavior has now devolved down to blatant, in-your-face theft. They don’t even bother trying to hide it any more, and Eric “Place” Holder is too busy supervising the running of guns into Mexico so the drug cartels can shoot both Mexican and American citizens.
What am I, or anyone else, supposed to do in this sort of “market” environment? Invest in…. what? Land titles are worthless as they’ve been corrupted by robosigning, margin deposits have been stolen, Madoff’s clients had confirmations of trades that never happend and proved to worthless pieces of paper instead of valuable securities and while Madoff went to prison nobody else has and the money is still gone!
Without enforcement of the law — swift and certain — there is no deterrent against this behavior.
There has been no enforcement and there is no indication that this will change.
It will take just one — or maybe two — more events like MF Global and Greek CDS “determinations” before the entire market — all of it — goes “no bid” as participants simply stuff their hands in their pockets and say “screw this.”
It’s coming folks, and I guarantee you this: Whatever your “nightmare” scenario is for such an event, it’s not bearish enough.
Hilarity ensues. (Click for larger image.)
A protester handed President Barack Obama a note while shaking hands along a rope line in New Hampshire today. AP photographer Charlie Dharapak smartly zoomed in so you can read the note for yourself.
For those of you who like to know (myself included) the technical information on how Charlie shot the pictures, here it is. Both frames were made with a Canon 1D Mark IV with a 70-200mm zoom lens. The exposure was 1/250 @ f2.8 rated at 1600iso. The first image was shot at 70mm and the close up was shot at 160mm.
Source: Paid to See
Video: German Failed Bond Auction, 6 Billion Offered, 3.6 Billion Takers; Contagion Spreads From Periphery to Outer Core, Then from Outer Core to Inner Core
No doubt emergency meets are underway in numerous countries right now following a failed German bond auction. Bond auctions have failed before, but not in Germany (at least by this much), and never at a worse time.
Link if above video does not play: German Bond Auction Disaster
Key Ideas Expressed in Video
“What people are saying is Germany is going to have to pay the bill. … Just possibly, today is the day people may have decided German bonds are not the safe haven they thought they were. … It’s all about confidence isn’t it?”
It’s actually about solvency, not liquidity, not confidence. Solvency issues in Greece, Spain, and Portugal have now affected the core.
Mike “Mish” Shedlock
Is the world on the verge of another massive global financial collapse? Yes. The western world is drowning in an ocean of debt unlike anything the world has ever seen before, and our financial markets are gigantic casinos that are dependent on huge mountains of risk and leverage remaining very stable. In the end, this house of cards that has been built on a foundation of sand is going to come crashing down in a horrifying manner. Usually in this column I go on and on about why things will soon get much worse. But today I am going to take a bit of a break. Today, I am going to let some of the top financial professionals in the world tell you why things will soon get much worse. Many of the quotes that you are about to read just might make the hair on the back of your neck stand up. Most people out there have no idea what is about to happen. Most people out there are working hard and are busy preparing for the holidays and they are hopeful that the economy will turn around soon. But that is not going to happen. We are heading for another major global financial collapse, and when it happens the U.S. economy is going to get even worse.
The epicenter for the coming global financial collapse is almost certainly going to be in Europe. As you will see below, financial professionals all over the world are sounding the alarm about Europe. It is a disaster that everyone can see coming but that nobody seems to be able to prevent.
Of course the failure of the “supercommittee” in the United States certainly is not helping matters. There is already talk that we may soon see another downgrade for U.S. debt. It is hard to even describe how incompetent the U.S. Congress is.
There is a tremendous lack of leadership both in the United States and in Europe right now. The financial world is more interconnected than ever before, and when the financial dominoes start to fall it is going to take a miracle to keep a complete and total disaster from unfolding.
So when the time comes, who is going to step forward and provide that leadership?
That is a really, really good question.
Right now, panic and fear are spreading like wildfire in the financial world and nobody knows for sure what is going to happen next.
But one thing is for certain. Pessimism is growing stronger by the day.
The following are 17 quotes about the coming global financial collapse that will make your hair stand up….
#1 Credit Suisse’s Fixed Income Research unit: “We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”
#2 Willem Buiter, chief economist at Citigroup: “Time is running out fast. I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.”
#3 Jim Reid of Deutsche Bank: “If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.”
#4 David Rosenberg, a senior economist at Gluskin Sheff in Toronto: “Lenders are finding it difficult to finance their day-to-day operations with short-term funding. This is a lot like 2008 but with more twists.”
#5 Christian Stracke, the head of credit research for Pimco: “This is just a repeat of what we saw in 2008, when everyone wanted to see toxic assets off the banks’ balance sheets”
#6 Paul Krugman of the New York Times: “At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.”
#7 Paul Hickey of Bespoke Investment Group: “More and more, we are hearing anecdotal comments from individual and professionals that this is the most difficult environment they have ever experienced as the market is like a fish flopping around after being taken out of the water.”
#8 Bob Janjuah of Nomura International: “Germany appears to be adamant that full political and fiscal integration over the next decade (nothing substantive will happen over the short term, in my view) is the only option, and ECB monetisation is no longer possible. I really think it is that clear and simple. And if I am wrong, and the ECB does a U-turn and agrees to unlimited monetisation, I will simply wait for the inevitable knee-jerk rally to fade before reloading my short risk positions. Even if Germany and the ECB somehow agree to unlimited monetisation I believe it will do nothing to fix the insolvency and lack of growth in the eurozone. It will just result in a major destruction of the ECB‟s balance sheet which will force an ECB recap. At that point, I think Germany and its northern partners would walk away. Markets always want short, sharp, simple solutions.”
#9 Dan Akerson, CEO of General Motors: “The ’08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress….This is much more serious.”
#10 Francesco Garzarelli of Goldman Sachs: “Pressures on Euro area sovereign bond markets have progressively intensified and spread like a wildfire.”
#11 Jim Rogers: “In 2002 it was bad, in 2008 it was worse and 2012 or 2013 is going to be worse still – be careful”
#12 Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush: “Market forces are increasingly determining what the options are and foreclosing on options policymakers thought they had. One option which is now under discussion involves permitting a country to temporarily leave the Euro, return to its native currency, devalue, commit to returning to the Euro at a better debt to GDP ratio, a better exchange rate and a better growth trajectory and yet not sacrifice its EU membership. I would like to say for the record that this is precisely the thought process that I expected to evolve,but when I proposed this possibility back in 2009, and again in September 2010, I had a 100% response from clients and others that this was “impossible” and many felt it was “ridiculous”. They may be right but this is the current state of the discussion. The Handelsblatt in Germany has reported this conversation, but wrongly assumes that the country that will exit is Germany. I think that Germany will have to exit if the Southern European states do not. Germany’s preference is to stay in the Euro and have the others drop out. The problem has been the Germans could not convince the others to walk away. But, now, market pressures are forcing someone to leave. Germany is pushing for that someone to be Italy. They hope that this would be a one off exception, not to be repeated by any other country. Obviously, though, if Italy leaves the Euro and reverts to Lira then the markets will immediately and forcefully attack Spain, Portugal and even whatever is left of the already savaged Greeks. These countries will not be able to compete against a devalued Greece or Italy when it come to tourism or even infrastructure. But, the principal target will be France. The three largest French banks have roughly 450 billion Euros of exposure to Italian debt. So, further sovereign defaults are certainly inevitable, but that is true under any scenario. Growth and austerity will not do the trick, as ZeroHedge rightly points out. Ultimately, I will not be at all surprised to see Europe’s banking system shut for days while the losses and payments issues are worked out. People forget that the term “bank holiday” was invented in the 1930’s when the banks were shut for exactly the same reason.”
#13 Daniel Clifton, a policy strategist with Strategas Research Partners on the potential for more downgrades of U.S. debt: “We would expect further downgrades, a first downgrade from Moody’s and Fitch and possibly a second downgrade from S&P.”
#14 Warren Buffett on the problems in the eurozone: “The system as presently designed has revealed a major flaw. And that flaw won’t be corrected just by words. Europe will either have to come closer together or there will have to be some other rearrangement because this system is not working”
#15 David Kostin, equity strategist for Goldman Sachs: “The wide range of possible outcomes on both the super committee process and the unstable political economy in Europe drives our view that investors should assume the worst while hoping for the best.”
#16 Mark Mobius, the head of the emerging markets desk at Templeton Asset Management: “There is definitely going to be another financial crisis around the corner”
#17 Gerald Celente, founder of The Trends Research Institute: “The whole system is going down. Pull your money out your Fidelity account, your Scwhab accout, and your ETFs.”
Are you starting to get the picture?
When so many top financial professionals are freaking out like this, perhaps the rest of us should start paying attention.
They are telling us that “time is running out”.
They are telling us that “there is definitely going to be another financial crisis”.
They are telling us that this “is going to be worse” than 2008.
They are telling us that “the whole system is going down”.
Yes, a devastating financial collapse really is coming. Just like in 2008, it will seem like the “end of the world” while it is happening, but it won’t be. It will severely damage our financial system and our economy, but it will not finish us off.
Think of it this way. When you build a sand castle at the beach, it doesn’t get totally wiped out by the first wave or the second wave that hits it. Each wave does significant damage, but the destruction of your sand castle is a process.
It is the same thing with the U.S. economy. We once had the most incredible economic machine that the world has ever seen. It is constantly being gutted and the financial crisis of 2008 hit us really hard, but we are still doing okay.
After this next financial crisis we will be in even worse shape. But we will still be breathing.
More “waves” will come after this next financial crisis. If we continue on the road that we are on, our economy will progressively get worse and worse.
Not everyone will agree with this analysis, and that is okay. In the end, time will reveal the truth to all of us.
Right now, we all need to get ready for the next wave that is about to hit us. A lot of people are going to lose their jobs over the next few years. Hopefully you are prepared for that.
A Majority of Americans (Including Both #OWS and the #TeaParty) AGREE on the Most Important Issues … We Just Don’t Realize It
I have repeatedly demonstrated that – despite the false divide-and-conquer tactics of the mainstream parties and mainstream media – the overwhelming majority of Americans agree on the most important issues facing our country. See this.
NO MORE BAILOUTS!
As I’ve noted since 2008, Americans are united in their overwhelming disapproval for bailouts to the big banks.
This has remained true right up to today.
As Rassmussen found only last month (as summarized by KXLF news):
Today’sRasmussen Reports survey finds that most Americans don’t like bailouts for financial institutions.
60% Oppose Financial Bailouts; 74% Say Wall Street Benefited Most
Survey of 1,000 American Adults
• Just 20% think it was a good idea for the government to provide bailout funding to banks and other financial institutions, but 60% say otherwise.
• While many activists try to link the Republican Party and Wall Street, Republicans think the bailouts were a bad idea by an eight-to-one margin.
• Those not affiliated with either major party think they were a bad idea by a four-to-one margin. Democrats are much more evenly divided. Thirty-four percent (34%) of those in the president’s party say the bailouts were a good idea while 42% disagree.
• Overall, 68% believe that most of the bailout money went to the very people who created the nation’s ongoing economic crisis, but 12% disagree and 21% aren’t sure.
As the Washington Post’s Greg Sargent notes, the recent proposal from lobbyists to the American Bankers Association recommending ways to co-opt the Occupy movement accurately stated:
Well-known Wall Street companies stand at the nexus of where OWS protestors and the Tea Party overlap on angered populism. Both the radical left and the radical right are channeling broader frustration about the state of the economy and share a mutual anger over TARP and other perceived bailouts. This combination has the potential to be explosive later in the year when media reports cover the next round of bonuses and contrast it with stories of millions of Americans making do with less this holiday season.
(Except that it is the majority of Americans – not “extremists” on either side of the aisle – that share this anger).
The “Tea Party” movement was centered on the protesting government bailouts of the giant banks, before it was hijacked by the mainstream Republican party, Sarah Palin, Neocons and others. See this, this, this, this and this.
Ron Paul said last month at a GOP debate:
Bailouts came from both parties…. If you have to give money out, you should give it to people losing their mortgages, not to the banks.
And one of the most common sayings of Occupy Wall Street protesters is:
Banks got bailed out. We got sold out
END CRONY CAPITALISM!
I noted last year:
A Rassmussen poll conducted in February found:
70% [of all voters] believe that the government and big business typically work together in ways that hurt consumers and investors.
(and see this).
Remember that the government helped and encouraged the giant banks to get even bigger, and then has hidden their insolvency and shielded them from the free market, and helped them grow even during the severe downturn.
In return, the big banks and giant corporations have literally bought and paid for the politicians.
Conservatives might call it “socialism” and liberals might call it “fascism” – they are the same thing economically.
But all Americans – conservatives and liberals alike – can agree that it is not capitalism, and it is not American.
PROSECUTE WALL STREET FRAUD!
I pointed out a year ago:
Liberals tend to believe that the public should be protected against harm, while conservatives tend to believe that people should be left free to buy what they want.
Too far apart to ever agree?
No. Conservatives believe that people must be held responsible for their actions and punished for their transgressions. Indeed, some 82% of the American public wants tougher regulation of Wall Street.
Moreover, even for those who don’t like the government sticking its nose in our business, liberals and conservatives agree that if a company chooses to make a representation about something, it can be sued if it is a lie. In other words, all Americans agree that fraud laws should be enforced against everyone from the homeowner who fills out a mortgage application on a small house to the head of a giant bank who makes false statements about the bank’s balance sheets and the quality of it’s investments.
Everyone agrees that financial scammers must be tried and put in prison.
Indeed, Rasmussen found last month:
Two-out-of-three Americans (66%) believe the federal government has not been aggressive enough in pursuing possible criminal behavior by some Wall Street bankers, but 10% don’t feel that’s true and 25% are not sure.
END – OR AT LEAST REIN IN – THE FEDERAL RESERVE!
As I pointed out last month, Americans are not happy with the Federal Reserve:
“We are seeing a level of enthusiasm for Ron Paul that can be compared with President Obama in 2008″, said Eric Brakey, Media Coordinator for NYC Liberty HQ, the grassroots organization hosting the rally for the candidate. “Congressman Paul’s youth support is different now than it was during his last presidential campaign. It’s more organized and it’s picking up steam and continues to grow”.
As the longtime congressman from Texas stepped onto the stage, the crowd screamed with enthusiasm. The audience’s biggest reaction came when he spoke about ending the Federal Reserve. “The country has changed in the last four years, but my message hasn’t changed” Paul said. “The country is ripe for a true revolution”.
Indeed, as Bloomberg noted last December:
A majority of Americans are dissatisfied with the nation’s independent central bank, saying the U.S. Federal Reserve should either be brought under tighter political control or abolished outright, a poll shows.
Americans across the political spectrum say the Fed shouldn’t retain its current structure of independence. Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.
RESPECT THE CONSTITUTION AND OUR LIBERTY!
As I noted in September, Americans want our freedom back:
Americans have become much less tolerant of the wholesale destruction of our constitutional freedoms in the name of fighting terrorism.
As Talking Points Memo notes:
On the eve of the ten year anniversary of 9/11, the Pew Research Center has released new data on Americans’ reaction to the attacks, and the foreign and national security policies pursued in the post 9/11 era. They show a country with views that have evolved on the relationship between civil liberties and the tools given to government to fight terrorism, and a disbelief that the continuing wars in Iraq and Afghanistan helped to lessen the chance there will be another terrorist attack on the United States.
The Pew survey showed a large shift in the number of Americans who are willing to see some of their civil liberties go out the window in the name of fighting terrorism. Directly after 9/11, Americans were willing to make the deal, as 55 percent thought it was necessary, against 35 percent who felt the opposite. Now, only 40 percent felt that giving up some civil liberties is necessary to curb terrorism, with 54 percent against.
END PERPETUAL WAR!
Americans want to put a stop to perpetual warfare:
Ron Paul is [partly] gaining popularity because he is against the never-ending War On Terror, and wants to bring the troops home. Americans are sick of the never-ending, ever-creeping war. See this, this and this.
As Talking Points Memo reported earlier this month:
“…Only about a quarter say the wars in Iraq (26%) and Afghanistan (25%) have lessened the chances of terrorist attacks in the United States,” the Pew report reads. “In both cases majorities say the wars either have increased the risk of terrorism in this country or made no difference.”
Top American military leaders agree, saying that the war on terror has weakened our national security.
- Three-quarters of Americans support US withdrawal from Iraq.
- Two-thirds of Americans believe the Iraq War was not worth fighting.
- Half of Americans oppose US involvement in Libya.
- More than half of Americans want to end the war in Afghanistan.
- Seventy per cent of Americans do not support military intervention to change dictatorships into democracies.
- 55% of Americans say Iran can be contained via diplomacy.
- Only 15% of Americans support military intervention in Iran.
MAKE ELECTIONS FAIR!
I noted last year that Americans want fair elections:
All Americans agree that … there should be free and fair elections. That is why – according to ABC News and the Washington Post – 80 percent of all Americans oppose the Supreme Court’s recent decision allowing unlimited campaign contributions. Americans understand that – unless we take the flood of money out of elections – Washington will represent special interests, and not us.
And we all agree on publicly verifiable, automatically audited paper ballot elections with reasonable ID requirements, so that we assured that no party can manipulate electronic voting results.
KEEP POISON OUT OF OUR FOOD AND WATER!
I noted last year that Americans want safe food and water:
Americans want to be free to live our lives without being poisoned. We agree on safe food, clean water and a healthy environment.
For example, polls show:
- A large majority of Americans want strong food safety rules, and want genetically modified foods to be labeled
- Most Americans are worried about water pollution
- Americans don’t want to be exposed to toxic pollutants
IF THE AMERICAN PEOPLE AGREE ON THESE CORE ISSUES, WHY AREN’T OUR DEMANDS BEING HEARD?
If Americans from across the spectrum agree, why aren’t these desires being implemented by our politicians?
Because our politicians are bought and paid for … lock, stock and barrel.
And the powers-that-be are good at using the age-old divide and conquer trick to keep us weak, divided and fighting at each others’ throat … instead of for what we actually want.
But ultimately, the main reason that we are impotent is that we don’t realize that the overwhelming majority of Americans want the same things we do.
Indeed, most Americans – conservatives and liberals – are fed up with both the mainstream Republican and Democratic parties. This is not surprising, given that neither party is addressing the core demands of the American people as a whole.
Sure, liberals and conservatives will always disagree on some things. But if we realized how many core beliefs we share, we would unite to take our country back from those who disagree with fundamental American values.