Thursday, November 4, 2010

It's Raining Ben! Hallelujah! It's Raining Ben!

"Note to Fed -namby-pamby won't allow you to realize your goals,"
-David Ader, CRT Capital

Bloomberg: Bernanke said resuming large-scale asset purchases should boost economic growth through larger borrowing costs and higher stock prices and that concerns about the strategy are "overstated". 'This approach eased financial conditions in the past', Bernanke said.

( Personal income decreased $16.8 billion, or 0.1 percent… Personal current transfer receipts decreased $21.5 billion in September, in contrast to an increase of $35.1 billion in August. The September change reflected the effects of unemployment compensation legislation, which reduced emergency unemployment insurance benefits by $25.5 billion at an annual rate in September, after boosting benefits by $20.5 billion in August…Real disposable income decreased 0.3 percent in September, in contrast to an increase of 0.2 percent in August.

Quelle surprise! The demand restoration project is still not working. Hoocoodanode?

Once again, here are the top ten reasons why this ends in tears or (hopefully not) fireworks...

10. Nancy Capitalists in a Sovereign Democracy that are Hell Bent to Seek Rent.
9. Although we walk through the Valley of Debt we fear 'No Easing'.
8. Socialized Guts will lead to diminished glories.
7. Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy.A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats.
6. The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century.
5. Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency.
4. Yes Virginia, there is no collateral.
3. The government is 'all in' and can't pull out.
2. Employment, inflation, productivity, GDP, and other sundry stats are massaged into irrelevance ... the markets are rigged.
1. After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is.

Bernanke institutionalizes the concept of PPT, tinfoil hat comrades?, as the pablum narrative collectively shrugs. The continuation of QE1 is estimated as the equivalent of cutting the fed funds rate by three quarters of a percentage point, per the Fed, and even double this amount would result in no more than a .2 percentage point drop in the unemployment rate by 2011, per Macroeconomic Advisers.

One neither need have stayed at a Holiday Inn Express last night nor need have worn a Sherlock Holmes costume on Halloween to deduce that The Fed's mandate of reducing unemployment is unattainable.

What then of the fabled stratagem of 'price stability'? Stability where? A special sauce applied to the trillions of bad meatballs at the insolvent banks where the excess reserves are nothing but DIP financing for a generational workout? That's the deflationary chasm that has already been disappeared from the ojos of us mere mortals - QSPEs and VIEs existing only in the realm of the Google Cache. Stability through debasing our standard of living for a Potemkin recovery where the commons can enjoy prices declining in things they want but can't afford and prices rising in things they need but can barely afford? Ah, say our solons, stability per the pablum narrative description of Federales Psych ops, the clever chestnut of 'portfolio balance'. The Divine Might of Wizards through buying bonds will increase the 'demand' for those hell bent to seek rent in equities, thus trickling household wealth and the resultant spending to the surplus eaters.

But households only have about 7 trillion in equities and if you calculate equities going up 10% from here that translates into about one-quarter of one percent of GDP.

As the Oracle of Eccles goes on his speaking tour over the next few days what will be said is, given the slack in the economy we have to do something... we have the technology to reduce this portfolio... Washington needs to get its' house in order... and the world needs a vibrant and growing America.

What won't be said is @#$%^#$#%$% I pray for the day when I can declare victory and walk away.

And the Nancy Capitalists with their chalice of confidence raised toward liquidity's faucet chortle, 'It's Raining Ben! Hallelujah! It's Raining Ben!'

Wednesday, October 20, 2010

Squircling the drain, the name for our pain?... the inculcation of disdain.

Two generations from the denouement of the summer of love and we've portmanteaued from the counter culture to the culture counter. Today's political discourse akin to the fellas at Stuckey's rippin' on anything that isn't white and male or subservient to same. The grizzly MILVF's, (Mom's I'd Like to Vote For) today's surrogate for dingbat housewife, the cynical pablum narrative akin to the hot meal waiting with scotch properly poured.

It's a feedback loop that doesn't stop giving. Besmirch the stupidity and the authors of same use such accusations as proof of their legitimacy. And the press? Trapped in the hell of cognitive dissonance. This just in... the science of ambulation but first a special report from a momma whose back was broken when yonder crack was stepped on.

In my life no matter what the pursuit there has always been a line of intellectual demarcation best described as retail and wholesale. Perhaps it is conceit to suggest that the chasm between the two seems wider than I've ever perceived but verily if stupid is as stupid does, the wholesale product has transcended the continuum of criminally stupid or stupidly criminal.

Economically we seem damned to exacerbate this Potemkin recovery into something that not even the Divine Might of Wizards can transmogrify. The Great Game as a scum scrum for the crumbs. The unarmed combatants staring at their impotent swords of currencies like Black Knights. Even if reality were to declare the 'fight is mine' the solons would proclaim it to be naught but a flesh wound as they launched the middle class, their chests as cannons, at the great whale of deflation.

Politically, the devils in red dresses, manchurian candidates of the fear industrial complex whose denizens are uniformly hell bent to seek rent, employing 'common' wisdom for the 'common' man for purposes of anything but the commons. Verily, they will hand power to the elites in a way that will beggar credulity all the while being incredulous at any treatises of reasons that might suggest contrary.

Not only must the windfall apples be reserved for the more equal of brainworkers but the tree of egality must be refreshed with the blood of your standard of living.

After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is.(AM Rule #1)

Squircling the drain, the name for our pain?... the inculcation of disdain.

*%&$^# Eh what the hell.... Honey? Where's my scotch!

Thursday, October 14, 2010

Sipping sweet ambrosia from the skull cap of the common man.

'Bernanke and his ilk are not just trying to boost the US economy, they are trying to salvage their reputations and theories. The crime is that they are savaging average Americans and have bet the country in a desperate attempt to prove that they know best.'
-Bill King, the King Report 10/14/2010

'The effect of QE2 on interest rates could be small and limited to an announcement effect...many believe that the effect on output or employment would be small...unlikely to stimulate aggregate demand...little effect on aggregate demand implies a corresponding small effect on output and, hence employment. QE2 could have adverse effects.'
-Federal Reserve Bank of St. Louis

'The folks at the Fed are frozen in fear. They don't know what to do.'
-Chris Whalen

'But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil...'
- 1 Timothy 6:9-10

'There hath no temptation taken you but such as is common to man...'
- 1 Corinthians 10:13

'Don't Task Don't Smell', the central plank of the 'I Can't Believe it's Not Capitalism Plan', has given us Sugar Mountain, where stupidity is cupidity.

Ringfencing the multitude through financial pulchritude is but Federales psych ops, masquerading debasement as growth, as the plutocracy sips sweet ambrosia from the skull cap of the common man.

Phat, Plummed and Cupid is no way to go through strife son. Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency(AM Rule #5). Timmy G even takes credit for the creation of the 'strong dollar' policy.'Nuff said!

As the epigram, 'Yes Virginia , there is no collateral' becomes an accepted norm, as the metaphorical fork in the middle of the road er scratch that kicked can hangs with horsehair, the splinter of our disconnect in the deep bosom of our equity buried is proclaimed by the Federales as nothing but a thorn discovered as they fervently hope not to be cast to the lions.

Is it Back to the Future of folly and bubbles or Fade to Back as we peer down the chasm of the black diamond demographic? Building a bridge to nowhere is at least doing something, but please don't peer down dear citizens lest ye randomwalkers realize the gravity of our situation.

The Oracle at Eccles and assembled throngs of Nancy Capitalists beseech their models that show 100% chance of 'no fail' when the money is easy and free to deliver them like Aesop's Shepherd so when the masses see that which healed them, they will pardon and not attack.

Golden goose or scrambled eggs?

The answer it would seem as we destroy our standard of living to create a Potemkin recovery, is both, in an ever increasing divergent measure.

The insouciance of elites and the Antoinette economy.

Verily, let them eat debt.

Friday, October 8, 2010

Fed for the people, chasing Bennie's steeple, gathereth the reapers.

'As we have been asserting, the FED continues to apply QE, despite it official announcement that Q.E 1.0 ended two quarters ago. For the week ended on Wednesday, the Fed balance sheet increased $9.358B due to the monetization of $7.390B of Treasury notes and an increase of $2.248B of 'assets denominated in foreign currencies' (footnote #13; currency swaps?)
-The King Report, Issue 3856, October 8,2010

...He that gathereth not with me scattereth...
- Matthew 12:30

Faced with the surplus eaters rubbing sus ojos Bernanke had to fire up the psych ops jets after the Jackholios shrimpfest.

The Diving Might of Wizards again on display, gangbanging the string framed as many easings away, the levers of debasement screened whilst shadowfoxing the fray, all in the blind hope that we can avoid anchors aweigh.

"Bennie-boy, whaddaya say there pal of mine ?"

"You know Mr. Market, I've been watching you.
And I know you've been watching me.
You watch me! I know!"

"So, Bennie, what are you gettin' at?"

"Mr. Market, my friend!
How would you like to pump me up the curve?"

"I know you wanna pump me, Market!"

"And you know that I know that you know
that I know that you wanna pump me!"

"Now I'm gonna leverage up,
and when I do, start pumpin'!"

And yet there is dissension in the chattering class of Nancy Capitalists, who with their chalice of confidence half-empty, parry like duck and rabbit.

'Fiscal Stimulus! Monetary Stimulus!'

'Fiscal Stimulus! Monetary Stimulus!'

'Monetary Stimulus!'


'Fiscal Stimulus!'

Verily they are all despicable. The struggle of virtue and vice is writ large as the debate between deflationistas and debasionistas. The former pines for reason before farce, the latter embraces the tragedy.

The Oracle at Eccles contemplating Rallye's mend at Recession's end scratch that Depression's bend.

To QE, or not to QE: that is the question:
Whether 'tis nobler in the markets to suffer
The slings and arrows of outrageous fortune,
Or to halt QE against a sea of troubles,
And by opposing end the rally?

To short: to buy;
No more; and by buy to say we end
The heart-burn of the thousand little trades
That this office is heir to, 'tis a consummation
Devoutly to be wish'd.

The butterfly wings of the banksters reflected back by the synarchy of the squatters reflected back by the imperfection of collateral liens reflected back by the political palliative of misdirection through scapegoating.

Now is the splinter of our disconnect
Made glorious summer by this sun of Ben;
And all the clouds that lour'd upon our house
In the deep bosom of our equity buried.

At this point at the end of the trend - 2009 low besting the 2002 low breaking a line of lower lows from 1897 up- our prosperity is now in the hands of Fleck's battle of unarmed combatants (currencies) where the U.S. is the dealer (reserve), at least for the near term.

It is not so much a race to the bottom as it is a pace to a bottom. QE2 can't sail until Euroland hits the rocks again. We can't let their upcoming crisis go to waste.

In choosing 'prophetic' models with a track record of failure we are mortgaging the ability to be masters of our fate. To foresee a future that rhymes with a past is not, as the pablum narrative whines, to refute self-determination but ironically such recognition would harness the same to shape the unknown to a more benevolent conclusion.

Deficits do matter, belief in a random deliverance is foolish, better to accept a mandatory across the board cut and employ a fair and flat tax.

Free market statistics that are transparent and real allow the free market to allocate resources productively and intelligently.

Creative destruction is the progenitor and the instigator of the wealth creating mechanism of capitalism.

Empires are not eternal. The hard fought blessings of liberty are secured by the prudent not the profligate.

Years from now all this, and most assuredly more, will be obvious and this chapter in history, marked by excesses and folly, will be seen as similar to the ones preceding.

Fed for the people, chasing Bennie's steeple, gathereth the reapers.

We will kick the can until the can kicks us.

"Bennie-boy, whaddaya say there pal of mine ?"

Thursday, September 30, 2010

The greatest part of mankind have no other reason for their opinions than that they are in fashion.

'To say of what is that is not, or of what is not that it is, is false; while to say of what is that it is, and of what is not that is not, is true.' -Aristotle

'The greatest part of mankind have no other reason for their opinions than that they are in fashion.' -Samuel Johnson

'A man can get to love shit if his livelihood depends on it, if his happiness is involved.' -Henry Miller

'Free your mind.' -Morpheus

Just for giggles took a look at the Investment Company Institutes Long term Mutual Fund Flows Historical Data at

April 2009 through August 2009 : 55.832 billion in
September 2009 through December 2009 : 23.271 billion out
January 2010 through April 2010 : 39.131 billion in
May 2010 through September 2010 : 72.958 billion out

So since April 2009 we have net approx... 1 billion out. With the week ended 9/22/2010 being 1.9 billion out that means we broke even (from April 2009) a few days ago.


You just have to hand it to 'em. When it was clear to many of us discerning folk that the wheels were going to come off hard, the silver lining perceived was that sobriety and propriety would return. In fact the exact opposite has occurred. The Federales turned the psych ops up to 11, the plutocracy expounding the Big Lie in a manner and scope that has truly beggared the imagination of us mere surplus eaters.

Lies of course have consequences. When this ends is known to no one. How it ends seems fairly clear. The denouement of the trusted, the sound of great applause lauding folly, and then a long period of silence.

In many ways it is the age old story of Emperors and Pirates, deflation being the Jolly Roger, and a headlong drive into oblivion with the argument that forcing the issue will resolve it. Rummy's chestnut of "If you can't solve a problem, make it bigger' is exemplified by replacing mojo with POMO and the fraudulent conveyance that is gubmint statistics.

But there are unknown unknowns.

What we do not know that we don't know is how the continuing liquidation of Main Street and bifurcation of America will interact with the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self interests and are trying to do it again.

What we do not know we don't know is what the long finger of instability from the Hand will ultimately do to the markets and the economy that are still the home of the brave but alas are now a different land.

The Pump and Happenstance that is the bedrock of Nancy Capitalism is killin' Sam, the wafting asset values per debasement lubricating sovereign democrats that are hell bent to seek rent.

The elitist insouciance of thanking the heavens for the bank bailouts as Bernanke promises to monetize cows to increase the price of milk is manufacturing a chasm of contempt at recession's end... er scratch that... depression's bend.

Eventually something's got to give.

With arms extended, if it may please the court, I present the real unemployment rate in this country.

Over 30%.

Have been following ( for awhile ... kids say the damnedest things don't they?... and what is germane for historical purposes is that the defacto rate of 30% is actually 5 percentage points higher than the worse unemployment levels experienced in the Great Depression Volume 1. In addition, at least per this fella's research,the defacto rate is the most similar measurement to the metric used back then which was as follows: individuals who had at some time worked in an occupation in which they earned money or the equivalent, or in which they assisted in the production of marketable goods, whom were unemployed. The only caveat is that back then, in some instances, 14 and 15 year olds were included in the unemployment rate.

Let me tell you why you're here gentle reader. You're here because you know something. What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

It is the splinter of our disconnect.

Free your mind.

Tuesday, September 28, 2010

Hey... do you think we can export to them? Does Mars need bonds? Bwahhahahahaha...

Guardian : Is the United Nations about to appoint Malaysian astrophysicist Mazlan Othman as the ambassador to extraterrestrial intelligences? Yesterday, the Sunday Times published an article claiming that Othman is expected to announce her proposed new role at a meeting of the Royal Society next week. According to the article, the plan to make Othman and the UN's Office for Outer Space Affairs which she heads, the first point of contact will be debated by UN scientific advisors before heading to the general assembly. Turns out though that the newspaper, and dozens of other media outlets that rewrote the same story, may have jumped to some conclusions. Today, Othman emailed The Guardian, "It sounds really cool but I have to deny it."

'Until such time as planet Earth learns to export to Mars, every national surplus must be offset somewhere else with a matching deficit.'
-Jim Stanford

'And pray that there's intelligent life somewhere up in space, 'Cause there's bugger all down here on Earth.'
-Monty Python

'Where's the kaboom? There was supposed to be an earth-shattering kaboom!'
-Marvin the Martian

'The US Airforce assures me that UFO's pose no threat to National Security.'
-President John F Kennedy

"I looked out the window and saw this white light.It was zigzagging around. I went up to the pilot and said,Have you ever seen anything like that? He was shocked and he said, "Nope." And I said to him: "Let's follow it!" We followed it for several minutes. It was a bright white light.We followed it to Bakersfield, and all of a sudden to our utter amazement it went straight up into the heavens. When I got off the plane I told Nancy all about it."
-President Ronald Reagen (Describing his 1974 UFO encounter to veteran newsman Norman C. Miller, then Washington bureau chief for the Wall Street Journal.)

'I'm not at liberty to discuss the governments knowledge of extraterrestrial UFO's at this time. I am still personally being briefed on the subject"
-President Richard M. Nixon

"The phenomenon of UFOs does exist, and it must be treated seriously."
-Mikhail Gorbachev

From the UK Telegraph:

Aliens have landed on earth, infiltrated British and American nuclear missile sites and sabotaged weapons, according to US Air Force officers.

The beings have repeated their efforts in the US and have been active since 1948, the men said, and accused the respective governments of trying to keep the information secret.

The unlikely claims were compiled by six former US airmen and another member of the military who interviewed or researched the evidence of 120 ex-military personnel.

The information they have collected suggests that aliens could have landed on Earth as recently as seven years ago.

The men's aim is to press the two governments to recognise the long-standing extra-terrestrial visits as fact.

They are to be presented on Monday 27 September at a meeting in Washington.

One of the men, Capt Robert Salas, said: "The US Air Force is lying about the national security implications of unidentified aerial objects at nuclear bases and we can prove it."

He said said he witnessed such an event first-hand on March 16, 1967, at Malmstrom Air Force Base in Montana which housed Minuteman nuclear missiles.

Capt Salas continued: "I was on duty when an object came over and hovered directly over the site.

"The missiles shut down - 10 Minuteman missiles. And the same thing happened at another site a week later. There's a strong interest in our missiles by these objects, wherever they come from. I personally think they're not from planet Earth."

Others claim to have seen similar activity in the UK.

Col Charles Halt said he saw a UFO at the former military base RAF Bentwaters, near Ipswich, 30 years ago, during which he saw beams of light fired into the base then heard on the military radio that aliens had landed inside the nuclear storage area.

He said: "I believe that the security services of both the United States and the United Kingdom have attempted - both then and now - to subvert the significance of what occurred at RAF Bentwaters by the use of well-practised methods of disinformation."

The site was then the base of the US 81st Tactical Fighter Wing.

Capt Bruce Fenstermacher, a former US Air Force officer, also claims he saw a cigar-shaped UFO hovering above a nuclear base in Wyoming in 1976.

Story #2

Six retired officers and one former non-commissioned officer claim to have gathered witness testimonies from more than 120 military personnel revealing the infiltration of nuclear sites by aliens as recently as 2003.

In some cases, nuclear missiles supposedly malfunctioned while a disc-shaped object hovered nearby.

Captain Robert Salas, a former Intercontinental Ballistic Missile Launch officer, said he was on duty during one missile disruption incident at Malmstrom Air Force Base in Montana in 1967.

“An object came over and hovered directly over the site,” he said.

“The missiles shut down – 10 Minuteman missiles. And the same thing happened at another site a week later. There’s a strong interest in our missiles by these objects, wherever they come from.

“I personally think they’re not from planet Earth.”

He said he was ordered to never discuss it: “The US Air Force is lying about the national security implications of unidentified aerial objects at nuclear bases and we can prove it.”

Colonel Charles Halt said he watched Unidentified Flying Objects directing beams of light into RAF Bentwaters airbase near Ipswich and heard on the radio that they landed in the nuclear weapons storage area.

Col Halt said: “I believe that the security services of both the United States and the United Kingdom have attempted – both then and now – to subvert the significance of what occurred at RAF Bentwaters by the use of well-practised methods of disinformation.”

Story #3

The group of officers said they would distribute declassified government documents on Monday that would prove there had been alien interference at nuclear weapons sites stretching back to 1948.

Robert Hastings, a long-time UFO researcher, who collated the information, said at a press conference in Washington that “this planet is being visited by beings from another world who for whatever reason have taken an interest in the nuclear arms race”.

He claimed to have gathered witness testimony from more than 120 military personnel showing infiltration of nuclear sites. Six retired officers and one former NCO spoke of their personal experiences.

In some cases, nuclear missiles supposedly malfunctioned while a disc-shaped object hovered nearby. Although the officers produced fresh affidavits detailing their experiences, the incidents, many of them the 1960s, had previously been publicised by UFO enthusiasts. Some of them were first disclosed decades ago.

Mr Hastings stated that beings from UFOs had also tinkered with Soviet nuclear weapons and speculated that the aliens had been seeking to send “a sign to Washington and Moscow that we are playing with fire”.

Captain Robert Salas, a former US Air Force Inter-continental Ballistic Missile Launch officer, said he was on duty during one missile disruption incident at Malmstrom Air Force Base in Montana in 1967 when a “large glowing, pulsating red oval shaped object” hovered over the front gate.

He then noticed that the Minuteman missiles he was overseeing had shut down. “The indicators for all or nearly all 10 missiles showed as red-coloured ’fault’ lights, which meant that the missiles were disabled and could not be launched.”

He said he was ordered not to discuss the matter but was never given an explanation by his superior officers.

In another case in Britain, Colonel Charles Halt said that in 1980 he watched a UFO directing beams of light down into the RAF Bentwaters airbase near Ipswich.

His security team “observed a light that looked like a large eye, red in colour, moving through the trees”. After a few minutes “this object began dripping something that looked like molten metal. A short while later it broke into several smaller, white-coloured objects which flew away in all directions.”

Sceptics pointed out that there was a lighthouse nearby but Col Halt maintains that the objects were “extraterrestrial in origin” and that “the security services of both the US and the UK have attempted – both then and now – to subvert the significance” of what happened near Ipswich.

Saturday, September 25, 2010

Sacred Profanities, Bonfire of the Banalities, Fiscal er Psych Op Insanities ... It's a madhouse.

'Make the lie big, make it simple, keep saying it, and eventually they will believe it.'
-Adolph Hitler

'There are a lot of people who lie and get away with it, and that's just a fact.'
-Donald Rumsfeld

'Repetition does not transform a lie into a truth.'
-Franklin D. Roosevelt

'During times of universal deceit, telling the truth becomes a revolutionary act. Political language. . . is designed to make lies sound truthful.'
-George Orwell

'The first casualty of war is not truth, but perspective. Once that's gone, truth, like compassion, reason, and all the other virtues, wanders around like a wounded orphan.'
- Ente Grillenhaft

'The 1st panacea of a mismanaged nation is inflation of the currency; the 2nd is war. Both bring a temporary prosperity; a permanent ruin.'
-Ernest Hemingway

'I just want you to know that, when we talk about war, we're really talking about peace.'
-George W. Bush

"We're not going to monetize the debt."
-Ben Bernanke

'We are never deceived; we deceive ourselves.'
-Johann Wolfgang von Goethe

Left the Cubs game at the earliest point, (fourth inning - they were being clubbed by the Cardinals), that this fella has ever remembered abdicating his first row seat. But stayed long enough to listen (covertly) to a group of VIPs discuss their plans on renovating Wrigley, how the ivy was loosely covered under the declarations of the National Registry, how any modifications would need to keep up the appearance that things really hadn't been changed much, and how perceptions needed to be handled both in Washington and Clark & Addison whilst maximizing revenue.

True profanity to the ears of a worshiper at the shrine of futility.

And also a fractal writ large of the daily Vaudevillian interplay of the comics (WSJ and FT). Verily, 'tis a war against the future.

The dividing lines have been drawn, on one side are the Naysaying Nabobs of Nancy Capitalism that, with beige books extended, are unwavering in their dogma that Chairman Ben will perpetually liquefy their chalice of confidence, and on the other side are the few the proud, the misfits... the Atticus Finchs that believe that reality is the tail risk. With arms extended they proclaim : We are not idealists to believe firmly in the integrity of our economic system. That’s no ideal to us. That is a living, working reality! Now we are confident that you Mr. Market will review without passion the evidence that you have heard, come to a decision, and will uh, uh, well, uh ...

Then they stop and scratch their head and say ... the government is all in isn't it?

The Office of Economic Influence headed by the Oracle at Eccles like all progenitors of psych ops has to, by necessity, weigh whether the harm done through their deception offsets the good that same, purportedly, will accomplish.

Continual disinformation can result in damaging blowback, and most certainly the denouement of the trusted is a high-priority target to be avoided lest the surplus eaters start to believe their lyin' ojos and reject the Divine Might of Wizards.

As Napolean once opined : 'There are but two powers in the world, the sword and the mind. In the long run the sword is always beaten by the mind.' The horsehair splintering for the Federales cum Svengalis is to negate the cycles and learn from the historical chestnut that in 1929 the top 1% of households represented 44.2% of wealth and in 1933 they represented 33.3%.

Psychological operations are planned operations to convey selected information and indicators to audiences in order to influence their emotions, motives, objective reasoning, and ultimately their behavior.

If inflation expectations are unanchored, then a severe recession can lead to a deflationary spiral. The logic is as follows: In the early stage of recession, the emergence of slack causes the inflation rate to dip. The resulting lower inflation rate prompts people to reduce their future inflation expectations. Continued economic slack causes the inflation rate to fall still further. If the recession is severe and long enough, this process eventually will cause prices to fall and then spiral lower and lower, resulting in ever-faster deflation rates.

And much like 'modifying' the ivy on the walls at Wrigley deflation is true profanity to the ears of a worshiper at the shrine of liquidity.

The struggle of virtue and vice is writ large as the debate between deflationistas and debasinistas. Ones' lens depends on what one means by ones' ends. The deflationistias mean that deflation is the midwife of hyperinflation. The debasinistas pray that familiarity breeds content and not contempt.

So tell me Morpheus how can they camouflage debasement in a no-stimulus zeitgeist?

Friday's King Report:

'The Fed did a major juicing of the system by adding $11.059B for the week ending on Wednesday. More importantly, the Fed’s balance lost only $361m of MBS. It’s inconceivable that the Fed received $10+B of interest or principal prepayments on its $1.09 trillion of MBS in one week.

The Fed monetized $10.461B of Treasuries. The NY Fed has done $20.887B of POMOs, which are Treasury monetizations. There is a POMO scheduled for today as well as Tuesday and Thursday of next week. (

The size of POMOs has increased the past two weeks. So the Fed is on pace to monetize $30+B of Treasuries for September. This is almost a 34% yield on its $1.09 trillion MBS portfolio – less the amount of principal repayments, which we don’t know because the Fed won’t tell anyone.(

The latest H.4.1 shows the Fed is monetizing Treasuries far in excess of the decline in MBS value. We’d love to see proof that principal repayments and interest in 1 year can be 34% of a MBS portfolio. Ergo, the Fed is monetizing Treasuries far in excess of its stated monetization of MBS interest and principal prepayments. The Fed has increased its QE 1.0 activity.

As we keep screaming, QE 1.0 has not ended despite official proclamation that it had. The bottom line is Bernanke and the Fed have been lying about the scope and nature of it - QE/debt monetization.'

Thanks for the Red pill Mr. King.

Damn dirty apes.

It's a madhouse.

Saturday, September 18, 2010

The United States of America LLC

'Fearful people are more dependent, more easily manipulated and controlled, more susceptible to deceptively simple, strong, tough measures and hard-line postures. They may accept and even welcome repression if it promises to relieve their insecurities.'
- George Gerbner

Liberalism is the belief in the importance of equality and liberty. It promulgates reason as the primary source for legitimacy and authority. It stands in direct opposition to religion endorsed by the state, and plutocracy, the modern equivalent of absolute monarchy and the Divine Right of Kings.

The American Revolution (can you hear me Mr. Teabag?) promulgated liberal philosophy as their justification in rising up against the Crown.

Civil rights, individual liberties, the peaceful coexistence of different lifestyles and interests, where the common good can be achieved on the battlefield of dialogue, where power is not concentrated, and mutual respect and tolerance are exhorted... that's liberalism folks.

The antithesis of liberalism is elite theory where the windfall apples need be reserved for the more equal brain workers.

And what is conservatism?

As Robert Eccleshall once opined : 'It is the persistent image of society as a command structure in which the responsibilities of leadership can be exercised within the framework of a strong state manifested in divine-right royalism.'

Deference to authority, traditional institutions, an opposition to modernism, a yearning for the 'good old days', and advocacy of minimalistic change is the bedrock of conservative opinion.

British Psychologist Glenn Wilson stated per his book, 'The Psychology of Conservatism' (1973), that a general factor underlying conservative beliefs is "fear of uncertainty."

To apply these categories, ontologically, to today's conservative and liberal is challenging to say the least.

A conservative president embarking on nation building with the aplomb of a bong-addicted college liberal? Hey we didn't put up that Mission Accomplished sign, we have no idea how it got there. Democracy is on the march dude!

A liberal president advocating Potemkin health reform, approximately a third a trillion to the insurance industry over 10 years, decried by conservatives, whose last president prescribed 8 trillion in unfunded benefits, as socialism? The same president lauding nearly a hundred billion in weapons as a jobs creation program?

An ubiquitous bankster friendly policy, (although to be fair Bush just gave Paulson the keys, Barry Dunham actually had a stronger hand on the rudder) where trillions in rich folks' bad speculative bets were swept under the FASB? And a continuing national discourse squabbling about nickels as the banksters steal gold bars out the back?

The liberal welfare state? Who's zoomin' whom? Welfare is most certainly not just for liberals in the United States of America LLC.

And our popular uprising du jour, crying for NIMBY libertarianism, denouncing the welfare state, save of course for the payments they are entitled to receive, and sickened by the socialism er fascism er well whatever ism 'tis is ... don't get all high-falootin' on me ya book-reading left coast effete... all we know is we don't like it!

It is curious though that few if any of the Tea-baggin' crowd would describe themselves as liberal and yet they seem to be drawn from the well of classic liberalism, as were our Founding Fathers, opposing elitism which ironically the ideology of the rich have conflated for them as today's liberalism.

The end-game of their protestations, most probably, coalescing around the next American Demagogue, the Manchurian Mountain Mama who will, in this fella's humble opinion if she gets in, deliver the state to the elites in a fashion that will beggar credulity.

Now, a lot of folks don't think she has a chance and if the moment occurs when it appears that she does enough of a counter-movement will arise... but please, my progressive friends, keep this in mind, we elected Nixon to his first term right after the 'Summer of Love'.

Thursday, September 16, 2010

Repost and Add-on : Destroy this invisible government ... dissolve the unholy alliance between business and corrupt politics ...wink

'Don't believe everything you breathe
Someone keeps sayin I'm insane to complain
Forces of evil in a bozo nightmare
'Cause one's got a weasel and the other's got a flag
You can't write if you can't relate
Trade the cash for the beef for the body for the hate

You see I may be a Christian but I am also a capitalist. And I will defend our capitalist system against all enemies unless there's a way to profit from its' demise.'
-Stephen Colbert

'Your motto is God,guns,guts,and American.'-CNN interviewer

'Actually its' God, guns,guts,and American pick-up trucks.' -Missouri car dealer that is giving away free AK-47s with purchase of a truck

'Some might wonder why God is included in a motto that also includes guns.'-CNN interviewer

'You don't have a problem with God do you?'-Missouri car dealer

Originally posted December 17, 2009 with brief add-on:

Populism is best defined as the juxtaposition of "the people" with "the elites". Its' flag has been hoisted by the left and the right, the irrational and the rational, and its manifestation per the prevailing zeitgeist is often appropriated by a demagogue.

For Ben Tillman, African Americans were the scourge of white society; for James Michael Curley, Anglo-Saxons were the bane of the browbeaten Irish; and for Joseph McCarthy, liberal elites(commies) were an evil upon America. They all fought on behalf of and for the protection of the 'good way of life.' - they all fought against that which stood in opposition to a presumed American norm.

To borrow liberally from Sigmund Neumann's, 'The Steadfast Rules of the Demagogue', and Douglas Walton's,'One-Sided Arguments: A Dialectical Analysis of Bias' : the most recognizable traits of a demagogue are the simplicity of message content and an entirely unilateral point-of-view presentation - summarized as unidimensionality.

The demagogue appeals to the crowd and commonly adds the logical fallacies of appeals to pity, appeals to reverence and appeals to personality as well as other rhetorical devices such as omission not for literary elegance or brevity but rather for gain, influence and deception. The demagogue is anti-Aristotelian, in that rhetoric is not seen as the counterpart of the dialectic -instead, there is no desire to reconcile using opposing views but rather the demagogue presents a view in opposition to some Other. The Other is responsible for cultural and social upheaval, the Other is to blame for all current adverse conditions and "we" the true Americans, in opposition, need to uphold all that is good.

The demagogue capitalizes on vulnerabilities due to ignorance and fear.

The first Populist party in America called itself the Greenback Party. It opposed the shift from greenbacks, paper money issued after the American Civil War, to a bullion based standard. Its platform supported an income tax, an eight hour day, and called for allowing women to vote. After 1884 it was no longer a force in American politics.

The Populist party in the United States came about in the 1892 election. Its' platform called for the abolition of national banks, a graduated income tax, civil service reform, direct election of Senators, a working day of eight hours, and the nationalization of telegraphs, telephones and railroads. This party was gestated for economic reasons namely the desire to repeal the gold standard to counter high deflation in agricultural prices. The party was co-opted by the Democratic Party of 1896 and never recovered from its' defeat.

The platform of the Progressive Party of 1912, formed by Theodore Roosevelt, was 'to destroy this invisible Government, to dissolve the unholy alliance between business and corrupt politics [it]... is the first task of statesmanship of the day.' The platform called for women's suffrage, recall of judicial decisions, easier amendment of the U.S. Constitution, social welfare legislation for women and children, workers' compensation, limited injunctions in strikes, farm relief, revision of banking to assure an elastic currency, required health insurance in industry, new inheritance taxes and income taxes, improvement of inland waterways, and limitation of naval armaments. The Progressive Party did poorly in the 1914 elections and faded away.

The United States Progressive Party of 1924 was a continuation of the Progressive Party of 1912, after gaining only 17% of the popular vote in the 1924 elections it disbanded.

The last true populist party was Huey Long's 'Share our Wealth' movement begun during the Great Depression. Its' platform was:

'No person would be allowed to accumulate a personal net worth of more than 100 to 300 times the average family fortune, which would limit personal assets to between $1.5 million and $5 million. Income taxes would be levied to ensure this. Annual capital levy taxes would be assessed on all persons with a net worth exceeding $1 million.

Every family was to be furnished with a homestead allowance of not less than one-third the average family wealth of the country. Every family was to be guaranteed an annual family income of at least $2,000 to $2,500, or not less than one-third of the average annual family income in the United States. Yearly income, however, cannot exceed more than 100 to 300 times the size of the average family income.

An old-age pension would be made available for all persons over 60.

To balance agricultural production, the government will preserve/store surplus. This is made so no food is wasted.

Veterans are paid what they are owed.

Education and training for all children to be equal in opportunity in all schools, colleges, universities, and other institutions for training in the professions and vocations of life.

The raising of revenue and taxes for the support of this program was to come from the reduction of swollen fortunes from the top, as well as for the support of public works to give employment whenever there may be any slackening necessary in private enterprise.'

Huey Long's slogan was 'Every Man a King'. The movement died with his assassination.

Not every demagogue is a populist and not every populist is a demagogue, but when the two combine it is often combustible. The most salient example would be the conspiracist scapegoating in Germany promulgated as national socialist populism and articulated by a failed painter who did not become a German citizen until 1932.

Fast-forward to today( 12/17/09):

Rasmussen Reports : 'In a three-way Generic Ballot test, the latest Rasmussen Reports national telephone survey finds Democrats attracting 36% of the vote. The Tea Party candidate picks up 23%, and Republicans finish third at 18%. Another 22% are undecided. Among voters not affiliated with either major party, the Tea Party comes out on top. Thirty-three percent (33%) prefer the Tea Party candidate, and 30% are undecided. Twenty-five percent (25%) would vote for a Democrat, and just 12% prefer the GOP. Among Republican voters, 39% say they’d vote for the GOP candidate, but 33% favor the Tea Party option.'

And what is the platform of this nascent political movement?

Limited government, fiscal restraint, opposition to further stimulus spending and a determination to push back against "a federal government that is too big, too intrusive and all-too-eager to seize power from the states." Repeal the death tax, implement a flat tax, keep the internet tax-free, control the border, support free trade, personal accounts instead of social security, school choice, medicare reform, healthcare reform etc...

A populist movement with 21st century characteristics. It will most probably be co-opted by one of the established parties.

It may even marry up with a demagogue.

LA Times : Obama's new Gallup Poll job approval number is 47%. Last month it was 53%.

The new CNN/Opinion Research Poll shows Palin now at 46% favorable.

Move along nothing to see here.


Add-on (09/16/10)

Obviously the Manchurian Mountain Mama is continuing to gain steam. What seemed obvious to this fella is becoming more generally observed. Reading Heilemann and Halperin's 'Game Change' as well as other anecdotal accounts of Lady Palin suggest that we truly are about to live in even more 'interesting times'. At the risk of being cataloged at a future date let me add one final riposte to this once and future candidate, in the language that a regina pravus might understand:

'These six things doth the LORD hate: yea, seven are an abomination unto him:
A proud look, a lying tongue, and hands that shed innocent blood,
An heart that deviseth wicked imaginations, feet that be swift in running to mischief,
A false witness that speaketh lies, and he that soweth discord among brethren.
- Proverbs 6:16-19

Friday, September 10, 2010

Electile dysfunction, Nancy Capitalists sans compunction, raconteuring with gumption...damn dirty apes.

Chris Whalen says that 'The income foregone by individual and corporate savers and transferred to the banks is something closer to $600 billion annually or nearly $1 trillion in total.'

You mean that the failure to liquidate the insolvent banksters, to dip rich folks' bad speculative bets into the acid bath of price discovery, has liquidated a large part of the productive economy?

Seriously hoocoodanode?

Just for the heck of it asked Senor Google how many hits on the intertubes come up for say QSPE and Wells Fargo over the last three months... answer? ... 7! And one was from me per ZH blog on 04/09/2010! My oh my Alice. If 1.7 trillion or so worth less than 50 cents on the dollar can vanish down the randomwalkers' rabbithole without even a gasp verily anything is possible.

Mark Pittman is convulsing in his tomb.

At no time do their hands leave their arms folks; the middle class for their next trick as the 'vanishing bird' smashed at the bottom of the now empty cage.

Just for chuckles, prithee what are the comics saying today?

Deutsche dilutes itself 30% cause Basel might make 'em not count the secret capital?

Donaudampfschiffahrtsgesellschaftskapitän preparing for River Styx!

SEC reignites that 'investigation' into Lehman's fraudulent conveyance mimicry cause Dickie Fuld won't stop griping?

'The lights are growing dim Otto. I know a life of crime has led me to this sorry fate, and yet, I blame society. Society made me what I am.'
- Duke (Repo Man)

Motorcycle Cop: Whatcha got in the trunk?
J. Frank Parnell: Oh... You don't wanna look in there.
(Repo Man)

In the GM IPO the carservatorship's (patent still pending) total equity of $23.9 billion includes $30.2 billion of goodwill? From Government Motors to Goodwill Motors?

My's full of cars.

Equities drift up 'cause, after levering, the Federales hedge fund at Eccles spins about 50 billion from straw to maw this past week?

I couldn't do that. Could you do that? Why can they do it? Who are those guys?

BLS pulls a number out of their tailbone (why even fabricate an effort eh? gosh just one hour a week constitutes part-time employment dontchaknow), half of all youngsters are unemployed, deceleration widespread, plutocracy warns that the arsonists may burn again if the waterfall (tax cuts) are turned off, the repubs who chortled that when Obama was coming in that the subpoenas will fly (what? did somebody do something wrong?) are now threatening that, vuja de, if they get in the subpoenas will fly and Feddie Mac is introducing ... wait for it... minimal down payments, lower minimum credit stores, no appraisals and no mortgage insurance!!!

Have you left no sense of decency?

Electile dysfunction, Nancy Capitalists sans compunction, raconteuring with gumption.

Damn dirty apes...

Friday, September 3, 2010

The hardest button to button, meatballs for nuttin, fiscal mcguffins versus a contrarian somethin'

When Timmy G went to Euroland to pitch stress tests for what ailed 'em was it a set-up? After all, it is not so much a race to the bottom as it is a pace to a bottom. QE2 can't sail until Euroland hits the rocks again. We can't let their upcoming crisis go to waste.

If the U.S. stress tests were I.Q. tests, the EU tests were, in comparison, measuring sanity... as in over the long term only the insane would believe them.

For example did you know that part of most all big German banks balance sheets' consists of 'secret capital' (seriously that is what it is called) - loans from the state with non-disclosed terms. You didn't? Why, cause it's secret folks!

An example of German efficiency , they don't have to fight transparency all the way to the Supremes.

Sniffing down the banksters' rathole has already started on the Continent and believe you me, our national security apparatus, scratch that, the rating agencies, will step in whenever the planners and thinkers cast the 'appropriate' runes.

Ha! Mr .Money, one might say, the Federales could never plan so well. Certainly though they do plan, everyone does, as they paint themselves into the corner of the round-roomed recovery, fervently they beseech the Rhyming Gods to let the second easing mouse get the cheese. 'Tis but the matter of timing the trap.

Be that as it may ...let me interrupt this rant for something completely different.

It seems all the rage now to talk about depression, exhort the birth death model, and parse the cornucopia of fraudulence conveyance that is government statistics, with the only positive spin imaginable being some version of ' I may be going to hell in a bucket, babe. but at least I'm enjoying the ride.'

Yes, surprise, surprise, the demand restoration project is not working yet. And?

Let me spin a contrarian tale, the silver in the clouds of this approaching storm.

If you're going through hell, verily 'tis only one option, keep going.

When change is afoot you have two choices, you can either grab the surfboard and ride the wave or you can let it crash over you.

Do not count on government to save you, look in the mirror for your salvation.

I assure you that the majority of citizens on this planet do not have such an advantage.

As horrible as this will feel, in hindsight something wonderful is about to happen.

America needs to get its' mojo back, one citizen at a time.

Don't be afraid.

Let's face it, as Americans we collectively think history does not apply to us or at least we have mastered it- we have grown up as the dominant power, we have basked in the fruits of that glory.

As such we, the citizenry, although troubled still ache to believe that this is temporary, a transient blip, happy days soon will be here again...policies flowing from on high will mimic that optimism and in doing so will underestimate (at least 'officially') the dilemma and prolong the process.

My entire life have always rallied against the tyranny of petty knowledge. Folks that wield their 'secrets' like a club have always generated intense vitriol from this fella. Knowledge is nothing more than an acquired thing. You can learn anything if you put your mind to it. How? Just do it. Why? Because you can.

Now, more than ever in my generation's lifetime,a broad intelligence is critical. We have stuffed the pig on the scales of fate. Through our desire to be prophets we have ceased to be makers of our own fate. On a macro level but not for the individual.

Despite all the digital ink spent on the failings of America, especially in light of the ‘I Can’t Believe it’s not Capitalism’ Plan generated in response to the ‘What Just Happened Crisis’… hope is not dead, progress has not been outlawed, justice is not forbidden, and evolution is not off the table.

The fire of liberty exists, the embers of truth still glow. As long as one voice stands to speak truth to power,the dream of this country lives and can be expressed by each and every one of us.

We are Americans dammit, and that word, yes, still has noble meaning.

There is one blessing fostered upon Americans that can't be denied. We can reinvent ourselves. We are not beholden to anything other than our imagination, we can make out of clay what our minds and our hands desire. They can only take from us what we abrogate; they can only lie to us if we refuse to put in the work to know the truth.

It is not a question of being part of the solution or part of the problem. Change does not have to be consistent with someone else’s plan. Change comes from within. To make a difference outwardly one must first find that difference within.

Get off your ass America, over the long-term if you will it to be, your future is so bright, we'll all be shorting shades.

The hardest button to button, meatballs for nuttin, fiscal mcguffins versus a contrarian somethin'

Believe it and you will be it.

Saturday, August 28, 2010

At Fed's End. Hoist with their own petar; and 't shall go hard. The world as bard, as they play their last card.

The boomer generation has born witness to the greatest private misallocation of capital in the modern era, dot-com, followed by the greatest public misallocation of capital in the modern era, blutarsky interest rates and banksters too bankrupt to go broke.

As we continue our walk through the fiscal wilderness it is fitting that 40 days and 40 nights (80 years) brings us 1932-2012. (1929-2009 being just a coincidence, of course.)

What shall we call the next generation? The busted?

The rhyming of the greatest separation of wealth since 1928 brings the spectre of the first full-blown deflationary episode post-WW2 to the forefront once again. The prevailing chestnut that deflation will result in depression is for the most part, per the historical record, nonsense. Worldwide, over the last couple centuries, there were 65 episodes of deflation without depression and 21 of depression without deflation, 65 of 73 deflation episodes had no depression, and 8 of 29 depression episodes had no deflation. Nearly 90% of the episodes with deflation did not have depression. (Atkeson&Kehoe, 2004)

Of course back then we had sound money not found money.

Deflation and depression were interlinked in GD1 of course, but not quite the way most folks believe it was. Inflation expectations were well anchored in GD1 and the black diamond in CPI to mark the onset of that crisis was symmetrical to the pop in CPI in the late 30s. Hyperinflation did not ensue because the 'deflation' more rightly should have been called disinflation, and of course deflation is the midwife of hyperinflation (caught you cribbin' Mr. Edwards.) The disinflation of the 30s was reversed with a 40% currency devaluation, the belief in wizards was strong and well met.

The empirical point to consider though is that this Great Depression is occurring in a sovereign that has the world's reserve currency with a national security apparatus that includes the rating agencies. A volatile mix of mischief that allows folks to not only dispel the administration of medicine but promote the advocacy of alchemy while bloviating on how deflation is truly the hemlock of the people, well at least some of the people.

How does this end? To the sound of great applause, folly's denouement ... and then a long period of silence.

In many ways it is the age old story of Emperors and Pirates, deflation being the Jolly Roger, and a headlong drive into oblivion with the argument that forcing the issue will resolve it. Rummy's chestnut of "If you can't solve a problem, make it bigger."

Methinks the Federales have one 'futile and stupid gesture' brewing to can-kick the ebbing empire, guns and butter redux, although this time perhaps more appropriately phrased as buns and gutter. Ultimately regaled, for those of more modest deportment, as Financial Pornography 101 : Gangbanging a String.

The Fed will end, 2016 is circled on my calendar, hoist with their own petar; and 't shall go hard. The world as bard, as they play their last card.

Tuesday, August 24, 2010

Financial Pulchritude, Ringfence the Multitude, Federales with Attitude, Brother can you spare a Rhyme?

"The worst is over without a doubt."
"American labor may now look to the future with confidence"
"We have hit bottom and are on the upswing"
- James J. Davis Secretary of Labor. (June,Aug,Sept 1930 respectively)

"In other periods of depression, it has always been possible to see some things which were solid and upon which you could base hope, but as I look about, I now see nothing to give ground to hope-nothing of man."
- Former President Calvin Coolidge, (1933)

'He that trusteth in his riches shall fall; but the righteous shall flourish as a branch.'
- Proverbs 11:28

In 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%.

In 2004, the top 0.1% of Americans had a combined pre-tax income of the poorest 120 million people (approximately 40%.)

In 1929 the top 1% of households represented 44.2% of wealth and in 1933 they represented 33.3%. On the second data point hangs the prophetic sword with horsehair splintering over the Oracle at Eccles.

As of 2007, the top 1% of households owned 42.7% of all financial wealth (total net worth minus the value of one's home.) The bottom 80% percent? Just 7%.

As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top .01% (yes, that is one-hundredth of one percent) receiving 6% of all U.S. wages.

In 1928, the top 10 percent of earners received 49.29 percent of total income. In 2007, the top 10 percent of earners garnered 49.74 percent.

In 1928, the top 1 percent of earners received 23.94 percent of income. In 2007, the top 1 percent took home 23.5 percent.

And the lessons learned by our blessed leaders concerning this Great Depression? Prices cannot go down and wealth inequality needs to tick up. An assemblage of price-distorting wizards locked arm-in-arm struggling to defeat the creative destruction blizzard. The insouciance of elites and the Antoinette economy. Exhibit thyself to a public that may hiss thee, bemoan the solons. Let them eat debt!

Quis custodiet ipsos custodes? said the Roman poet Juvenal. Who will guard the guards themselves?

Why, pronounce our modern day guards, we will. Trust us but don't task us lest you see trust in us lost to your peril.

'Don't Task Don't Smell', the central plank of the 'I Can't Believe it's Not Capitalism Plan' has given us Sugar Mountain, where stupidity is cupidity.

The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century. (AM Rule #6)

After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is. (AM Rule #1)

Truly we need a hero or it is generation zero.

Financial Pulchritude, Ringfence the Multitude, Federales with Attitude, Brother can you spare a Rhyme?

Phat, Plummed and Cupid is no way to go through strife son.

Sunday, August 15, 2010

The splinter of our disconnect. Fade to back.

Scene 1:

6 year old daughter had been misbehaving during the course of a day. Wife did the old 'wait until your father comes home.' When I arrived home just as the wife was about to regale me with the little one's transgressions, my daughter 'waved her off' and walked towards me with arms extended to support her point; 'Daddy I am still just a little girl, I am going to make mistakes.'

Scene 2:

Driving home from my wife's parents the other night.
She notices that our son (4yrs) was playing with a toy...

Mom: Is that your toy?

Son: No Mama, Grandpa and Nana said I could have it for a week.

AM: I think he is making that up.

Son : (Pause) I changed my mind.

Son: Its' craziness Mama.

Wife: What's craziness ?

Son: Its' craziness when you take a toy that doesn't belong to you.

Son : (Pause)

Son : And I'm a crazy man Mama.

Scene 3:

'Now is the winter of our discontent
Made glorious summer by this sun of York;
And all the clouds that lour'd upon our house
In the deep bosom of the ocean buried.
- William Shakespeare (Richard III),

Fade to Back:

'There are two mistakes one can make along the road to truth -- not going all the way, and not starting."

The first two above are from my children but it is a fractal of the Federales for most certainly crazy men do make mistakes.

The crystallizing mistake of our age, the crime of the century writ large, the splinter of our disconnect... is this epigram: failure to liquidate the insolvent banksters, to dip rich folks' bad speculative bets into the acid bath of price discovery, has liquidated a large part of the productive economy. And so the blast beat of the cyclic drum plays on as we fade to back.

The American Empire came to a fork in the road and instead of taking it we morphed it into a can.

A quarter century of being prophets of our fate, of the Great Moderation, scratch that the Great Modification, of deficits not mattering, of models over history, is serving up the middle class as a burnt offering and may result in our not being masters of our intermediate future as we black diamond towards the denouement of the trusted.

Just got back from a Colorado Springs conference and had the 'same conversation' once again this time with the cab driver. A decade out from California, the fella was a luxury real estate developer, and he shared two stories which characterizes our zeitgeist.

The first is that of a former client who has a 25 million dollar home (well that was what they paid for it) with several million in equity. They would like to refinance with the bank but they can't because the bank has absolutely no idea how to value it, couldn't even give 'em a number or a range.

The second is that this cabdriving victim of the misallocation of productive capital plans to stock up on guns and ammo and, offering the caveat of 'don't laugh with what I'm going to tell you Mr. Stranger in the back seat', has plans to go to Alaska with a portable home (I forget the indigenous term) to live of the land.

Being a contrarian, I suggested to him that his conversation was one that had been oft-repeated as of late (he agreed his associates were all chortling the same) and suggested that if we do get shaked and baked either through gravity dislocations (astro stuff), history relocations (war following financial crisis), or popular sniping (the manufacture of contempt for it is only a Great Depression if they say it is) the big cities will probably be the safest place to be...

After all, if the s$&% comes down do you really want to be out in the hinterlands with every other fella loaded to bare? Sounds like Mad Max to me.

If I knew the way would most probably share it, but he who has a crystal ball most certainly ends up with a mouthful of broken glass.

This I feel to be true... it is a Great Depression but with different characteristics than our First. You can read the intro to this blog as well as the inception date, your humble blogger dropped the tagline of the Great Depression of 2007 prior to the Noblesse Oblige even calling the recession.

In GD1 what was a fella to do? Collect cigarette butts on the street, sit on the porch, listen to the radio, or mayhaps go down to the Bowery and get in trouble?

Now the choices are a cornucopia of low-cost to no-cost diversion. Juvenal would be proud. Watch a movie , read a book, read a paper, or listen to music all for free via the intertubes and collect the government check. All until that zombie movie comes to your local cineplex entitled 99 Weeks Later.

Among the empirical evidence of our current dilemma are current unemployment levels being empirically worse than the worse levels of the Great Depression Volume 1 - if we apply the same measurement metric. Seriously, you can look it up!

Another nugget is the comparable extremes met in the separation of wealth in 1928 and 2007, which has actually upticked through 2010. B.S. Bernanke certainly did learn the 'lessons' of GD1, did he not?

My trading sensei berated me a few days ago in my commenting that this is GD2, with the bromide 'look at all the affluence around us!' My reply was have you ever read newspapers from 1930 and 1931? - Internally I verbalized Hemingway's chestnut...'{there are two ways a man goes broke}, slowly,and then all at once.' Once upon a rhyme is a'comin.

Here in Cook County homes over $500,000 are not to be foreclosed on (add-on : >$500K foreclosures represent about 1% of total per The King Report), the banks don't want to take the hit, the overextended upper middle class with horsehair splintering probably choosing to go to Disneyland (or Nordstrom's?) as they squat in their hut and dream of... I don't know... joining the cab driver in Alaska?

With the upper echelons of America contributing a disproportionate share of consumer spending, and their primary asset frozen in the ember of a 13-16 year downtrend where the buyers are lower and the sellers are higher (most probably chemically since the securitization market for jumbo has gone dumbo) the cyclic clock is ticking, the alarm anticipated, that will start wholesale regurgitation to flippers who will counterintuititively drag the 'cancer clearing' out as the fast money waits for the the Groundhog Day bounce back of the ever-imminent recovery right around the corner of a round room.

A generational circle smirk as it were.

And with trillions of meatballs thrown at the problem, the reserves at the Fed being nothing more than a dip financing for a generational workout, private demand is down ticking for the first time since 1928? Viva la V-shaped scratch that seeds abounding scratch that nascent scratch that unusually uncertain recovery!

If the inflection point between inflation and deflation is believing in wizards or believing your lying eyes the Oracle at Eccles better fire up the jets prior to meeting with the Jackholios cause people are squinting at the eye chart and rubbing sus ojos.

Now is the splinter of our disconnect
Made glorious summer by this sun of Ben;
And all the clouds that lour'd upon our house
In the deep bosom of our equity buried.

Fade to Back.

Sunday, May 16, 2010

All good things must come to an end ... or perhaps a new beginning.

Fractal-based theories of market behavior explain discontinuous movements such as the May Trix Flash Crash.

As opposed to supposing that the bubbles in your portfolio are as random as the bubbles in your soda pop, a fractal approach concedes that bubbles are a certainty.

'Fundamentals' most certainly do matter although the use of the term is not what the conventional wisdom perceives.

Even a cursory examination of modern financial history would seem to consign the squawk of randomwalk to the febrile dustbin of history and yet the arrogance of unlimited self-determinism and the mastery of man above all motivates adherence to the ex-theory.

Like lemmings herded to discontinuous chasm after chasm, markets move in memoriam much to the prevailing wisdom's opprobrium.

For your humble blogger Mandelbrot was an eye-opener, but John Needham was the closer.

Over the last week I have automated a spreadsheet based on a 'fractal' theory where upon entering high, low, open, and close as well as ONE other indicator (proprietary from Needham), buy and sell orders can be triggered in ALL liquid markets, and quite successfully I might add.

Applying what Mr. Needham has taught in 'face-to-face' sessions and postulating as to what he will unveil in his foreshadowed 'next stages', have on this fella's spreadsheet clearly, and empirically, separated the winners from the 'sinners'.

Stunning, brilliant, simple, elegant, and in direct opposition to most every financial model known to man.

Now, gentle reader, you might ask why not publicise it Mr. Money, become rich and famous, dye your eyebrows and hair black, and become a billionaire, or at least write a book?

Well, the humble reply is as follows: 1) the entries in this blog do publicize it and have directed folks to Mr. Needham's website, however to truly appreciate his teachings one must attend a tutorial and he is coming to the States this summer ; 2) fame is way, way, overrated and I've already made enough coin for both myself and my children to be comfortable; 3) I've earned my grey hair thank you very much; 4) money is the root of all evil and should be treated with respect much like a weapon and a drug, it is so very hard to make abundance in in this world and not at the end of the day be a complete a&$%ole and 5) all I care about is feeding the kids, and from time to time the extended family, feeding a book would be torture.

And yet this is damn entertaining, and sharing, albeit anonymously, is caring.

The purpose of this blog was in part to figure it 'out', believing' it' to be 'it', with the understanding that it was much easier to make 'it' than to invest 'it'.

Now that I'm firmly ensconced into a future where I'm in 'it' to mint 'it' , the purpose of this blog is called into question.

So...will ponder that. Thoughts for now are that future entries may be limited, if any, and that the future focus will, predominantly, be on the premise that according to fractal theory 'self-similarity occurs on all scales' as well as an exploration of the more subtle concept of self-affinity which refers to a fractal whose pieces are scaled by different amounts in the x- and y-directions.

All good things must come to an end ...or perhaps a new beginning.

There is a difference between knowing the path and walking the path.

To be mindful is a discontinuous process, our senses allow us a glimpse at the perfect form (truth) but that view can often be distorted by the flickering fire of perception that illuminates the shapes we perceive to believe.


Wednesday, May 12, 2010

MathTerror... we're sorry but the numbers you've reached have been logically disconnected

'We are the fools of Europe'
-Bild Magazine

'History is a set of lies agreed upon.'

'And you will know the truth, and the truth will make you free.'
- John 8:32

WSJ : The European Union picked 440 billion euros as the size of the rescue fund because the sum of 440 billion euros and 60 billion euros available initially from an EU emergency fund "sounds nice", a European Commission official said with half a smile. Even better, said another, when the IMF's portion is included, the bailout would be rendered by the American press as $1 trillion.

Forbes: In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy. “It’s not based on any particular data point,” said a Treasury spokeswoman, “We just wanted to choose a really large number.”

And that folks is the new Goldilocks world economy in the new normal - wild ass guesses promulgated to save civilization on the basis of 'sounds just right.'

Better to guess up than fess up I suppose.

Snarkiness is running aground on the shores of institutionalized fraudulent conveyance that is becoming so ridiculous that one can only stare in Gaga'd disbelief...

To wit, WSJ: 'April marked the 27th consecutive month in which small businesses either shed more or the same number of jobs that they added, according to a monthly survey to be released Tuesday by the National Federation of Independent Business, a trade group in Washington, D.C. Since July 2008, employment per firm has fallen steadily each quarter, logging the largest reductions in the survey's 35-year history. Going forward, more small-business owners say they plan to eliminate jobs compared with those that expect to create new jobs over the next three months. The latest study was conducted during the month of April and reflects responses from 2,197 U.S. small-business owners.'

Compare and contrast that with the Bureau of Laborious Statistics Birth Death Model creating 188,000 small business jobs....

Oh but it gets even wackier..

Monday's The King Report : 'For April the fabricators at the BLS have ‘men, 16 years of age and older’ gaining 456,000 jobs. But ‘women, 16 years of age and older’ gained only 94k jobs. This is impossible!!! This is the fourth straight month of impractical imbalance of job gains between the sexes.'

To wit, as mentioned here on March 8th : "the Federales Household Survey showed that this month (Feb.) the category of 'Men 16 years and older' accounted for 297,000 of the 308,000 jobs gain and last month (Jan.) 'Women 20 years and older' produced 529,000 of the 541,000 jobs gain. Dude, stats happen! Don't blame the soothsaya."

Last month the King report revealed, 'Once again we see chicanery in the March Employment because the Household Survey shows a gain of 264k jobs but ‘Men 20 years & over’ accounted for a 290k job gain. ‘Women 20 years & over’ lost 42k jobs. This is absurd!'

What will be the title of the April Household Survey? 'Stats from Mars, B$%#*&@t from Venus?'

Well they didn't choose that appellation although well they should have especially in light of yet another tragedy- per Reuters; 'The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January.'

Sadness layered upon madness served up to a hamster-wheeled populace.

And those of us that cry for reason before farce are left to muse until the dancing stops.

The road ahead seeming to fork between destroy the middle class now (wafting asset values with the gentle lubricant of debasement) or destroy the middle class later (deflation being the midwife of hyperinflation where the path to $5000 gold goes through $500.)

A burnt offering to the tribes and their machinations.

The Black Swan, when it isn't being blamed for its' prescience, synthesized as the hope upon hope of just muddling through.

I fear that we will see things in the near term that we would have never ever imagined could ever happen.

Unless of course Santa Claus, the Easter Bunny, the Tooth Fairy, and a requisite choir of angles, descends down to present us with fusion, teleportation, room temperature superconductors or the like to further enable the game...

Someday this war is gonna end.

MathTerror... we're sorry but the numbers you've reached have been logically disconnected..

Tuesday, May 11, 2010

Randomwalkin's not pinin', Barclays, 'tis whinin, the cycles are dinin', the fractals divinin'

Do we blame the umbrella for the rain?

Do we blame the parka for the snow?

Do we blame the roof and the walls for the storm?

Well if one is an advocate and sycophant of the ex-theory, randomwalking, a pristine and inviolate thesis that has been disproven this last century to the tune of a gazillion-squared, I guess one does indict the forenamed suspects for their obvious culpability.

In the WSJ, lead right section C, the pablum narrative to end all pablum narratives, the silliest, most inane, and flat-out stupid article that these eyes have witnessed in a long long time.

'Did a Big Bet Help Trigger 'Black Swan' Stock Swoon' is the title.. the randomwalkers' version of 'And how long sir have you beaten your wife?'

Universa Investments, a fund that bets to win on discontinuous market movements, where Nicholas Taleb is an advisor, and Benoit Mandelbrot is considered to be a visionary (a sentiment also shared by your humble blogger)... is being blamed for the 'flash crash'!

You have to be f&%$*&g kiddin' me!

The article details how Universa made a big bet, a whoppin' $7.5 million for 50,000 options, that would have paid off about $4 billion should the S&P 500 stock index fall to 800 in June. Admitting that the trade was not 'out of character' for the fund and that 'on any other day' the option contracts 'might have briefly hurt stock prices' the Wall Street Journal then lays out in a breathless array, conclusive evidence, in an attempt to brand Universa as the most likely culprit in a crash that all credible models insist should have never happened.

'The trade may have played a key role', 'traders on the other side of the transaction' led to 'selling to offset some of the risk', then, as the market fell 'those declines are likely to have forced even more hedging ' creating a 'tsunami', a 'tidal wave of selling into a market already on the edge' and 'a blast of orders' causing exchanges to be 'clogged', and causing individual stocks to 'collapse'.

'The working theory among traders and others (others??) involved in the exchange meltdown is that the "Black Swan" -linked fund may have contributed to a Black Swan moment, a rare, unforeseen event that can have devastating consequences.'

Pay no attention folks that the working theory that all our blessed mathematical models are based on emphatically states that the rare and unforeseen can be foreseen to never occur.

And so if it pleases the court (of public opinion) we shall cast the accused into the waters and if she floats she is clearly a witch... may God have mercy on her soul.

Or one can make another argument. Hours before the panic began, selling volume was unusually heavy. The selling of stocks was at its highest since the day the market reopened after the Sept 11 terror attacks. The Universa trade along with likely dozen of other trades across the market, led to a cascade of selling in the futures markets. As the trading volume soared, data systems across the stock market began to get clogged. With the high frequency funds either selling or pulling out of the market, Wall Street brokerage firms pulling back and the NYSE stock exchange temporarily halting trading on some stocks, offers to buy stocks vanished from underneath the market.

'Universa alone couldn't have caused the market meltdown", said Mark Spitznagel, Universa's founder. "We had reached a critical point in the market, and it was poised to collapse.'

Well that's a very convincing counter-argument but here's the thing... I am quoting from the same article.

Edward R. Murrow is convulsing in his tomb.

So why wasn't the headline 'Ex-theory fails again. Universa profits from discontinous market movement'?

Well aside from the obvious reason, one might note from reading between the lines that Barclays most certainly falls under the auspices of the aforementioned 'others' and in part, or perhaps in whole, the enabler for this hatchet job. Universa placed their order on Barclays trading desks, Barclays was selling hard, and a market data feed at Barclays that delivers data on "buy" and "sell" orders went down, although a backup data system purportedly went 'immediately online'. Although Barclays disingenuously 'declined to comment' for the article, their head of electronic trading is cited once and the bank is named seven other times in this missive, suggesting someone over there was squawking and deflecting.

The sentence in this trash worth considering is the brief citation to Taleb's fame referencing his thesis that 'unlikely events in the financial markets are far more likely than most investors believe.'

If quantum theory is correct there is an alternate plane of reality where their Wall Street Journal would expand upon this assertion in the following manner.

Randomwalkin's not pinin'! It's passed on! This theory is no more! It has ceased to be! It's expired and gone to meet 'is maker! 'It's a stiff! Bereft of life, it rests in peace! If you hadn't nailed it to the masses it'd be pushing up the daisies! It's metabolic processes are now 'istory! It's off the twig! It's kicked the bucket, it's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-THEORY!!'

Natural law is based upon a "fractioning" of a larger structure into smaller structures that have not only the features of the larger structure but if scaled up will look identical to the larger structure. Mandelbrot showed this scalability by graphing long-term financial data that appeared to be discontinuous on logarithmic paper revealing a fractal relationship in markets.

Per Benoit: 'Price changes are not independent of each other.My heresy is a different, fractal kind of statistical relationship, a "long memory." Why this should be is not certain; but one can speculate. Whatever the explanation, we can confirm the phenomenon exists- and it contradicts the random-walk model. Contrary to orthodoxy, price changes are very far from following the bell curve. Such theory predicts that index swings of more than 7 percent should come once every 300,000 years; in fact, the twentieth century saw forty-eight such days.(Over 50 now!) Truly, a calamitous era that insists on flaunting all predictions. Or perhaps, our assumptions are wrong.'

Mandelbrot discerned that markets exhibit a wild trait of abrupt change or discontinuity. This hierarchy of turbulence, a pattern that scales up and down with time, he describes as the Noah Effect - catastrophic, but transient. This Noah Effect is seen in the market's discontinuity : this is the pillar of fractal geometry.

The market's second wild trait - almost-cycles- he describes as prefigured in the story of the prophetic dreams of Joseph, a biblical tale of pattern recognition or long-term dependence. The Joseph effect is the influence of a long-term memory through which the past continues to influence the present.

Per Benoit: ' But how exactly do these two effects- Noah and Joseph, dependence and discontinuity - interact in markets? Answer: At least one market mechanism I identified naturally leads to the other. Suppose, for instance, that you have an "almost-trend" emerging in a stock price: a few weeks, say, in which a stock price rises seven days out of ten. The pattern must eventually break up, of course; otherwise, it would be a real trend that you could bet on continuing a few weeks, and hope to make some real money. But when the "almost-trend" finally does break, it can do so rapidly. A sudden lurch downward, perhaps. A discontinuity. Or, in the terms of the Biblical metaphor, a Noah Effect produced by Joseph-style dependence.

For some real-world examples, think about investment bubbles. They seem calamitous -but they happen all the time. Conventional economics tells us they are aberrations, "irrational" deviations from the norm, caused by a rapacious speculator, mass greed, or some other unpleasant factor. But under certain circumstances they can be entirely rational and flow from the entwined effects of long-term dependence and discontinuity.

The distribution of price changes in a financial market scales. Given that event X has happened, what are the odds that Y will happen next? With financial prices, scaling means that the odds of a massive price movement given a large one are akin to those of a large movement given a merely sizable one. Such is the confusion of scaling. It makes decisions difficult, prediction perilous, and bubbles a certainty.'