Posted on 11/25/2011 4:26:50 AM PST by blam
The Game Is About Done
Karl Denninger
November 23, 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.
It’s going to make 1933 look like a cook out.
In 1933 flash mobs were not stealing the apple carts
THese major depressions seem to end in only one way, world war.
Since capital markets are saying “no”, the Europeans will force their Central Bank to keep buying up the debt.
This is not over yet.
Just got my black friday shopping done - Dicks had a great deal on a 24 Gun Safe.
You want to laugh - I was there as 5:30 am and the store was entirely empty except . . . . . . . . . . .
THE FIREARMS DEPARTMENT
Saw three people buying guns at 5 am.
Until we start prosecuting these financial criminals like the murderers they are and jailing them for life, we will be forever in a state of mistrust.
Karl’s concluding sentences-—
“”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.””
Start with Congress......
Karl is one of the few guys that say’s it straight ip.
“ip” = up.
Its both. The financial terrorists on wall street like madoff, corzine, et al, and the congress are both equally culpable.
And even worse - the disgusting police state we live under turnms a blind eye to financial terrorism, and focuses on utter nonsense while the nation implodes.
>>In 1933 flash mobs were not stealing the apple carts<<
Great observation. The social glue of the 1930s is long gone.
” THE FIREARMS DEPARTMENT
Saw three people buying guns at 5 am.”
Now that’s funny right there!
“Great observation. The social glue of the 1930s is long gone.”
//////////////////////////////////////////////////////////////
Not only the social glue but the knowledge of how to survive on a shoestring is gone. I was born in 1944 five days before D-Day. We lived on forty acres in South Carolina a mile off the nearest blacktop road . My parents knew how to survive with nearly nothing because they had reached adulthood on farms during the depression. Some on FR seem to think they can just go back and live that way if they find it necessary but it is not that simple. I can still remember how to do a lot of what I learned growing up but I realize that I never learned much of what they knew. Most people now cannot even imagine how people lived back then. You could hand the average young person a fine sharp axe now and they would collapse from exhaustion before they cut through a small tree branch.
I don’t mean this to sound critical, it is simply the facts. Most people have no more understanding of how to live that way than my father had of how to use a computer. A computer was simply a word that he learned before he died and that kind of living is simply words to most people, they have no idea of the reality behind the words. There are exceptions of course but they are a small minority.
Was the truth. They had a big safe half off and my Dad and I went at 5am.
Sotre was EMPTY. About 40 people working there. Went straight to the gun department - about 5-6 other people.
One woman was already filling out the paperwork - should bought a shotgun and a hunting rifle. Two other guys were buying .22 rifle and a shotgun.
Was talking to the guy and he said that the firearms department does the best out of anything. This is in White Plains, NY
What is going to give the us (the US) breathing room in the near-mid term is the perception that we are the Global safe haven. In fact, the “Smart money” has been fleeing European banks & soverign bonds for “safe” US Treasuries for some time. But eventually we will be held to account to. When UST interest rates go over 5%, look for all H@ll to break loose as they true cost of the deficit cannot be swept under the rug anymore.
The current priority of the Fed is keeping UST interest rates low so that the Government spending party can continue. Everything else is decoration. The reason is simple: the Government effectively IS the Economy. If the Government is forced to live within its means, then most of the population will see either a partial or total reduction in income. It will be a SHTF situation like we’ve never seen.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.