Infinite Unknown

- America’s Bubble Economy Is Going To Become An Economic Black Hole (Economic Collapse, May 22, 2013):

What is going to happen when the greatest economic bubble in the history of the world pops?  The mainstream media never talks about that.  They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to.  And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay.  Sadly, that is not the case at all.  Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy.  You can see this when you step back and take a longer-term view of things.  Over the past decade, we have added more than 10 trillion dollars to the national debt.  But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars.  Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks.  But the Dow does not keep setting new records because the underlying economic fundamentals are good.  Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929.  Margin debt is absolutely soaring, and every time that happens a crash rapidly follows.  But this time when a crash happens it could very well be unlike anything that we have ever seen before.  The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up.  After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.

But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term.  Things are good this week and things were good last week, so there is nothing to worry about, right?

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Tags: Bill Gross, Bonds, Bubble, Collapse, Debt, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, GDP, Global News, Japan, PIMCO, Stock Market, U.S., Wall Street

- Denver Public Schools Pay $216 Million to Wall Street Banks to Unwind Swaps (Liberty Blitzkrieg, May 12, 2013):

You can move from New York City to Colorado, but it seems you can never escape the all encompassing tentacles of Wall Street parasitism and theft.  I recently covered a similar situation back in March in my piece Wall Street: $474 Million, Detroit: 0. In both cases it seems clear that public officials had no idea what they were getting into and there was a great deal of irresponsibility, but that is beside the point.  It’d be one thing to say these communities should suffer the consequences of their actions if Wall Street had to as well, but we all know that isn’t the case.  So it is highly immoral and culturally destructive to say it’s ok that Wall Street gets bailed out from all their mistakes and then is able to turn around and impose austerity on everyone else.  That’s the way America works today and we can thank Ben Bernanke and Barack Obama for that reality.  We must never forget the enablers in chief of all of this.  Oh, and did I mention that the $216 million paid by Denver represents two-thirds of annual teaching expenses? USA! USA!

From Bloomberg:

Wall Street banks collected $215.6 million that Denver’s public schools paid to unwind swaps and sell bonds since the district began borrowing to cut pension costs in 2008. That sum is about two-thirds of annual teaching expenses.

The district paid $146.6 million last month to banks, including RBC Capital Markets LLC, Wells Fargo Securities LLC and Bank of America Corp., to end interest-rate swaps as part of a second attempt to restructure a 2008 borrowing, bond documents show. The April 17 deal sold as the district’s property-tax rate has risen 26 percent in two years to fund education.

Municipal borrowers from Detroit’s utilities to Harvard University in Cambridge, Massachusetts, have paid billions of dollars to banks to end privately negotiated interest-rate bets sold as hedges. The Federal Reserve’s policy of holding its benchmark borrowing rate near zero since 2008 has turned many of the swaps into wrong-way bets.

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Tags: Bank of America, Banking, Bonds, Economy, Fed, Federal Reserve, Global News, Government, U.S., Wall Street

- Stocks Are Officially in a Blow Off Top (ZeroHedge, May 9, 2013):

This is the culmination of Bernanke’s life’s work. In his mind he has succeeded in saving capitalism by spending trillions of Dollars pushing stocks higher.

It doesn’t matter that the US hasn’t experienced 3% GDP growth a SINGLE year since he took the Fed.

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Tags: Ben Bernanke, Economy, Fed, Federal Reserve, Global News, Stock Market, U.S., Wall Street

Added: 27.03.2013

Tags: Banking, Bonds, Collapse, Dollar, Economy, EU, Euro, Europe, Fed, Federal Reserve, Financial Crisis, Global News, Gold, Government, Politics, U.S., Wall Street

- The Big Banks Are Recklessly Gambling With Our Money, And It Will Cause The Global Financial System To Collapse (Economic Collapse, April 2, 2013):

Have you ever wondered how the big banks make such enormous mountains of money?  Well, the truth is that much of it is made by gambling recklessly.  If they win on their bets, they become fabulously wealthy.  If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are “too big to fail”.  Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to “recapitalize” themselves by stealing money directly from our bank accounts.  So if they win, they win big.  If they lose, someone else will come in and clean up the mess.  This creates a tremendous incentive for the bankers to “go for it”, because there is simply not enough pain in this equation for those that are taking the risks.  If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street.  But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened.  In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.

Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed?

Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them.  In a recent article, Ron Paul explained how the situation played out once the bets started to go bad… Continue reading »

Tags: Banking, Bonds, Bubble, Collapse, Cyprus, Debt, Derivatives, Derivatives market, ECB, Economy, EU, Europe, Global News, Government, Greece, IMF, Politics, Ron Paul, U.S., Wall Street

- 1936 Redux – It’s Really Never Different This Time (ZeroHedge, March 14, 2013):

While chart analogs provide optically pleasing (and often far too shockingly correct) indications of the human herd tendencies towards fear and greed, a glance through the headlines and reporting of prior periods can provide just as much of a concerning ‘analog’ as any chart. In this case, while a picture can paint a thousand words; a thousand words may also paint the biggest picture of all. It seems, socially and empirically, it is never different this time as these 1936 Wall Street Journal archives read only too well… from devaluations lifting stocks to inflationary side-effects of money flow and from short-covering, money-on-the-sidelines, Jobs, Europe, low-volume ramps, BTFD, and profit-taking, to brokers advising stocks for the long-run before a 40% decline.Things look eerily similar eh?

But when we look at the headlines in the Wall Street Journal from mid 1936 to mid 1937 as the market topped out (orange oval), dipped, was bought back, then collapsed 40% in 3 months, nothing ever changes…

Government Bailouts Repaid – Bullish Implications…

N.Y. Central Has Repaid All Government Loans
The Wall Street Journal, 978 words
Dec 1, 1936
WASHINGTON Numerous railroad developments here yesterday were climaxed by the announcement of RFC Chairman Jesse H. Jones that New York Central had repaid all of its government loans, totaling $16,858,950, most of which was not due until 1941. Continue reading »

Tags: Collapse, Dow Jones, Economy, Global News, Government, Politics, S&P 500, U.S., Wall Street

- Denial Is Not Just A River In Egypt: 10 Hilarious Examples Of How Clueless Our Leaders Are About The Economy (Economic Collapse, March 13, 2013):

They didn’t see it coming last time either.  Back in 2007, President Bush, Federal Reserve Chairman Ben Bernanke and just about every prominent voice in the financial world were all predicting that we would experience tremendous economic prosperity well into the future.  In fact, as late as January 2008 Bernanke boldly declared that “the Federal Reserve is not currently forecasting a recession.”  At the time, only the “doom and gloomers” were warning that everything was about to fall apart.  And of course we all know what happened.  But just a few short years later, history seems to be repeating itself.  Barack Obama, Federal Reserve Chairman Ben Bernanke and almost every prominent voice in the financial world are all promising that the U.S. “economic recovery” is going to continue even though Europe is coming apart like a 20 dollar suit.  But the economic fundamentals tell a different story.  Our national debt is more than $6,000,000,000,000 larger than it was back in 2008, the number of Americans on food stamps just hit another brand new all-time record, and the bankers up on Wall Street are selling gigantic mountains of the exact same kind of toxic derivatives that caused so much trouble the last time around.  But all of our “leaders” swear that everything is going to be okay.  You can believe them if you want, but denial is not just a river in Egypt, and another crash is inevitably coming.

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Tags: Barack Obama, Ben Bernanke, Bonds, Debt, Fed, Federal Reserve, Food stamps, Global News, Government, Obama administration, Paul Krugman, Politics, Wall Street

- Eric Holder Gets Passive-Aggressive With Senators on Too-Big-to-Fail Question (Daily Intelligencer, March 6, 2013):

Eric Holder has been watching his Elizabeth Warren videos, or something, because during a Senate hearing today, the attorney general came out and said that big Wall Street banks are too large and systemically important to be prosecuted effectively — a claim that critics of the Justice Department have made over and over again, while accusing them of being too soft on law-breaking institutions like HSBC and UBS.

Here’s the full exchange:

GRASSLEY: OK. On the issue of bank prosecution, I’m concerned that we have a mentality of too-big-to-jail in the financial sector of spreading from fraud cases to terrorist financing and money laundering cases — and I cite HSBC. So I think we’re on a slippery slope.

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Tags: Banking, Barack Obama, Economy, Eric Holder, Global News, Government, Obama administration, Politics, U.S., Wall Street

- The Last Time The Dow Was Here… (ZeroHedge, March 5, 2013):

“Mission Accomplished” - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables):  “we all know it’s going to end badly, but in the meantime we can make some money” – ZH translation: “just make sure to sell ahead of everyone else.”

• Dow Jones Industrial Average: Then 14164.5; Now 14164.5
• GDP Growth: Then +2.5%; Now +1.6%
• Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
• Labor Force Particpation Rate: Then 65.8%; Now 63.6%
• Americans On Food Stamps: Then 26.9 million; Now 47.69 million
• Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
• US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
• US Deficit (LTM): Then $97 billion; Now $975.6 billion
• Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
• US Household Debt: Then $13.5 trillion; Now 12.87 trillion
• Consumer Confidence: Then 99.5; Now 69.6
• S&P Rating: Then AAA; Now AA+
• VIX: Then 17.5%; Now 14%
• 10 Year Treasury Yield: Then 4.64%; Now 1.89%
• EURUSD: Then 1.4145; Now 1.3050
• Gold: Then $748; Now $1583
• NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

Tags: Barack Obama, Bonds, Debt, Dow Jones, Economy, Fed, Federal Reserve, GDP, Global News, Government, Obama administration, Politics, Stock Market, U.S., Unemployment, Wall Street

- The Big Dogs On Wall Street Are Starting To Get Very Nervous (Economic Collapse, Feb 21, 2013):

Why are some of the biggest names in the corporate world unloading stock like there is no tomorrow, and why are some of the most prominent investors on Wall Street loudly warning about the possibility of a market crash?  Should we be alarmed that the big dogs on Wall Street are starting to get very nervous?  In a previous article, I got very excited about a report that indicated that corporate insiders were selling nine times more of their own shares than they were buying.  Well, according to a brand new Bloomberg article, insider sales of stock have outnumbered insider purchases of stock by a ratio of twelve to one over the past three months.  That is highly unusual.  And right now some of the most respected investors in the financial world are ringing the alarm bells.  Dennis Gartman says that it is time to “rush to the sidelines”, Seth Klarman is warning about “the un-abating risks of collapse”, and Doug Kass is proclaiming that “we’re headed for a sharp fall”.  So does all of this mean that a market crash is definitely on the way?  No, but when you combine all of this with the weak economic data constantly coming out of the U.S. and Europe, it certainly does not paint a pretty picture. Continue reading »

Tags: Economy, Global News, Stock Market, U.S., Wall Street