Last leg of the Jew Scams upon Us... happening now! G-D Damn all the J-Tribers!

[CrackSmokeRepublican]

Sorry I was drinking and thinking of all the Scams going down... I just got angry.--CSR
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http://www.safehaven.com/article/24076/ ... capitalism


I am prepared to defend Capitalism until my dying days. I expect this endeavor to be no less of a challenge than it's been the past 12 years trying to explain the great dangers associated with a runaway Credit Bubble. Over the long-term, for Capitalism to succeed in the real economy requires a functioning pricing mechanism and sound Credit system. Distorting the price of finance ensures speculative Bubbles, the misallocation of real and financial resources, and resulting economic maladjustment. In this regard, policymakers have bordered on gross negligence.

Massive fiscal and monetary stimulus, along with unprecedented market interventions, has completely overwhelmed the capacity of the markets to effectively price risk. Instead of learning from past mistakes, policymakers are more determined than ever to dictate market pricing. Rather than recognizing the prevailing role "activist" central banking has played in fomenting dysfunctional markets, policymakers believe market outcomes beckon for only greater activism. Until governments can begin to extricate themselves from the manipulation of interest rates and risk market pricing more generally, this long cycle of destructive booms and busts will run unabated.

Mr. El-Erian posited that "capitalism has always, and will always be, prone to traditional market failures. The answer is to accept this, and work harder at reducing the chances of a catastrophic failure." Well, what lies at the heart of these "traditional market failures"? I have a very difficult time with the notion of accepting market proclivities and correcting institutional failings when there is scant evidence that policymakers or the economic community appreciate the inherent instabilities of Credit or the dangers of unsound finance. Would less debt, leverage, government market intervention and market speculation reduce the risk of catastrophic failure? Why then the incessant inflationist solutions of massive deficit spending, interest-rate manipulation, central bank monetization and progressive government control over the markets and real economies?

Mr. Issing states that "the rules of the game should be clear. Those who succeed are free to take the profits...; those who make losses have to bear the consequences, with bankruptcy the ultimate sanction." Yet the overarching problem today is that the global government finance Bubble has inflated past the point of being too big to fail. And the rules of the game have become dangerously clear: policymakers will do any and everything to sustain a global Credit system some years ago exposed as dysfunctional and a risk to Capitalism. Governments are conspicuously against the bearing of consequences, and market participants are being heavily incentivized to play it that way.
 
...

Unbalanced Global Economy Watch:

January 20 - Bloomberg (Nichola Saminather): "A year ago, when Sydney property agent Peter Green's clients decided to sell, half opted for auctions betting competition among buyers would deliver them the best price. Today, less than one in five take that chance. 'The vendors don't want to embark on the potential of failure,' said Green... principal at... Laing+Simmons in Miranda, a suburb...16 miles south of Sydney's center. 'In the last three months, the number of people visiting open houses has been cut by half. And buyers may show up to auctions, but they don't bid.'"

Central Banking Watch:

January 19 - Bloomberg (Jana Randow): "European Central Bank Governing Council member Jens Weidmann said policy makers should resist pressure to increase government bond purchases in response to the euro region's debt crisis. Some are demanding that the ECB turn to the 'bazooka' or 'nuclear option' of 'engaging in unlimited government bond purchases and limiting yields,' Weidmann, who heads Germany's Bundesbank, said... 'There are a number of legal, economic and political reasons why we shouldn't do this,' he said. Such an approach would violate European Union law, take away the incentive for governments to implement fiscal reforms and redistribute losses within the currency union, Weidmann said."

U.S. Bubble Economy Watch:

January 17 - Bloomberg (Leslie Patton and Lauren Coleman-Lochner): "Supermarkets that had been adding Starbucks Corp. cafes and olive bars to draw wealthy shoppers are now catering to a different audience: food-stamp recipients. Stores are moving their opening hours, adding products and revamping merchandise assortments as persistent joblessness pushes more shoppers to government support in buying groceries. Distributions from the federal Supplemental Nutrition Assistance Program rose 11% to a record $71.8 billion in fiscal 2011..."

Fiscal Watch:

January 19 - Bloomberg (Charles R. Babcock and Frank Bass): "Almost 15,000 federal retirees, including former leaders of Congress, a university president and a banker, are receiving six-figure pensions from a system that faces a $674.2 billion shortfall. About one of every 125 retired federal civilian workers collects more than $100,000 in benefits annually... 'We don't want to bash federal employees,' said Jim Kessler, vice president for policy at Third Way... 'Still, when you have today's economy, public sector jobs look better and better. And there are some pensions that make you question the system as a whole.'"

California Watch:

January 19 - Bloomberg (James Nash and Michael B. Marois): "California's future hinges on spending billions of dollars to link its cities with bullet trains and to bolster its water supply, Governor Jerry Brown said, even as it confronts a $9.2 billion deficit. The largest U.S. state by population is 'on the mend' after years of fiscal distress and needs the projects to keep growing, Brown told lawmakers..."


Copyright © 2000-2012 PrudentBear.com



Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/

[CrackSmokeRepublican]

A lot of things are still up in the air...keep an eye open on this one... I largely agree with most things that CHS writes. --CSR

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When Greece Defaults, the Credit Default Swap Dominoes Fall

February 4, 2012    


A default by any other name is still a default. When Greece defaults, the inter-connected chains of credit default swaps will fall like dominoes.

For your Superbowl half-time reading, here is a brief summary of the situation in Europe:

1. Greece is poised to default, the end-game everyone anticipated in 2011. It is not a matter of if but when.

2. That default will trigger credit-default swap contracts, derivatives known as CDS that protect the owner from events such as default.

3. This will implode the shadow-banking system and the visible banking system, as those who sold the CDS (financial institutions) do not have enough cash or assets to pay the owners of the CDS.

4. The general idea is that sovereign default is very unlikely, so you can sell protection (CDS) against that possibility for a low premium, and cover that bet by buying your own protection from another player.

5. If that player (counterparty) can't pay you off, then you can't meet your obligations on the CDS you originated and sold.

6. So the failure of one counterparty can trigger a systemic failure akin to a row of dominoes being toppled by the fall of one domino.

7. To avoid such a CDS-triggered collapse, the European Union and its proxy agencies (European Central Bank, etc.) are attempting to call a default by Greece something other than "default."

8. This will theoretically keep the first domino--a credit-default swap--from falling. In other words, if we call a default by some other name, then it isn't a default.

9. Those absorbing the losses caused by a Greek default (and let's stipulate that this references owners of Greek debt who bought CDS as insurance, not speculators who leveraged CDS at 30X the actual bond value) will want to cash in their insurance, i.e. the CDS they own against a Greek default. They have every incentive to demand a default be recognized as a default. If they accept the official plan to avoid calling a default a default, then all the losses will be theirs and none will fall to the counterparties who sold them the CDS.

10. How is this fair?

11. The official response of avoiding default is focused on self-preservation, not fairness, justice or the rule of law.

12. The system can be likened to a pool of $100 bets leveraged off $5 in cash. If every bet is covered perfectly, then it's somewhat like $95 in bets being paid by passing $5 around--much like the famous email that depicts all debts in a small town being paid by the same $5.

13. In the real world, somebody's bets and insurance will not be perfect and their obligations will exceed their cash on hand. In other words, they will end up with $3 and owe $5. They will default and the dominoes will start falling as everyone down the line doesn't receive their $5 counterparty payoff.

14. Empires tend to fall when the interests of their Elites diverge. We are at such a point in the global financial Empire.

15. "Extend and pretend" has "worked" for almost 2 years. If Greece defaults and it is recognized by even one player as a default, then the system will quickly unravel and cash/dollars will be king until the deleveraging runs its course.

This entry was drawn from the Weekly Musings Report #5.

http://www.oftwominds.com/blogfeb12/def ... 02-12.html