Merry F-ing Christmas

Send your own ElfYourself eCards

Everything Wrong, All The Time

1) Create Zombie industries via nationalization. Check.

2) Sow the seeds of hyper-inflation via ZIRP (zero interest rate policy). Check.

3) Sow the seeds of public unrest via crony Corporatism. Check.

4) Prop up equity/ bond markets via Fed/Tarp tinkering (purchasing awful assets). Check.

5) While propping said markets, insure there is so much scandal/ impropriety (Madoff, ARS, MBS, IB bonuses, relentlessly dumb CNBC bulls, un-hedged hedge funds) that no sane person will ever invest in those markets again. Check.

6) Saddle Gen X/Y/Millennials/grandkids/great-grandkids/ great-great-grandkids with gazillions in debt, higher taxes and zero growth. Check.

7) Elect Congressional leaders with no understanding of economics, so we are steam-rolled by the cult of personality of Bernanke-san and Paulson Sachs. Check.

8) Happy talk. Check.

We are still a democracy.

The fault lies not "out there".

The Onion Still Best of Breed

$700 Billion Bailout Celebrated With Lavish $800 Billion Executive Party

The Onion December 16, 2008 | Issue 44•51

Relieved CEOs were greeted by a life-size ice sculpture of the Taj Mahal.

GEORGE TOWN, CAYMAN ISLANDS—Amid the bleak backdrop of imminent economic collapse, worried observers got some good news last October when executives from the nation's top 10 failing companies celebrated the historic $700 billion government bailout with an ultra- extravagant $800 billion party aimed at restoring confidence and bolstering their resolve.

"It's never ideal for private corporations to rely on public funding, but we would not have been able to survive another week without letting loose and throwing this massive bash," Merrill Lynch CEO John Thain said aboard his newly purchased $22 million yacht, the Excelsior. "We can only hope it's not a case of too little too late."

Three thousand guests were reportedly flown on 750 separate private jets to the Caribbean, where they commemorated the last-minute financial aid package—which saved their companies from the subprime mortgage crisis that has left thousands of Americans without homes—with 4-tons of Beluga caviar, $250,000 bottles of vintage Dom Pérignon served over precious gems, a 36-hour fireworks display, an additional loan of $200 billion to cover the costs of the gala, and a private concert for each attendee with rock legend Rod Stewart.

Held October 4–7 on all three of the Cayman Islands, the historic economic-stimulus celebration, spokespeople said, sent an important signal to the world that Wall Street was weathering the crisis in style.

"I'm glad we were all humble enough to recognize that we couldn't do this on our own," said AIG CEO Edward Liddy, sitting in a hot tub filled with Cristal and seven dozen endangered-quail eggs. "Having come so close to disaster, it is crucial that I eat these 24-karat-gold-leaf-wrapped chocolate truffles to boost stockholder morale and show all the critics and naysayers that we are carrying on just as we always have."

"Do not worry, America," Liddy added. "It's business as usual at AIG."

In a sign of the new era of financial responsibility ushered in by the bailout, the CEOs estimated that they came in a full $100 billion under the party's projected $900 billion budget—a windfall they immediately reinvested in their companies' ailing executive-Christmas-bonus divisions.

Don't Believe the CNBC Hype

I gave Paul Krugman a bit of a shot last post, so I'll let him describe the economic situation himself (via Reuters):

STOCKHOLM (Reuters) - Paul Krugman, winner of this year's Nobel economics prize, said on Monday that the world could face a Japan-style, decade-long slump.

Speaking in Stockholm where he will collect his 10 million Swedish crowns ($1.3 million) prize, U.S. economist Krugman again called on policy makers to spend liberally to cushion a withering global downturn.

"A scenario I fear is that we'll see, for the whole world, an equivalent of Japan's lost decade, the 1990s -- that we'll see a world of zero interest rates, deflation, no sign of recovery, and it will just go on for a very extended period," he told a news conference.

"And that's unfortunately very easy to see happen."

Krugman added that in his worst case scenario there would also be a series of extremely serious crises "in particular countries that are in big trouble."

He said there were already premonitions of economic and political crises in line with those in Argentina and Indonesia in the 1990s-early 2000s, particularly "in the European periphery."

Iceland and Latvia are among European countries that have been hit hard by the global financial crisis.

"We can easily be talking about a world economy that is depressed until 2011 and maybe beyond," Krugman said.

"If there's a safe place I can't see it."

Krugman is in the Swedish capital for the "Nobel Week," when laureates attend news conferences and events culminating with the prize ceremony and a gala dinner on Wednesday.

(Reporting by Anna Ringstrom; Editing by Victoria Main)

Nice call, but I guess what I'm not understanding is if this scenario is a good possibility then why are we doing the exact same thing as Japan in 1990 i.e. creating Zombie Banks.

Who is getting "cushioned" here?

The only cushion I see is under Lloyd Blankfein's fat ass.

Kamikaze Ben

Hello.

We are in total self-destruct mode.

Federal Reserve Supreme Leader, Ben Bernanke is using one event: The Great Depression (hereby known as GD 1) as his template to kamikaze us into GD II.

It's based on his academic theory: that the problem with GD 1 was they didn't print enough money. Yeah, he wrote a fucking paper on it.

Rather than it being the excesses of the 1920s lead to the inevitable crash and decline, i.e. not fucking avoidable -it's physics, really.

Maybe he's right?

He's a lot smarter than me, and so is Nobel Laureate Paul Krugman, who basically agrees with him.

But where does common sense come into play? Here's a few questions:

1) How is the excess credit problem resolved through easier credit?

2) If we need the banking sector to get smaller, how does propping up failing banks move us toward that end?

3) Does a single infinite-variable event from 80 years ago, provide us enough statistical evidence to make any decisions about the present?

4) Have you studied Japan's bank rescue?

5) Do you have your bandana on?

cartoon by John Sherffius via the Ritholtz Big Picture blog.

Fuck

FLASHBACK:

(Nov. 18, 2007. . .Besides walking around as the human ATM, I spent the majority of my time in what may be the greatest bar ever -Leopold's (also made famous by Shantaram). It was there last night, that I appeared on this supposedly huge TV show in Asia -Mondo Magic. Check your local AsiaTV listings. I think they may have me falling out of my chair.

Also, I have a very good friend there, Mahesh, who served me 3 nights in a row, and looked out for me like a brother. I met a Brit, 2 Aussies, a Philly girl, the manager for French Laundry, the crew of Mondo Magic, as well as the usual criminal element. Also, Mahesh is delivering a message for me to Mr. Roberts. Please ask for Mr. Mahesh if you go, he is class A.

FAST FORWARD TO PRESENT:

According to tonight's WSJ: "The Leopold restaurant, one of the most popular with foreign visitors to the city, was riddled with bullet holes and there were blood on the floor and shoes left by fleeing customers."

These maniacs were looking for Westerners,and they went to all the right places. Currently, we have a hostage situation, where Americans, Brits and Jews are being held. Biggest crisis since 9/11.

I have full confidence in both our President and President Elect here. This is your time, guys. I also have full confidence that the Indian police will go in guns blazing, no hesitation.

I have no confidence the fire will be put out. Bucket brigade. No water.

Likely, these killers were trained in Pakistan. They look very young. And no, you can't just bomb the shit out of villages. Doesn't work. We must get in there and build schools. That's the answer. It's not quick. It's not easy. It's just what's needed.

I pray for you, Mahesh.

Happy Thanksgiving.

3 Point Plan To Save Mankind

1) Stop All Bailouts. Every one, and what we've already started, claw it back.

2) Guarantee All Bank Deposits. No limit, and guarantee all money markets.

3) Cut Corporate Tax Rates To Zero.

I really do not want to explain this plan. If you are of moderate intelligence, have a little bit of economics 101, and a little bit of common sense, you'll get it right away.

If not. . .oh fuck it, okay, basically this kills all the bad firms without touching Joe Public's cash savings.

This gives profitable firms like a 30%+ earnings boost. You'll see all the awful firms like Goldman, Citi, AIG, Morgan Stanley trading at zero, and firms that specialize in products NOT designed to destroy mankind trading much higher.

It's called Capitalism.

This plan has the added benefit of not bankrupting the country, and allows for your children to spend their formative years not eating each other.

What we are doing now is the opposite, throwing money at failing firms, solving our credit crisis with more credit and crony capitalism. Here's a similar idea, let's give the unibomber a cachet of WMD and tell him to build a park.

Take a breath, pause, and enjoy this: The firms most culpable for our current mess are the firms we have just bailed out.

Think about it.

Citi at the Trough

For Seconds!

Big sloppy seconds.

Get your riot gear.

Both parties in the pocket of Bob Rubin, Chairmen of Citigroup: Clinton Treasurer/ Obama advisor.

Third party candidates needed.

Citi Never Sleeps, Citi Sleeps With Fishes

Sorry, I was late with this one. Too many blow-ups to keep track.

This one. . .

kind of a biggie.

Too big to. . . er, bail?

Get some rest, Citi.

And more TV adverts, please.

Thank You For Your Service

Fair and balanced, Goldman Sachs top brass are forgoing bonuses this year.

This awesome piece of PR was counter- balanced today by the not so big secret they've been "naked" shorting everything in sight, including their own clients.

For example, they helped California sell municipal bonds, raking in their usual bounty, then turned around and told their other clients to short sell those same bonds, driving up borrowing costs in California. This may cause a CA bankruptcy. No biggie. . .

Thank you for your help.

I wonder how Arnold feels about this?

Hank Paulson: Secret Wizard

Michael Lewis, of Liar's Poker fame, another book recom- mendation, is a genius.

His end of Wall Street piece in Portfolio is a long but worthwhile read, and today's letter to Henry Paulson on Bloomberg is his usual hilarity:

As much as I admire all of your decisions I can’t help but notice that the main qualification of the bankers to whom you have been giving money, so that they might make smart loans, is that they have gone almost bankrupt by making stupid loans.

As your mind is subtle, I can only assume that you secretly believe that the American economy right now needs not smart loans, but more stupid ones -- and thus that you have targeted the bankers who have proven they can make them.

The most ridiculous thing is the geniuses at GS thought they could pull this off (The Bail Me Out Bro!! TARP 08) under the cover of night, like the Internets was some far off black magic voodoo tool, and no one would figure out what just happened.

The take away: 1) Don't live in a silo. 2) Genius drones are still drones, 3) Respect the wizard.

Lesson not learned.

Carry on looting.

3 Quickies

1) Go see the movie Slumdog Millionaire this weekend. It may be the best movie you've seen in years.2) I'm done with cell phones. It's a new trend I'm starting.3) Market at 6K by Christmas.

Happy Holidays!

Damn, It Feels Patriotic Shorting Goldman

Let's review: Credit unwind/ market tsunami makes the awful Ibank model obsolete.

US Treasury policy is hands off, laissez faire. So, Lehman Brothers goes BK, big deal, let them fail says US Treasury Head and Goldman Sachs alum, Henry Paulson.

Then. . . Uh oh, AIG is about to kick it. AIG is counter-party to trillions in defaults swaps with Goldman Sachs (GS). GS ticks below $100 and voila'. . .

TARP!! Mother of All Bailouts! Terror Alert Red! End of the World, we need to act right fucking now! Trillions to the worst companies on the block. Socialize those losses, baby. We must protect Wall Street bonuses, at all costs, for a better tomorrow. . .

And, as expected the taxpayer dollars went directly to the Ibank bonus pool. Now, in a normal earth world, the Ibank Supreme Leaders would have come out months ago, and said, "We are taking no bonuses this year, as a matter of fact we are taking NO COMP this year, or next, until this mess is sorted out."

But Banker-World is another place far removed from earth dwellers. I know, I was there, it is a special planet of delusion, denial and the still strong "not my bad" ethos.

We often borrow the old Wall Street axiom "this will end in tears" in describing most things financial. For everyone involved, including the big gun Democrats that supported this mother of all thefts, this TARP. . .

will end in wailing.

3 Parties, One Country

Greatest trip ever to NYC. Went to several insane parties which is what you do in New York, did you forget? NYC is a bit less crowded, a lot more Euro, and for a second I thought it had lost it's edge.

But, I was re-enlightened when I saw an obese drunk gentleman in a rubber batman mask getting a solid beat-down by like a 60 year bar owner on Second Avenue. It was noon.

But enough violence, I wanna talk about 3 parties in particular.

Perhaps, most surprising to you is that election eve, I was at a Republican rally in suburban New Jersey. That's right, you heard me, Republican rally mutha-fucka!

It gets better.

One of my best bro-dogs, ran and won a City Council Seat as a Repub, and get this, I phone banked for him all day Monday, that's right, I was cold calling Sarah Palin fans all day. Awesome.

I'm bipartisan. Fuck off.

Okay, stop crying, on election day of course, I was at the Obama party in NYC Obama headquarters, which you might guess is in Harlem. That guess would be totally wrong, it's in Park Slope, Brooklyn, whitest place on earth. And yes, I did just make that up (not the white part, the HQ part).

Finally, and least surprising, I was at an awesome apolitical Halloween Party where the guests ranged from Ron Paul Stock Traders, to Ralph Nader Vegans, to Tyler Durden Nihilists, to mostly Not Giving a Fuck Americans.

Awesome parties all. And as an American, I want to rank them.

Whitest: Obama Party (landslide)

Most Diverse: Tyler Durden Party followed closely by the Repub Party

Most People There For the Free Food Only: Repub Party

Most Police: Repub Party

Most Criminals: Durden Party

Best Costumes: 3 way tie, yet only the Durden Party was intentionally for Halloween. The Obama Party beautifully decked as West Wing circa 1996. The Repub Party meticulously garbed as Joe The Plumber circa 2008.

Happiest: Durden Party

So this is officially the greatest country in the world. Where Firemen, EMTs and people that actually save people's lives in real life vote Republican, and the whitest people on earth go Democrat, and the best party of all is run by Tyler Durden.

An amazing time, an amazing place.

God bless America. Gobama, get going.

And. . . We're BACK, baby!! USA! USA! USA!!

Time To Put This Mutha-Fucka In Command

Homestretch, Hope v. Fear -biggest election since the last one.

Intrade has the Obama contract at $85 (85%) which seems high, but closer to reality than polls or pundits: Landslide.

The idea is this: while I agree with my racist best friends back east on marginal taxes and all that, this whole thing is much bigger than marginal rates.

Marginal rates are a fucking joke compared to this mess.

And by the way, what kind of fucked up place have we become where we've socialized the richest people on earth (trillions to Wall Street), yet rail against socialization for the poor.

Just give me a little fucking consistency is all.

We are in dire straits here, worse than even the hyperbolic media tells us.

I give Obama a 4 out of 10 in his understanding of the economic mess. McCain gets a Blutowski, 0.0.

But, Obama has the right guys, namely Volcker, that give us a maybe 50-50 shot of pulling out of this at some point. More important, he's got the hope, the optimism, the idea that everyone still has got a shot here.

Without that last belief we are doomed, you can bring marginal rates to zero, but if Americans are miserably struggling, while bank shareholders and execs are bailed out, we'll have a no joke violent revolution by Christmas -and I'm not really into that.

Plus, I've got a shitload of clean energy call options.

Anywhoski, we'll get the Pres we deserve. Going to NYC, see you next week. If I offended you with this post, fuck off.

GW 8 more years!!

Mandelbrot & Taleb: The Opposite of Bullish

Just saw my heroes, Benoit Mandelbrot of Chaos Theory/ Nobel fame, and Nassim Taleb of Black Swan mania, on Jim Lehrer.

They have more intellect in their pinkies than all of Wall Street and Washington combined -that's how intellect scales: fractal like the Mandelbrot set pictured.

Actually, I just made that up, intellect probably scales normal, then again. . . probably not. . .
Any who, 13 months ago in my 4th post ever (Sept 19, 2007), I recommended their books, Mandelbrot's The Misbehavior of Markets and Taleb's the Black Swan. I would also very much recommend Taleb's Fooled By Randomness.

They are mandatory reads for anyone who handles money. Of interest, when I sampled the 100 odd brokers and wholesalers I worked with at the now half-dead wire-house/ibank, no one had heard of them.

Because of General Laziness Syndrome and Ostrich Style Financial Statement Analysis, I will be writing ebook summations on all 3 books and selling them for a very reasonable price on my new site TBA.

So basically, the point of this whole bloated post is; they (M & T) were not very bullish.

Just thought I'd pass that along.

And maybe forget about owning AAPL.

bottled water, shotgun, canned tofu, machete, biohazard suit and $3000 MacBook Pro

AAPL knocks it out. . .
again.











One of 3 stocks you can own into Armageddon Season.

Greatest Bloomberg Article Ever

(thanks to Dealbreaker comments for the link, full article pasted)

Lahde Quits Hedge Funds, Thanks `Idiots' for Success (Update1)

By Katherine Burton

Oct. 17 (Bloomberg) -- Andrew Lahde, the hedge-fund manager who quit after posting an 870 percent gain last year, said farewell to clients in a letter that thanks stupid traders for making him rich and ends with a plea to legalize marijuana.

Lahde, head of Santa Monica, California-based Lahde Capital Management LLC, told investors last month he was returning their cash because the risk of using credit derivatives -- his means of betting on the falling value of bonds and loans, including subprime mortgages -- was too risky given the weakness of the banks he was trading with.

``I was in this game for money,'' Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. ``The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.

``All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other sides of my trades. God Bless America.''

Lahde, who managed about $80 million, told clients he'll be content to invest his own money, rather than taking cash from wealthy individuals and institutions and trying to amass a fortune worth hundreds of millions or even billions of dollars.

``I do not understand the legacy thing,'' he wrote. ``Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.''

Request for Soros

He said he'd spend his time repairing his health ``as well as my entire life -- where I had to compete for spaces at universities, and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not.''

He also suggested that billionaire George Soros sponsor a forum in which ``great minds'' would come together to create a new system of government, as the current system ``is clearly broken.''

Lahde ended his letter with a plea for the increased use of hemp as an alternative source of food and energy that segued into a call for the legalization of marijuana.

``Hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products,'' he wrote. ``Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term.''

`Innocuous Plant'

He added, ``The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country.''

Lahde said the only reason marijuana remains illegal is because ``Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other addictive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers.''

Lahde graduated from Michigan State University with a degree in finance and holds an MBA from the University of California, Los Angeles. He worked at Los Angeles-based hedge fund Dalton Investments LLC before founding his own firm two years ago with about $10 million.

Lahde wasn't available for comment. A woman at his firm, who asked not to be identified, confirmed the authenticity of the letter.

To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net
Last Updated: October 17, 2008 16:27 EDT

In My Face

Ahhnold gets it done with the Munis.

album of the year

Nonsense Terms (part 1)

If your Financial Advisor or a CNBC pundit says any of the following nonsense words, run for the hills.

If your Financial Advisor is a CNBC pundit, cyanide capsules.



"market bottom"
"oversold"
"overbought"
"price to book"
"price to earnings"
"diversification"
"mutual fund"
"standard deviation"
"efficient markets"
"long-term investing"
"modern portfolio theory"
"Monte Carlo simulation"
"annuity"
"good as cash"
"variance"
"bell curve"
"don't panic"

Not At All Concealed Rage Vote Locked

Holy moly.

I think he even scared Joe the Plumber.

Can I Interest You In Some Municipal Bonds?

No.

Then, you must fight the bear!

CA BK?

I Guess We're All Convinced. . .

JPM, BAC, GS, MS, WFC et al.

Fully owned subsidiaries of the USA.

This has got to be bullish, no?

Yes, no.

Don't Nationalize Me, Brahh!

Too late.

Goodbye Capitalism.

Enjoy your weekend, all.

Blessings.

YT Greatest Fucking Hits Ever (Okay, 3 Months)

July 16, 2008 DJIA 11,239 So the question is: do you want the band-aid off fast or would you like it to take 8 fucking years. We've chosen the latter, so guess what, you cannot be long stocks or buy a house for any reason other than wanting to light hundred dollar bills on fire until around 2012 which I think is when the world ends anyway.

Here it is. We need the market to clear. That means we need the indexes down hard, we need several of the dumbest banks to fail, we need Paul Volcker to come in and jack rates, end inflation and sure up the plummeting dollar.

The guys in charge now are so compromised, so lacking in credibility, yet they keep tinkering around trying to plug holes where there are none, because guess what?

THERE'S NO MORE DAM, it's gone baby gone, you (we) are so under water, and messing around with short sellers, trying to bail out another I-bank, socializing risk is both prolonging the pain and making it worse.

But they will continue to take asinine steps like they did today because it's in their DNA. It's the strand known as the: Let's Keep Fucking Around With This Hand-Grenade Gene.

So tinker on, play politics, help out your idiot banker friends, you might get few hundred more points, maybe even a thousand, hell anything's possible, you may even get another bubble. Tinker on my friends, you cannot help yourselves, I know.

But, one thing is certain. This tinkering. . .will end in tears.

Aug. 25, 2008 DJIA 11,386 So yeah, I'm still bullish on this country 20 years out. Still believe we have a wicked awakening upon us in the markets and perhaps a depression, but we'll come out of it. I think we'll be all right now. I think so because Michelle Obama just delivered 5 million votes.

Sept. 18 2008 DJIA 11,020 Yeah, it gets better. Hedge Funds are a huge part of the economy. These funds are enormous, like massive beyond even the banks, which all just went out of business btw. As these funds blow up, and they will blow up at lightening speed now, they will need to liquidate, and this unwind will make the last week seem like a walk down Main Street Santa Monica -you know, like after yoga class you float over to the vegan cafe, have an elixir, jump in the ocean, fly your new kite, but i digress. . .

. . .So, the good news is the Market will rally hard, I mean hundreds, maybe a thousand points. (Sept. 18-19 DJIA rallied 800+) This will be followed by lethargy.

Which will be followed by the biggest crash in the history.

Oct. 9, 2008 DJIA 8579
*Oct 6-10, 2008 DJIA & S&P 500: worst weeks in history

nice year

gulp

Hello White People

In response to recent queries, and for those just now reading their 401k statements and weeping, let's do a review, shall we?

First, SEC Chair Chris Cox should be banned from the store. Yes, John McMaverick was right. For the proximate cause of the Market's recent 1500 point 3-week thrashing see here (from last month):

http://yogatrader.blogspot.com/2008/09/we-just-went-full-on-pakistan-style.html

For a broader exposition of the Market's 4500 point year long pantsing see here (from July):

http://yogatrader.blogspot.com/2008/07/warning-this-is-finance-post.html

Ugh!

Why, oh why can I not link here!? It's quite sad and making me melancholic, but I will keep working on it. In the meantime just fucking scroll backwards. Thanks. Keep it real.

(pic from www.stuffwhitepeoplelike.com -awesome)

Long Yen

Emergency rate cut, anyone?

Bueller. . . ??

Bailout To Nowhere

Pork Bailout Bill passed at 1:00 PM.

Market says thanks but no thanks.