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.