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Zeez European politicians unt economists all zound like
rocket scientists wiss all zeir
charming euro-chatter. But zey must be quite dumb
to machen zuch an unglaublich scheiße sturm of zee système financier. Che cazzo è?
Surely
all the pretending nears its dire conclusion. Everybody is broke and
everybody is in hock up to his prefrontal lobes and everybody is whirling
around the drain over in the grand continental theme park of lovely cities
and great eats. I'm sorry, but I don't see how they can stop the hemorrhaging
as we slide into the season of holiday enchantment.
Every
bank (and its uncle) is dumping everybody's sovereign bonds as though they
were discovered to be croissants imported from a leper colony. Feh...! Folks of all stripes and accents desperately seek
to move their money to some safe harbor - but where is this cozy mooring? To
the US for the moment perhaps; but what happens Monday morning when the
markets react to the weekend news that the US Senate super-committee has been
utterly unable to agree on decisive action that would forestall the scheduled
massive automatic budget cuts built into this red-white-and-blue doomsday
machine - not to mention the ratings agencies threats to knock UST-paper down
another notch upon such failure. Oy yoy
yoy!
Just
to be plain here: nothing is working. The global system of accounting control
fraud has completely unraveled. Nobody will lend money to anybody anymore
because everybody suspects everybody else is lying about their ability to
meet any obligation. The whole world has become a daisy chain of schnorrers and schmiklers.
All those hundreds of trillions of dollars in credit default swap insurance
(ha!). Worthless and pointless, because now that a Greek default
of at least 50 percent, officially, has failed to ignite a payout, then no
default will. Instead, you'll just get cascades of un-hedged defaults. All
the lawyers who ever lived could litigate until the sun turns into a red
dwarf and they will never resolve these swindles, and the money represented
in them will be so far gone that not even Ray Kurzweil in full Singularity
mode will encounter a trace of it in his eternal travels through a zillion
parallel universes.
So
much for the hedge fund industry. I hope the folks who ran those cute
operations enjoyed their years in Fairfield County, Connecticut, and Saddle
River, New Jersey, because in a few weeks they'll be disguising themselves as
OWSers in some makeshift urban encampment in order
to line up for three-day-old bagels. Personally, I look forward to
test-driving a few $5000 "must-sell" pre-owned Lamborghini Sesto Elementos, not that I'd actually buy one. The nimble
might even score some bargain beachfront property in the Hamptons.
It's
been about a fortnight now since John Corzine's MF Global fund went up in a
vapor, including a reported $800 million or so (rumored to be actually more
like $2+ billion) filched out of clients portfolios
that cannot be accounted for - though there are additional rumors that it
constituted a batch of collateral that was liquidated a micro-second after
its arrival at JP Morgan, which had lent Corzine's firm enough money to buy
the rope that it hung itself with. Notice, the story has completely
disappeared from the mainstream news media (while the Kardashians
soldier on).
Even
poor Gerald Celente, chief of the Trends Journal
forecasting group, arch-nemesis of "the white-shoe boys" got
snookered in the action when MF Global somehow ended up with custodial care
of the Gold ETFs Gerald was collecting and his shit just vanished! I heard
him fulminating over it on a podcast and he is not somebody I'd want to be on
the bad side of. Up until now, Celente was only
commenting on the prospects for revolution in the streets. Now, I daresay,
he'll be out in front leading it (or perhaps rappelling down Jamie Dimon's security wall with a straight razor clenched in
his teeth).
The
MF Global case has fast-tracked the evaporation of trust in all the places,
large and small, where American One-percenters
stash their cash. The redemption orders must be flying through their transoms
like radioactive black swans. By lunchtime tomorrow this could include all
the TBTF banks. That's what the pundits mean by "contagion." Where
will that money go now (if they can get it out)?
I
don't see where else it can go now except to shiny yellow and white metal,
and maybe some oil positions. But the mechanisms of the precious metals trade
have also been monkeyed with, and you'd best be careful where you place your
order. As for oil, if lending really does seize-up, then letters-of-credit
will not be issued and tankers will not be moving any product. More to the
point, the global revolving debt system has depended on colossal transfers of
ultra-short-term borrowed money. If short-term borrowing is simply
unavailable, things could go south very quickly - and by that I mean food
stops arriving at the supermarkets, which hold just a three-day supply. Wouldn't that make for an interesting Thanksgiving?
I
have admittedly painted an extreme picture this week. But this week presents
the most extreme convergence of events the world has seen since September of
2008, and perhaps a good bit worse.
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