Boom

[John Raabe]

A TED talk on the God Complex and its antidote. This could be a more productive adaptation to the complexity of modern life than the rigid dogma of partisan ideology that we see in common usage today.

It would help if we could stop thinking we know what we are doing.

http://feedproxy.google.com/~r/TEDTalks_video/~3/W5r4Svr9sYA/1190

[Native_NM]

Fear not, they got it covered:

http://www.youtube.com/watch?v=6JPcimrnXGA&sns=em

[John Raabe]

Thanks Native_NM:

Great video from the Onion   (I wonder how much Cash4Gold.com paid for the placement?)

[muldoon]

http://www.marketoracle.co.uk/Article29477.html

The $1 Billion Armageddon Trade Placed Against the United States Bond Market

Jack Barnes writes : Someone dropped a bomb on the bond market Thursday - a $1 billion Armageddon trade betting the United States will lose its AAA credit rating.

In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world.

The massive trade wasn't placed in bonds themselves; it was placed in the futures market.

The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01.

The value of the trade was about $850 million dollars. In simple terms, if that was a direct bond buy, no one would be talking about it.

However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.

You only do this if you see an edge.

This means someone is confident that the United States is either going to default or is going to lose its AAA rating. That someone is willing to bet the proverbial farm that U.S. interest rates will be going up.

I believe what happened is a debt-ceiling deal was done in Washington and leaked to a major proprietary trader. Everyone knows the debt negotiations in Washington have been an extreme game of brinksmanship between political parties, but now someone knows how that game played out.

This had the hallmarks of one of the largest bond shops in the world knowing something the rest of the market didn't.

The number of shops or even central banks that can take on this level of market risk is extremely small. Some that come to mind are hedge fund manager John Paulson, Bill Gross's PIMCO, and the U.S. and Chinese central banks.

Paulson already scored big - about $6 billion big - on a similar trade years ago when he bet against subprime mortgages, the investments that helped bring down Lehman Bros. and many other investors.

Whoever was behind it wanted a trade on ASAP, and didn't care about the ripples they would cause.

This is a 1 billion dollar bet, this is serious money.  The boom hit international credit markets two weeks ago, enormous amounts of capital the world over moved, many global, central banks and governments lost big in these moves.  Pay NO attention to the news you see in the media or the politicians feeding you chicken-squawk and trying to vie for political points on the winds of the spin.  This is not a USA event, it is a global event, the usa has alot of proverbial meat on their bones. 

There is a reason the "credit ratings" agencies suddenly have awoken after being blind for years.  I can think of billions of reasons. 

This is a USA == Lehman event in my opinion.  To be clear, also in my opinion it has zero to do with the us debt ceiling although that seems to be the scapegoat right now. 

[Tickhill]

Just a side bar on the financial discussion, I was made aware of the Elliott Wave principle (theory) last week by an individual whose son in law works in a brokerage house and the son in law showed him a model that indicated a second collapse in 18 months. This was in June of this year, which falls right in line with the December 2012 scenario.
We will have to wait and see.
If you watched the speech's last night, then you see exactly where the problem lies. We the people have allowed this finger pointing, do nothing, just give me a check mentality to morph into the current drama we see in going on in our nation's capital.
When a nation allows the abortion of unborn children, it is a small step to next disregard any future generation and be concerned about their ability to pay a ton of debt that we saddle them with. Instead of pay it forward, it is push it forward.

[h0rizon]

This means someone is confident that the United States is either going to default or is going to lose its AAA rating

This does not a leak make.  Someone is willing to play the odds 10:1 to hopefully cash in big.  Yes, $1 billion is a huge chunk of change, but under a large managed fund firm it may be a small portion of their cash holdings.  That's play money in hopes of raking in big earnings for themselves and their investors if it does come to fruition.  If the bet fails, they write it off as a bad investment and it is negated with any other earnings they make from the market going up.  Investors none the wiser.  They are hedging their bets, plain and simple.

That said, it doesn't mean that the bet is unfounded.

a model that indicated a second collapse in 18 months

A second collapse is coming, just a question of when, how deep and how long will it last?  Is it a giant wave or a small blip?  House prices are already down 4.5% over last year.

[Windpower]

Finally some intelligent commentary on the crisis from our leaders.


http://www.youtube.com/verify_age?next_url=http%3A//www.youtube.com/watch%3Fv%3DJnX-D4kkPOQ%26feature%3Dplayer_embedded

[muldoon]

http://twitter.com/#!/larry_kudlow

Larry Kudlow
@larry_kudlow Larry Kudlow
Sources tell me Italy has to restructure bonds.Deposit run on Italian banks.EU will have to mount Tarp rescue.
Big stress on interbank loans.
15 hours ago via web

...
This.  tick tick.  Timing of this rumor 100% on with yesterdays market waterfall into the close.  something in Europe continues to blow up, money needed to cover huge mounting losses, that money comes from somewhere.  There has been 2 trillion in paper losses in US markets in the last 10 days.  Money is never lost, it moves.  Where did it go?  Critical thinking required to see this.  3rd grade math required to fore-see this. 

[muldoon]

Italian bond yields in early trade
2y 4.96 +27
5y 5.73 +16
10y 6.39 +19


Italy raids Moody's, S&P offices
http://blogs.marketwatch.com/thetell/2011/08/05/italy-raids-moody%E2%80%99s-sp-offices/

August 5, 2011, 3:15 AM

The cost of Italy's borrowing jumped yesterday and Prime Minister Silvio Berlusconi promptly urged his citizens to wait it out and not ditch the debt-laden nation's government bonds.

Italy, it's worth recalling, is one of the largest government bond markets in the world, and the third largest economy in the euro zone.

"I don't think the markets will get worse," Berlusconi said this week.

But of course on Thursday they did and the bourse in Milan closed down over 5%.

The Tell thinks this is pure coincidence, but Britain's Telegraph newspaper reported Friday morning that Italian prosecutors have raided the local Moody's and Standard & Poor's offices "over allegations that the ratings agencies were involved in 'anomalous' movements in domestic share prices."

A rising note of tension has been accruing between ratings agencies and euro-zone governments in recent months and the Telegraph writes that the "agencies are blamed by some for exacerbating the region's sovereign debt crisis by downgrading many of the indebted countries."

For their part, Moody's and S&P have largely  shrugged off the Italian investigation.

Scaremongers or scapegoats, it's hard to say.

That Italy's under pressure is beyond doubt.

[MushCreek]

Another 'Friday Night Special'- S&P lowers US rating to AA+. First time it's been lowered since attaining AAA in 1917. Have you noticed these little bombshells seem to come out on Friday nights with this administration/media? I guess they think nobody will notice.

[Ajax]

Another 'Friday Night Special'- S&P lowers US rating to AA+. First time it's been lowered since attaining AAA in 1917. Have you noticed these little bombshells seem to come out on Friday nights with this administration/media? I guess they think nobody will notice.

The administration does not decide what S&P does.  S&P made an error in their calculations anyways. 

[Native_NM]

The stock market is just another form of taxation and banking.  Think about that for a minute at a very macro level.

"There has been 2 trillion in paper losses in US markets in the last 10 days.  Money is never lost, it moves.  Where did it go?  Critical thinking required to see this.  3rd grade math required to fore-see this."

[MushCreek]

The administration does not decide what S&P does.  S&P made an error in their calculations anyways. 

No- But the White House argued with S&P about it all day, from what I read. Didn't hear a peep about it until this morning.

[muldoon]

This thread spans about a month.  In it I tried to make clear statements about the state of the global credit markets and the effects of such distortions.  I re-read it tonight and realize I completely failed to convey any useful information because not a single person understood what I was getting at. 

When I go back re-read only my posts it seems clear as day. 

They have kicked the can for so long it seems they will be able to kick it forever somedays.  However, along the way there are pivotal shifts.  swings in direction and momentum; the history of our planet is littered with them.  Things work, until they don't.  This was a eurozone boom; but just like any financial event - most will not understand the event at the time, and they will not see the ripples of it in their daily lives for months.  Then they will not correlate the event with the effects. 

But were not talking about something we can cure if we just got the progressives on track.  That money is gone, it was mostly never real in the first place.  It was fraud and theft and grift.  There and here.  If you want to use a medical analogy, think of a parasite that has 100% infected its' host.  To kill the parasite, you kill the host.  There is nothing left of either system if you remove the fraud but unfortunately the losses are simply to great to paper over and continue to cover.  Them admitting that, is why this is significant. 

09:36 15Jul11 RTRS-S&P PLACES U.S. 'AAA/A-1+' RTGS ON CREDITWATCH NEGATIVE
09:37 15Jul11 RTRS-S&P PLACES U.S. RATINGS ON CREDIT WATCH NEGATIVE
09:38 15Jul11 RTRS-S&P SAYS AT LEAST A 1 IN 2 CHANCE IT COULD CUT RATING
09:39 15Jul11 RTRS-S&P SAYS COULD LOWER U.S. RATINGS WITHIN 3 MONTHS

think about that wire feed, read each one and think about it because s&p has never said anything like that about us debt ever.
...
http://www.reuters.com/article/2011/07/14/market-ratings-creditwatch-us-idUSWNA372820110714

...
credit events are global, the ripples from a few days ago are starting to show.  like I said then, the ripples take time to show up in daily lives but when they do -- people don't often line up the events.  There is a panic sign flashing in debt markets.

- as for better in 12 months, John I just don't see it. 

This is not about doom, not about the republic, not about gold, not about guns.  not about all the boogiemen you have heard for thirty years that never came true.

This is not about the republic, or Obamacare, or democrats and republicans.  Those are bread and circus; to give people seomthing to squawk about while they fight over a ever smaller piece of the pie.  this is much larger than national politicking.

It's about debt, it's about sovereign credit.  Take a look at borrowing cost increases in the last week.  Just 5 business days.  No business can survive a 15% increase in cost of borrowing in a week, much less the 20%, and 30%ers in there.  It went boom, and no one gets it yet. 

There is no such thing as a "bailout." It simply is a magical creature that doesn't really exist. A "bailout" is just a method of shifting the loss onto someone else.  That's why money printing doesn't work. It just shifts the loss around onto the general population destroying the real economy and making the problems worse.

To say that we have not done enough stimulus, while we go on credit watch negative today because of massive stimulus, is ludicris.

That is besides the point, this, I repeat, is not about American politics.  This is about global debt.  The things that always preclude massive changes.  Let me ask this, given the above rates for cds swaps, should Greece be stimulating?  Italy?  Spain?

How do you suppose it should be paid for?  Should they borrow at 30% to "invest" in their economy?  What kinda of return will they see?  Will they generate 30% back dollar for dollar.  or will it just be chewed up with the same fraud that created this mess like the last few trillion?

..
The boom I was attempting to bring to light has nothing to do with America or American politics.  It is about credit, or debt, or however you want to consider it.  It is about trillions of dollars globally shifting and moving right now.  These moves create fundamental changes in the world.  Rantings from the democrats or the republicans is just noise.  They are reacting to a crisis in the debt markets which possibly less than 1% of their constituents will ever understand.  So they squawk about who has private jets and which people are on welfare which is what people seem to want to talk about anyway.  A nation obsessed with finding a bad guy ..  when the problem is mathematical.

Two exponential functions running away from each other always ends the same.

This is a 1 billion dollar bet, this is serious money.  The boom hit international credit markets two weeks ago, enormous amounts of capital the world over moved, many global, central banks and governments lost big in these moves.  Pay NO attention to the news you see in the media or the politicians feeding you chicken-squawk and trying to vie for political points on the winds of the spin.  This is not a USA event, it is a global event, the usa has alot of proverbial meat on their bones.

There is a reason the "credit ratings" agencies suddenly have awoken after being blind for years.  I can think of billions of reasons.

This is a USA == Lehman event in my opinion.  To be clear, also in my opinion it has zero to do with the us debt ceiling although that seems to be the scapegoat right now. 

What do you think BOOOOM  means? 

[Native_NM]

This thread spans about a month.  In it I tried to make clear statements about the state of the global credit markets and the effects of such distortions.  I re-read it tonight and realize I completely failed to convey any useful information because not a single person understood what I was getting at. 

When I go back re-read only my posts it seems clear as day. 


What do you think BOOOOM  means? 

You guys are confusing the Balance Sheet with the Statement of Cashflows.  Companies don't shut down because they run out of earnings, they shut down when they run out of cash. Accounting 101.

Your friend in accounting,

Trapper

Boom means no more cheap cash. If any.

[Native_NM]

Let's really get them riled and talk about the derivative market and the trillions at risk therein.

[muldoon]

go ahead, invest with Timmy.  He couldn't even get his taxes right.  Trust that guy. 

[Native_NM]

go ahead, invest with Timmy.  He couldn't even get his taxes right.  Trust that guy. 

Turbo Tim is a partisan hack and a pawn....just my $0.08234 cents, adjusted for the inflation we are about to experience...

[ScottA]