Vampire Shorts?
A Naybob of Simian Nature AKA "chim-chim" sez that all this market gyration is a zero sum game.
Perhaps he has a point... and then again maybe not.
Stocks and debt get sold at reduced prices, someone makes money on the shorts and theres alot of them out there.
In the case of insolvency or liquidation, someone buys the paper assets for a substantial discount.
The above captioned is certain, but will it amount to a wash? Perhaps its time for another fractured fairytale...
This market is the result of the ruling government bailing out the old empire which begin its collapse on March 3, 2000 aka dot.com.
In essence, the government allowed the old empire to borrow unlimited amounts of money at very favorable terms.
Much additional currency was printed, credited and circulated into the system. While they were at it, the government decided to get the chains off of big business.
So the ubiquitous "they", tear down the trade barriers and allow the "free" flow of capital, labor and services.
This led to labor, capital and services at the margin. Get it where it's cheapest and forget about the long term consequences.
This led to the disenfranchising and emasculation of local self sufficient economies.
Many interdependency's were suddenly introduced into the supply chain. Nigerian rebels could raise the price of global oil just by rattling their guns.
Chinese laborers could make durable goods cheap so Americans could keep buying them.
And Greenspun's productivity "miracle" was born as durable economic goods production was outsourced to labor at the margin.
Durable and electronic consumer goods price deflation was exported by China to the world.
Why exclude the common man? Lets get him in on the party too... because greed is good.
The ensuing circulation and multiplier effect of the cheap money caused assets to magically inflate to incredible all time highs.
One problem, all assets inflated, even those that were unaffected by the empires collapse.
At the same time, through leveraged speculation, the money shufflers could profit by exporting something else from China, commodities hyperinflation.
Don't worry, be happy, more profits, more good times.
The businessmen who had went bust, were able to pay off their old debts with devalued funny money...
and profit in the process while trickling down the illusion of a raised standard of living for the common man.
After all the durable economic activities had been offshored, lots of cheap goods & money was needed to keep the common man placated with...
either a low paying McJob or if he's lucky, money shuffling activities or equity extraction.
Since the funny money was cheap and easy, looser lending practices evolved and the banks decided to lend it out at insanely low rates to anyone that could fog a mirror.
Said leveraged speculation through derivative vehicles and "free" markets caused equities, commodities & real estate to rise to absurd levels, beyond the dreams and realistic means of many.
This led to an even lower risk premium threshold where leveraged speculation was used to squeeze out higher yields without appropriate risk premiums.
A good time was had by all and yes, risk mitigation was in place.
But the robustness and even validity could be called into question in the occurance of a market event or stress test, which we are witnessing.
We apologize for interrupting the final 5 minutes of the Raider-Jets game to bring you our special presentation of Heidi, at its originally scheduled time...
I have two very clear images in mind, post WWI Weimar Germany; and the 1929 investment trust and utilities pyramid collapse.
Remember, the genius of the blue blood vampires, entice and stoke the publics predilection for mania by lending out cheap money.
Driving up all asset classes in the process, except the real value of the currencies, which over time all get debauched down.
Drain the jugular while its hot, borrow more cheap money for stock buy backs & LBO's at inflated earnings and share price levels.
Pay off old debt with worthless borrowed dollars and get everyone in the game. Inexperienced players play like idiots and will drive up the prices fast.
Rising real estate prices inflate tax revenues, insurance premiums, loan origination points & fees and bank revenues.
Rising money supply & stock prices generate more transaction and under management fees.
Being illusory, it makes the books look good. Party time, raises for all, big broker dealer commissions and executive bonuses.
Sunrise hangover, watch emasculated US service based economy start to weez and choke as the illusion begins to unravel.
The US Housing sector which is the only remaining durable economy activity starts contraction.
Chinese & Indian consumers making shit for wages can never support a global economy much less their own local economy,
and I don't care how many billions of them there are or what they claim the growth rate is.
American real estate prices decline as price levels become unsupportable.
Mental midgets who overpaid & shouldn't have been allowed a seat at the table, start to default and walkaway as most have no skin in the game anyway.
Banks get caught holding the bag along with MBS debt holders. Risk premiums rise, spreads widen and credit tightens.
Earnings decline as the US consumer who spends like no other, can no longer borrow and spends less.
Ratings plunge on all grades of debt as its worthiness becomes dubious.
Stock prices drop as market participants have to liquidate their liquid assets to cover margin calls.
And yes, the short hedges may make up some of the difference, but the damage to the debt & credit markets and the con could be fatal.
Because at some point even the public might wake up & realize, it's been had.
The confidence game is over and even short term asset backed corporate paper starts getting pulled out from under every ones feet.
In the end a confluence of all the above leads to systemic failure on a global scale for major lenders...
commercial banks, insurance companies, pension funds, brokerage houses and even government sponsored entities & debt.
Like rats, jumping from a sinking ship early or like the nocturnal blood suckers they are,
the blue bloods stay out of the light, hiding behind BK for insolvency and fleeing to the Caymans in their yachts. Exsanguination complete.
This ponzi scheme plunge is self perpetuating and it would not surprise us if the reanimated zombie or dead man walking gets the final stake through its heart, sometime in late October.
The Nattering One muses... we interupt our special showing of Heidi to return you to a replay of the incredible conclusion of Raiders-Jets game.
The bulk of this missive was penned in Sept 2007, just before the start of what has now become an official bear market for stocks.
We thought it apropo to release the missive at this time, as we sense, just beginning our journey to the dark side are we.
Perhaps he has a point... and then again maybe not.
Stocks and debt get sold at reduced prices, someone makes money on the shorts and theres alot of them out there.
In the case of insolvency or liquidation, someone buys the paper assets for a substantial discount.
The above captioned is certain, but will it amount to a wash? Perhaps its time for another fractured fairytale...
This market is the result of the ruling government bailing out the old empire which begin its collapse on March 3, 2000 aka dot.com.
In essence, the government allowed the old empire to borrow unlimited amounts of money at very favorable terms.
Much additional currency was printed, credited and circulated into the system. While they were at it, the government decided to get the chains off of big business.
So the ubiquitous "they", tear down the trade barriers and allow the "free" flow of capital, labor and services.
This led to labor, capital and services at the margin. Get it where it's cheapest and forget about the long term consequences.
This led to the disenfranchising and emasculation of local self sufficient economies.
Many interdependency's were suddenly introduced into the supply chain. Nigerian rebels could raise the price of global oil just by rattling their guns.
Chinese laborers could make durable goods cheap so Americans could keep buying them.
And Greenspun's productivity "miracle" was born as durable economic goods production was outsourced to labor at the margin.
Durable and electronic consumer goods price deflation was exported by China to the world.
Why exclude the common man? Lets get him in on the party too... because greed is good.
The ensuing circulation and multiplier effect of the cheap money caused assets to magically inflate to incredible all time highs.
One problem, all assets inflated, even those that were unaffected by the empires collapse.
At the same time, through leveraged speculation, the money shufflers could profit by exporting something else from China, commodities hyperinflation.
Don't worry, be happy, more profits, more good times.
The businessmen who had went bust, were able to pay off their old debts with devalued funny money...
and profit in the process while trickling down the illusion of a raised standard of living for the common man.
After all the durable economic activities had been offshored, lots of cheap goods & money was needed to keep the common man placated with...
either a low paying McJob or if he's lucky, money shuffling activities or equity extraction.
Since the funny money was cheap and easy, looser lending practices evolved and the banks decided to lend it out at insanely low rates to anyone that could fog a mirror.
Said leveraged speculation through derivative vehicles and "free" markets caused equities, commodities & real estate to rise to absurd levels, beyond the dreams and realistic means of many.
This led to an even lower risk premium threshold where leveraged speculation was used to squeeze out higher yields without appropriate risk premiums.
A good time was had by all and yes, risk mitigation was in place.
But the robustness and even validity could be called into question in the occurance of a market event or stress test, which we are witnessing.
We apologize for interrupting the final 5 minutes of the Raider-Jets game to bring you our special presentation of Heidi, at its originally scheduled time...
I have two very clear images in mind, post WWI Weimar Germany; and the 1929 investment trust and utilities pyramid collapse.
Remember, the genius of the blue blood vampires, entice and stoke the publics predilection for mania by lending out cheap money.
Driving up all asset classes in the process, except the real value of the currencies, which over time all get debauched down.
Drain the jugular while its hot, borrow more cheap money for stock buy backs & LBO's at inflated earnings and share price levels.
Pay off old debt with worthless borrowed dollars and get everyone in the game. Inexperienced players play like idiots and will drive up the prices fast.
Rising real estate prices inflate tax revenues, insurance premiums, loan origination points & fees and bank revenues.
Rising money supply & stock prices generate more transaction and under management fees.
Being illusory, it makes the books look good. Party time, raises for all, big broker dealer commissions and executive bonuses.
Sunrise hangover, watch emasculated US service based economy start to weez and choke as the illusion begins to unravel.
The US Housing sector which is the only remaining durable economy activity starts contraction.
Chinese & Indian consumers making shit for wages can never support a global economy much less their own local economy,
and I don't care how many billions of them there are or what they claim the growth rate is.
American real estate prices decline as price levels become unsupportable.
Mental midgets who overpaid & shouldn't have been allowed a seat at the table, start to default and walkaway as most have no skin in the game anyway.
Banks get caught holding the bag along with MBS debt holders. Risk premiums rise, spreads widen and credit tightens.
Earnings decline as the US consumer who spends like no other, can no longer borrow and spends less.
Ratings plunge on all grades of debt as its worthiness becomes dubious.
Stock prices drop as market participants have to liquidate their liquid assets to cover margin calls.
And yes, the short hedges may make up some of the difference, but the damage to the debt & credit markets and the con could be fatal.
Because at some point even the public might wake up & realize, it's been had.
The confidence game is over and even short term asset backed corporate paper starts getting pulled out from under every ones feet.
In the end a confluence of all the above leads to systemic failure on a global scale for major lenders...
commercial banks, insurance companies, pension funds, brokerage houses and even government sponsored entities & debt.
Like rats, jumping from a sinking ship early or like the nocturnal blood suckers they are,
the blue bloods stay out of the light, hiding behind BK for insolvency and fleeing to the Caymans in their yachts. Exsanguination complete.
This ponzi scheme plunge is self perpetuating and it would not surprise us if the reanimated zombie or dead man walking gets the final stake through its heart, sometime in late October.
The Nattering One muses... we interupt our special showing of Heidi to return you to a replay of the incredible conclusion of Raiders-Jets game.
The bulk of this missive was penned in Sept 2007, just before the start of what has now become an official bear market for stocks.
We thought it apropo to release the missive at this time, as we sense, just beginning our journey to the dark side are we.
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