The Wall Street Conspiracy: Ascent of the Psychopaths and the Culture of Death
by ilene - February 11th, 2012 4:11 pm
Courtesy of Jesse's Cafe Americain
"The privileged have regularly invited their own destruction with their greed."
John Kenneth Galbraith, The Age of Uncertainty
"Psychopaths have a grandiose self-structure which demands a scornful and detached devaluation of others, in order to ward off their envy toward the good perceived in other people."
“He will choose you, disarm you with his words, and control you with his presence. He will delight you with his wit and his plans. He will show you a good time but you will always get the bill. He will smile and deceive you, and he will scare you with his eyes.
And when he is through with you, and he will be through with you, he will desert you and take with him your innocence and your pride. You will be left much sadder but not a lot wiser, and for a long time you will wonder what happened and what you did wrong.
And if another of his kind comes knocking on your door, will you open it?"
Robert D. Hare, Without Conscience
You can also watch the full documentary 'Fishead' here.
I thought the section focusing specifically on Prozac was a bit overdone, as if it was somehow a cause rather than a symptom. At the height of its use, the largest per capita use of Valium was in Japan, probably due to the high tension caused by their close living conditions and a strict cultural system of obligations tied to personal worth.
The point of the film to me is that psychopaths require no such drugs, and if they come to power they order the system to suit their needs. Psychopathic cultures foster extraordinary actions amongst ordinary and feeling people to cope and compete.
High tension cultures live on abusing drugs, whether they be alcohol, cocaine, marijuana, amphetamines, prescription drugs, nicotine, or even sex, sports, or obsessive collecting. People can 'lose themselves' in many ways, including apathy, hatred and ignorance. There was a story just today that says the latest craze on Wall Street is testosterone therapy.
Let's just say that anything can be abused,…
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DiggMF Global: Francine McKenna of re: The Auditors Gives a Plausible Explanation
by ilene - February 11th, 2012 3:44 pm
Courtesy of Jesse's Cafe Americain
Francine McKenna is an ex-auditor from Price, Waterhouse Coopers.
McKenna has a blog called re: The Auditors, and also writes for Forbes.
MF Global is a slowly boiling scandal. It is always the cover up that brings the most damage, rather than the initial criminal acts that are committed by a few.
She provides a very plausible description of what really happened at MF Global, and I find it to be entirely consistent with my own thoughts and extensive reading on the subject.
She does not address the actual cause of the MF Global bankruptcy but that is another matter.
It is a dirty business. And Francine is a highly credible source.
This will start viewing at 13:00 to hear McKenna's thoughts.
“Student Loan ‘Debt Bomb”; Obama’s Misguided Proposal and Mish’s Two-Point Alternative Proposal
by ilene - February 11th, 2012 3:37 pm
“Student Loan ‘Debt Bomb"; Obama's Misguided Proposal and Mish's Two-Point Alternative Proposal
Courtesy of Mish
It's interesting to watch some of the terms bandied about in headline news. For example, the LA Times headline reads S&P says student loan debt could be next financial bubble.
Next? Could Be?
What with the word "next"? Also what's with the words "could be"? Without a doubt student loans are in a bubble and have been for many years. The source of the problem, as it always is with financial bubbles, is cheap money, loans to nearly anyone, and in the case of student loans, no way to discharge the debt, even in bankruptcy.
From the article …
"Student-loan debt has ballooned and may turn into a bubble," S&P said. "There are more defaults and downgrades for some student loan asset-backed securities."
Federal and private student-loan debt is approaching $1 trillion and surpassed credit-card debt for the first time in 2010, according to Mark Kantrowitz, publisher of FinAid.org, a college grant and loan website. Under U.S. law, student-loan debt — unlike credit-card borrowings — can rarely be discharged in bankruptcy court.
President Barack Obama last month proposed linking federal aid to a college's ability to control tuition costs. The plan calls for increasing campus-based aid only for schools that limit tuition-cost increases and penalizing those that don't.
The Next "Debt Bomb"
The Huffington Post says Student Loans Could Be America's Next "Debt Bomb"
Growing numbers of Americans are finding themselves bankrupt, with their college diplomas partially to blame.
Slightly more than 80 percent of bankruptcy attorneys say the number of their potential clients with student loan debt have increased "significantly" or "somewhat" in the past three to four years, according to a survey by the National Association of Consumer Bankruptcy Attorneys. And there's little hope those debtors will get out of their obligations; 95 percent of bankruptcy attorneys surveyed said that very few student loan debtors will be discharged from their loan as a result of undue hardship.
"Take it from those of us on the frontline of economic distress in America: This could very well be the next debt bomb for the U.S. economy," William E. Brewer, Jr., president of the NACBA said in a statement accompanying the survey.
With so many college graduates burdened with so much debt, the potential for bankruptcies is huge.
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Occupy Movements of Mutual Knowledge
by ilene - February 11th, 2012 2:49 pm
Courtesy of The Automatic Earth
The psychology of expansion and the psychology of contraction are complete opposites. Expansions occur against a backdrop of increasing trust and social inclusiveness. At least initially, people are industrious and seek to build enterprises and larger social structures. The value of the goals they are working towards outweigh the potential risks, so people try, and succeed, to innovate.
Political aggregations form and grow in both reach and effectiveness as the trust horizon expands and a sense of common humanity trumps xenophobia. Over time, a positive outlook develops into a self-fulfiling prophecy and times typically become relatively stable and peaceful. Unfortunately, in losing sight of risk and hollowing out the substance of society in their latter phase of over-reach, expansions sow the seeds of their own destruction.
The self-fulfilling prophecy in the opposite direction that follows unfolds much more quickly, as trust takes a long time to build and very little time to destroy. The perception of risk makes a major comeback, and as it does so, people become much more cautious, and also much more suspicious of the motives of others. This psychological shift away from innovation, building and longer term goals is a major factor in precipitating economic contraction. Xenophobia returns as the resulting losses must be shared out. This is much more difficult than sharing out gains during good times when there is plenty to go around.
The psychology of contraction is a major negative force undermining the achievements of the previous era. It is corrosive of the fabric of society – emphasizing fear, anger, and jealousy. Time horizons shorten with increasing instability, so that constructive planning becomes much more difficult. Far fewer people have enough of a cushion to permit them the luxury of the longer term view, hence short-term crisis management comes to dominate, to the cost of all.
We need to understand the major movements of human herding behaviour that give us expansion and contraction. To understand is to be able to resist being caught up in movements of unfocused anger and fear that can rapidly come to dominate a society in hard times. As circumstances deteriorate, we need to short circuit the progression towards increasing isolationism and tribalism that will only make matters worse.
This can be done by maintaining a focus on that which can genuinely be done where trust still exists. Maintaining communication between likeminded people
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Violent Protests in Greece; 6 Cabinet Members Resign
by ilene - February 11th, 2012 3:28 am
Violent Protests in Greece; 6 Cabinet Members Resign; LAOS leader "I Would Rather Starve Than be Under German Jackboot"; Controversy Over Missing Paragraphs
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Courtesy of Mish
Imagine you are asked to sign a document but three pages were missing. Further imagine the documents you were asked to sign were written in English but you only speak Greek. Would you sign?
That is exactly the predicament Greek officials were placed in by the Troika. Here is the story sent to me by Demetri Kofinas at Capital Account.
Hello Mish
George Karatzaferis leader of LOAS political party gave a speech today addressing why he refused to sign this latest agreement. In his speech, he said that he asked for a translated document of the agreement so that he could read it and sign it since his English is not as good as Papademos'.
When he got a copy, it was not only smaller than the English version, but was also missing pieces, including the last paragraph! He refused to sign it because he felt pressured and wants more time.
Youtube has a video of Karatzaferis where he compares the documents. At the 11:35 mark he translates the last paragraph for the listeners, which was not provided to him in the translated copy that he was to read.
The video is in Greek so not many can understand it. Moreover, the video was somewhat garbled and some things do not easily translate, so I do not have a good account of the missing paragraphs, but it is clearly absurd that anything should be missing.
"I Would Rather Starve Than be Under German Jackboot"
Facing down protests, dissent, Greece vows to push through austerity warns of default 'chaos'
Greece's future in the eurozone came under renewed threat Friday as popular protests again turned violent and dissent grew among its lawmakers after European leaders demanded deeper spending cuts.
The country's beleaguered coalition government promised to push through the tough new austerity measures and rescue a crucial euro130 billion ($170 billion) bailout deal after six members of the Cabinet resigned.
Prime Minister Lucas Papademos promised to "do everything necessary" to ensure parliament passes the new austerity measures that would slap Greeks with a minimum wage cut during a fifth year of recession. He also promised to replace any other Cabinet members who did not fully back
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Fed Playing Favorites With Wall Street in Secretive Bond Deals: Mortgages
by ilene - February 11th, 2012 3:22 am
The Federal Reserve secretly selected a handful of banks to bid for debt securities acquired by taxpayers in the U.S. bailout of American International Group Inc., and the rest of Wall Street is wondering what happened to the transparency the central bank said it was committed to upholding.
“The exclusivity by which the process has shut out smaller dealers is a little un-American,” said David Castillo, head of sales and trading at broker Further Lane Securities LP in San Francisco, who said he would have liked to participate. “It seems odd that if you want to get the best possible price that it wouldn’t be open to anyone who wants to put in the most competitive bid.”
Continue here: Fed Playing Favorites With Wall Street in Secretive Bond Deals: Mortgages – Bloomberg.
MF Global Inc. trustee sees $1.6 billion gap
by ilene - February 11th, 2012 1:15 am
The Trustee, relying on the books and records of MF Global Inc., the investigation that has traced a majority of the cash transactions during the last week before the bankruptcy of MF Global Inc., and the claims process, currently believes there is at least a $1.6 billion gap between the value of the Trustee’s estimate of potentially allowable commodities claims and the assets that are currently under the Trustee’s control. This reconfigured estimate is expected to change over time as claims are processed and assets recovered, and depending on claims reconciliation and the ultimate outcome of claims the Trustee may contest, the estimated deficiency may rise or fall in significant amounts. The estimate applies to claims from commodities customers who traded on US exchanges, as well as commodities customers who traded on foreign exchanges, including approximately $700 million that the Trustee is disputing with the Joint Special Administrators of MF Global UK Limited.
The Trustee has returned approximately $3.9 billion in property from US depositories to former commodities customers in three bulk transfers since MF Global went into bankruptcy on October 31, 2011. Currently, the Trustee has approximately $1.4 billion in assets under his control, which is being held in reserve.
The Trustee and his staff continue to review and tabulate claims made by former MF Global Inc. commodities customers against the MF Global Inc. estate, which were submitted prior to the January 31, 2012 claims deadline.
Keep reading here: MF Global Inc. trustee sees $1.6 billion gap – Financials – Futures Magazine.
China Financial Markets: When Will China Emerge From the Global Crisis?
by ilene - February 10th, 2012 4:22 pm
Courtesy of Mish
I am saddened to report that Michael Pettis' site China Financial Markets has been blocked. The link redirects to a site with a one line message "This Account Has Been Suspended". When I have more details, I will post them.
Note: I just heard back from Pettis who is unsure of what happened. Hopefully this will be cleared up soon. I am leaving the rest of this post as I originally wrote it.
This is really a shame because Pettis is invariably a great read. I am personally indebted because he has taught me most of what I know about trade.
Michael Pettis is Professor of Finance at Peking University, and Senior Associate at the Carnegie Endowment for International Peace.
When Will China Emerge from the Global Crisis?
Via email (this may have been posted on his blog but obviously I cannot tell), please consider snips fromWhen will China emerge from the global crisis? by Michael Pettis.
Caixin, one of my favorite magazines, has an interview with Liu Mingkang, former China Banking Regulation Commission chairman. In it Liu says: I've said in the past, that this economic crisis will spread from the United States to Europe and finally land in Asia. Now we can see that it's already begun influencing Asia.
In 2008 and 2009 I argued that the crisis we were undergoing would affect every major economy in the world, but not necessarily at the same pace. I suggested that the US typically is quick to adjust and, given the pace of deleveraging that was already taking place, I expected that it would be the first major economy out of the crisis, probably in the next two to three years, as private debt levels continue to decline and public debt growth slows.
By now I think the prediction that the US will be among the first and China among the last to escape the crisis no longer seems as eccentric. Others are making similar predictions. There is growing awareness that China has not yet addressed the changes forced upon it by the global crisis, and will have to do so soon. It has certainly become easier to see how the crisis has spread, as Liu points out, first from the US and then to Europe and now to Asia.
It is important to note that it is not just Liu who
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Petroleum 3-Month Rolling Average Turns Sharply Lower; Negative Shipping Rates; Collapse in Global Trade
by ilene - February 10th, 2012 4:15 pm
Courtesy of Mish
On February 6, I noted (with huge thanks to reader Tim Wallace) a Huge Plunge In Petroleum and Gasoline Usage.
Tim used weekly numbers, which show, much week-to-week volatility. Instead, I proposed using rolling three-month averages, compared to the same three months in prior years.
Today I received some updated charts that are much easier to see precisely what is happening.
Gasoline Usage Last Three Months vs. Last Three Months Prior Years
click on any chart for sharper image
Gasoline Usage by Quarter Ending December 2011
Petroleum Usage by Quarter Ending December 2011
Wallace writes "Gasoline and petroleum demand recently has plunged more than at any time in the recession. When you see petroleum usage back to numbers in the 1990's, you know there is serious economic trouble no matter what the talking heads say."
Wallace willing, each month I will post the "Petroleum Rolling Three-Month Average Index". Hopefully we can get a derivative of that first chart, "Percent Change From a Year Ago".
At the end of February the comparison will be December – January – February vs. the same three months in prior years.
Negative Shipping Rents
Amazingly, shipping rates have dropped so low, shippers will pay you to ship, just to get the cargo vessels to better locations.
Bloomberg reports Charter Rates Go Negative
Glencore International Plc paid nothing to hire a dry-bulk ship with the vessel’s operator paying $2,000 a day of the trader’s fuel costs after freight rates plunged to all-time lows.
The vessel will haul a cargo of grains to Europe, putting the carrier in a better position for its next shipment, he said.
“Our other option was to stay in the Pacific and earn poor revenues or ballast to the Atlantic and pay the fuel ourselves,” Rodley said. Ballasting refers to sailing without a cargo. Charles Watenphul, a spokesman for Glencore, declined to comment in an e-mailed response to questions.
Charters for the so-called backhaul routes that reposition ships to the Atlantic Ocean region from the Pacific are falling to the lowest since indexes started, exchange data show. Rents for Capesize ships that haul ore and grain on backhaul routes were at minus $7,342 a day, the lowest
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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