Posts Tagged ‘Ponzi’

PIMCO’s Bill Gross’ December Letter – We’re All Living in Allentown, PA

Courtesy of TraderMark of Fund My Mutual Fund

PIMCO’s Bill Gross’ monthly letter for December is out and it speaks to a lot of themes FMMF has been touching on for years – a very nice read for those of you not familiar with his work.  I also embedded a video of an appearance of his yesterday on CNBC.

Full letter below – hit fullscreen to make it easy to read

Some key points:

  • The global economy is suffering from a lack of aggregate demand. With insufficient demand, nations compete furiously for their share of the diminishing growth pie.
  • In the U.S. and Euroland, many policies only temporarily bolster consumption while failing to address the fundamental problem of developed economies: Job growth is moving inexorably to developing economies because they are more competitive.
  • Unless developed economies learn to compete the old-fashioned way – by making more goods and making them better – the smart money will continue to move offshore to Asia, Brazil and their developing economy counterparts, both in asset and in currency space. 

Two ways the U.S. can address this – the hard (but long term healthy) way or the easy (but long term unhealthy) way.  You can guess which way we will ultimately go….

The right way:

  • The constructive way is to stop making paper and start making things. Replace subprimes, and yes, Treasury bonds with American cars, steel, iPads, airplanes, corn – whatever the world wants that


continue reading


Tags: , , , , , , ,




Thursday Thrust – Just Buy the F’ing Dips!

It's very sad when you can get your best financial advice from cartoon characters.

I apologize for the language but  this video pretty much says it all.  As the man in green says:  "Buy the f'ing dip, you f'ing idiot."  That's the entirety of the market strategy we are being trained like Pavlov's dogs to follow.  Also as the man says "Now, don't forget this only works if you go out and tell all your friends and family to do the same.  That way, when they are buying more expensively than you, you can sell back to them and collect your money."  

Of course it's a Ponzi scheme but it's a gigantic, legal one and the best thing about it is that the Government FORCES everyone to play so you never run out of suckers.  When there is a lack of actual new sucker/investors to put money in, the Government steps in with stimulus or buys equities (QE1) or buy Treasuries from the banks so they can have free capital to buy equities with (QE2).  They debase the currency and drive inflation higher while talking it up even more so and virtually penalizing people for saving money and not shopping.  In this way, the US Government places a tax on every single citizen through a systemic devaluation of their lifetime accumulation of wealth as well as unfavorable savings and inflation conditions that are aimed to force money into equities and commodities.  

What is the logic to this?  Well, none if you are a government that actually cares about the long-term benefit of 310M people but we haven't had a government that was "for the people" since they put two in the back of Kennedy's neck so why complain about it now? What we should be doing is celebrating the sheer stupidity of the situation and enjoying the ride as this stock market roller coaster clacks up the tracks – towards a drop that is certain to have investors screaming all the way down but, for now, let's listen to what the Bernanke Bears have to say in their latest cartoon about the Bank America crisis with WikiLeaks as well as their advice on NFLX and CRM:

Now, what could be more simple than that?  Just take all…
continue reading


Tags: , , , , , , , , , , , , , , , ,




Naked Capitalism and My Scary Minsky Model

Naked Capitalism and My Scary Minsky Model

Courtesy of Steve Keen at Debtwatch

I met with Yves Smith of Naked Capitalism on the weekend, at a superb Japanese restaurant that only New York locals could find (and I’ll keep its location quiet for their benefit–too much publicity could spoil a spectacular thing). Yves was kind enough to post details of my latest academic paper at her site in a post she entitled “Steve Keen’s scary Minsky model“.

Yves found the model scary, not because it revealed anything about the economy that she didn’t already know, but because it so easily reproduced the Ponzi features of the economy she knows so well.

I have yet to attempt to fit the model to data–and given its nonlinearity, that won’t be easy–but its qualitative behavior is very close to what we’ve experienced. As in the real world, a series of booms and busts give the superficial appearance of an economy entering a “Great Moderation”–just before it collapses.

The motive force driving the crash is the ratio of debt to GDP–a key feature of the real world that the mainstream economists who dominate the world’s academic university departments, Central Banks and Treasuries ignore. In the model, as in the real world, this ratio rises in a boom as businesses take on debt to finance investment and speculation, and then falls in a slump when things don’t work out in line with the euphoric expectations that developed during the boom. Cash flows during the slump don’t allow borrowers to reduce the debt to GDP ratio to the pre-boom level, but the period of relative stability after the crisis leads to expectations–and debt–taking off once more.

Ultimately, such an extreme level of debt is accumulated that debt servicing exceeds available cash flows, and a permanent slump ensues–a Depression.

There are 4 behavioural functions in the model that mimic the behaviour of the major private actors in the economy–workers, capitalists and bankers. Workers wage rises are related to the level of employment and the rate of inflation; capitalists investment and debt repayment plans are related to the rate of profit; and the willingness of banks to lend is also a function of the rate of profit.…
continue reading


Tags: , , , , , , , , , ,




The Perversity Of Bank-Driven Policy Response

The Perversity Of Bank-Driven Policy Response

Courtesy of Karl Denninger, The Market Ticker 

If you’re wondering why the big banks have "captured" the political environment in every nation of the world, you need only look at the Goldman results through a somewhat-different lens.

See, it wasn’t just Goldman - it was also Bank of America, Citibank and JP Morgan who scored "perfect quarters."

Aliens selling spaceship in outer space

Now if Goldman’s record was predicated on the outcome of a game of chance set of odds and had an 8.67 x 10-19 probability of occurring, for four of these institutions to do so would be that to the 4th power, or something approaching 5.65 x 10-73.

As pointed out in the forum by Tsberts, there are fewer than this many particles (atoms, etc) in the known universe.

Now it is certainly true that trading activities are not a pure game of chance, and that most of the trading profits are generated from "market making" (that is, earning a spread.)

But that makes the performance even more outrageous, because these "market making" activities are claimed to be something that provides net benefit to market participants and thus the economy as a whole.

That claim looks awfully hard to sustain when the book-maker never loses – not even once on a daily aggregate basis.

Indeed, this puts into stark relief the nature of "banking" these days in the Wall Street context, which is increasingly nothing more than an activity intended and executed to skim off profits for the banksters at the expense of literally everyone else in the economy.

They seem to be doing a good job of it too, if these results are any indication.

Here’s the problem with this, assuming you’re not a bank executive:…
continue reading


Tags: , , , , , , , , , , , ,




Cut the Partisan Crap … BOTH the Private Sector AND the Government are to Blame for the Financial Crisis

Cut the Partisan Crap … BOTH the Private Sector AND the Government are to Blame for the Financial Crisis

Courtesy of Washington’s Blog

Partisan GOP hacks say the financial crisis was caused by too much regulation, and government interference in the markets.

But Glass-Steagall was repealed, derivatives were left unregulated, and the regulators were watching porn instead of preventing fraud. Giant banks, hedge funds and other fat cat private players knowingly gamed the market and committed fraud in more ways than can be listed in a single post.

And remember, even the "father of economics" – Adam Smith – didn’t believe in completely unfettered free markets.

On the other hand, partisan Democratic party hacks say that bad corporations caused the crisis, and that if more power is given to Summers, Bernanke, Geithner and the other governmental honchos, they’ll fix everything.

But Summers, Bernanke, Geithner and the other meatheads largely caused the crisis through their actions. And as Simon Johnson points out, the government created the mega-giants, and they are not the product of free market competition.

As I pointed out in February 2009, government fraud is pervasive:

In case you believe that there are only "a couple of bad apples" in the United States, here is an off-the-top-of-my-head list of corruption by leading pillars of American society:

  • Senior military officials stole approximately $125 billion dollars out of Iraq reconstruction funds, dwarfing Madoff’s $50 billion Ponzi scheme (in turn, the looting which is now occurring under the bailout/stimulus programs will far surpass $150 billion)
  • The government-endorsed ratings agencies which were supposed to accurately rate the credit-worthiness of companies and nations committed massive fraud

There are hundreds of similar stories of corruption which have come out recently.

But surely government employees would have done something to stop such corruption if had known about it, right?

Well, actually:


continue reading


Tags: , , , , , , , , ,




“The New Bubble Is In Stimulants…..” Rosenberg

"The New Bubble Is In Stimulants….." Rosenberg

Courtesy of Jan-Martin Feddersen at Immobilienblasen

I want to add that the bubble is also in outright & hidden bailouts…..Nothing really new but hours/days away from the next mega bailout ( FHA ) a sober summary how wasteful the resources are "squandered"..…..

government spending

H/T Gary Varvel

Rosenberg

So the U.S. economy is growing again. But how can it not be growing with all the dramatic stimulus? The question should be “why only 3.5%”?

> If you can stand more details you can read "A Sham GDP For A Sham Economy"……

> Für einen teiferen Einblick was die USA veranstalten müssen um überhaupt ein positives GDP Ergebnis auf die Beine zu stellen kann das in "A Sham GDP For A Sham Economy"…… nachlesen….

Now the U.S. government is going to not just extend but indeed expand the tax credits for homeownership. This is happening at a time when the fiscal deficit is 10% of GDP. Simply amazing. The sector already receives more in the way of government support than any other area, and it adds zero to the capital stock or productivity growth. Oh, but it makes us better citizens. Renting must be for losers.

And then we see that the Fed’s TALF (Term Asset-Backed Securities Loan Facility) program that began in March just broke the $90 billion mark. This has basically supported 75% of the growth in the asset-backed market, almost evenly split between auto credit and credit cards because at over a 130% household liability-to-disposable income ratio, the government seems to believe we don’t have enough debt on our balance sheets. Honestly — you can’t make this stuff up.

But here is the real kicker. The Federal Housing Authority (FHA). If you’re wondering how it is that the U.S. housing market has managed to rise from the ashes, well, consider that the government-insured FHA program moved into high gear this year and has basically filled the gap vacated by the private sector. (where default rates are really becoming a problem) should not go unnoticed (and they weren’t by the staff at the WSJ that uncovered the growing problems in yesterday’s edition — FHA Digging Out After Loans Sour on page A2).

[No Easy Exit for Government as Housing Market's Savior]

The efforts to allow practically anyone to secure a mortgage not just


continue reading


Tags: , , , , , , , , , ,




The Shell Game – How the Federal Reserve is Monetizing Debt

Fascinating!  H/t to Zero Hedge for finding this excellent article by Chris Martenson. (See also Tyler Durden’s "Is The Fed Enabling Foreign Central Banks To Swap Out Their Agency Debt Into Treasuries?")  And welcome to Chris Martenson of ChrisMartenson.com!

The Shell Game – How the Federal Reserve is Monetizing Debt 

Courtesy of Chris Martenson

Executive Summary

  • The Federal Reserve and the federal government are attempting to "plug the gap" caused by a slowdown of private credit/debt creation.
  • Non-US demand for the dollar must remain high, or the dollar will fall.
  • Demand for US assets is in negative territory for 2009
  • The TIC report and Federal Reserve Custody Account are reviewed and compared
  • The Federal Reserve has effectively been monetizing US government debt by cleverly enabling foreign central banks to swap their Agency debt for Treasury debt.
  • The shell game that the Fed is currently playing obscures the fact that money is being printed out of thin air and used to buy US government debt.

The Federal Reserve is monetizing US Treasury debt and is doing so openly, both through its $300 billion commitment to buy Treasuries and by engaging in a sleight of hand maneuver that would make a street hustler from Brooklyn blush. 

This report will wade through some technical details in order to illuminate a complicated issue, but you should take the time to learn about this because it is essential to understanding what the future may hold. 

One of the most important questions of the day concerns how the dollar will fare in the coming months and years. If you are working for a wage, it is essential to know whether you should save or spend that money.  If you have assets to protect, where you place those monies is vitally important and could make the difference between a relatively pleasant future and a difficult one.  If you have any interest at all in where interest rates are headed, you’ll want to understand this story.

There are three major tripwires strung across our landscape, any of which could rather suddenly change the game, if triggered.  One is a sudden rush into material goods and commodities, that might occur if (or when) the truly wealthy ever catch on that paper wealth is a doomed concept.  A second would occur if (or when) the largest


continue reading


Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,




This just in: Bernie Madoff was a crook!

Courtesy of Christopher at For What It’s Worth

This just in: Bernie Madoff was a crook!

He passed out investors’ money to all his family and spent most of it on himself. No sign yet of the Madoff boys’ houses on Tomac or Cherry Valley being put up for sale, but my guess is that they’ll be just behind Walt’s Round Hill cottage. Maybe a “Madoff real estate tour” should be organized for this fall?

Mr. Madoff listed family members, boat captains, housekeepers and others as employees of Bernard L. Madoff Investment Securities, even though they never actually worked for the firm, newly released documents show. Mr. Madoff also used his firm’s money to pay for real estate, yachts, private planes and country club memberships, according to court filings by the trustee charged with liquidating the Madoff firm and recovering money for victims of Mr. Madoff’s multibillion-dollar Ponzi scheme.

The documents back up a previous assertion by lawyers for the trustee, Irving H. Picard, that Mr. Madoff used his business as a personal “piggy bank.”

[snip]

In January, Mr. Madoff, his wife, Ruth, and other family members spent more than $100,000 on his firm’s American Express Corporate Card. Among the charges were $1,564 at Bistro Chez Jean-Pierre in Palm Beach, Fla.; $2,000 at Georgio Armani in Paris; and $2,813 at the Apple computer store in New York.

Mr. Madoff, the mastermind of the world’s biggest Ponzi scheme, doled out more than $7 million to various companies owned by his wife, Ruth, his two sons and his niece Shana. Peter Madoff’s wife, Marion, was paid a salary of $163,500 by the Madoff firm last year, even though investigators found no evidence that she actually worked there.

Mr. Madoff also paid out $471,000 to a marina in Long Island and nearly $1 million to a number of exclusive country clubs including the Breakers, the Atlantic Country Club on Long Island, the Palm Beach Country Club and the Trump International Golf Club.

If the IRS never audited this guy, who were they auditing? Just asking.


Tags: , , , ,




 
 
 

Phil's Favorites

Retail rage: Why Black Friday leads shoppers to behave badly

 

Retail rage: Why Black Friday leads shoppers to behave badly

Courtesy of Jaeha Lee, North Dakota State University

The manic nature of Black Friday has at times led shoppers to engage in fistfights and other misbehavior in their desperation to snatch up the last ultra-discounted television, computer or pair of pants.

What is it about the day after Thanksgiving – a day meant to celebrate togetherness and shared feasting – that inspires consumers to misbehave?

Fellow researchers Sharron Lennon, Minjeong Kim, Kim Johnson and I have in recent years been exploring the causes of consumer misbehavior on Black Friday, historically ...



more from Ilene

Zero Hedge

Brexit Budget - Grim Outlook As UK Economy Downgraded

Courtesy of ZeroHedge. View original post here.

Brexit budget - Grim outlook as UK economic forecasts downgrade

- UK Chancellor uses housing market policy as smoke-screen for deteriorating economy

- UK budget matters more than ever due to BREXIT risks

- Policy on stamp duty will fail to aid worsening housing market

- Real GDP expected to grow by just 1.5%, 40% less than projections 2 years ago

- Househ...



more from Tyler

Digital Currencies

Bitcoin: An Unknowable Bubble?

Courtesy of ZeroHedge. View original post here.

"Whatever [Bitcoin] is, I missed it... It looks and smells like all the bubbles I have seen throughout history." - billionaire investor Jim Rogers

Authored by Constantin Gurdgiev via True Economics blog,

There is a much-discussed in the crypto-sphere chart making rounds these days, plotting Bitcoin price dynamics against the historical bubbles of the past:

...



more from Bitcoin

Insider Scoop

8 Stocks To Watch For November 22, 2017

Courtesy of Benzinga.

Related CRM 9 Stock's Moving In Tuesday's After Hours Session Salesforce Falls Despite Q3 Beat The Vetr co...

http://www.insidercow.com/ more from Insider

Chart School

Russell 2000 and Semiconductor New Highs / S&P Breaks

Courtesy of Declan.

The S&P broke higher to confirm a 'bear trap' and also closed at a new all-time high. Volume climbed to register an accumulation day but there were further losses in relative performance and continued losses in the MACD.


The Nasdaq posted a gap-driven 1% gain to bring it ever closer to channel resistance. It hasn't yet tagged resistance but it looks well placed to do so by the end of the week. Technical are all bullish.

...

more from Chart School

Biotech

The two obstacles that are holding back Alzheimer's research

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

The two obstacles that are holding back Alzheimer's research

Courtesy of Todd GoldeUniversity of Florida

Family members often become primary caregivers for loved ones with Alzheimer’s disease. tonkid/Shutterstock.com

Thirty years ago, scientists began to unlock the mysteries regarding the cause of Alzheimer’...



more from Biotech

ValueWalk

Robert Mugabe Under House Arrest, Military Takes Control Of Zimbabwe

By Andjela Radmilac. Originally published at ValueWalk.

Zimbabwe’s head of state, 93-year-old Robert Mugabe, has been placed under house arrest after what seems to be a military coup took place in the nation’s capital.

By U.S. Navy photo by Mass Communication Specialist 2nd Class Jesse B. Awalt/Released [Public domain], via Wikimedia CommonsRobert Mugabe is safe

Following numerous reports on social media late Thursday night about the increased military presence in Harare, the capital of Zimbabwe, the country’s military took...



more from ValueWalk

Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



more from Our Members

Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



more from Promotions

Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



more from Kimble C.S.

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David



FeedTheBull - Top Stock market and Finance Sites



About Phil:

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...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>