Saturday, March 16, 2013

Capitalists BURNanke, DRUGhi, BarBOOMo, LuggTard team hard at work again…who knew what where and when…and more importantly WHY?

While everyone was calmly waiting for central bank internal hedge fund trading algorithms to ramp the markets into their 4pm close, someone was futzing around with the SPY…and I would like to know who and why? The SPY has been trading at a premium recently to the Cash index. Till Friday that is…at which point it reverted to a discount…and not such a small one…could that be a coincidence?

I am not quite sure, but this does not pass the smell test. First, the action is perverted and anything but efficient. Second, the Cyprus experiment is clearly a test to see what the EU and Central bank brethren can get away with before a comatose public…Not to mention the disasterous JPM testimony, which only serves to reinforce my statements on these pages for so many years regarding their derivatives book.

Due to both of these situations anyone who has had doubts about holding money in a commercial or institutional bank or who has had faith in our central bankers MUST have serious doubts as to the brevity of their agendas. Clearly, our deposits are not safe - especially in the EU…where France, Italy, Spain, Portugal, Ireland, Belgium and others are only a short time away from getting orders for the theft of their citizens assets to line the pockets of the elite too big to fail banks and the buddies. Grillo’s popularity is certain to gain double digits due to the this insanity…which will not be a pretty thing for Europe, the ECB, the EU or our buddie BEN who assures us the US banks are all a-okay and can buy as much of their stock bask as they would like. Below are some interesting quotes officially sanctioning theft and tortious contract disruption:
  • "In order to have burden-sharing, you extend the tax base, to residents and also to non-residents - Asmussen
  • Lagarde said she would recommend that the IMF board now agree to chip in 1 billion euros ($1.3 billion) in loans.
  • "As it is a contribution to the financial stability of Cyprus, it seems 'just' to ask a contribution of all deposit-holders" - EU official Dijsselbloem
  • "upfront, one-off tax is expected to raise 5.8 billion euros on top of the loans still to be finalized by eurozone parliaments"  - Mario Draghi
  • "We did what we had to," - French Finance Minister Pierre Moscovici. 
  • "It's something that compared to other possible outcomes, is the least onerous," - finance minister Sarris
The beauty of all this destructive and counter-productive effort is that supposedly JP Morgan, Deutsche Bank and GoldmanSachs will all get paid and continue to earn their fees without interruption.

Additionally, though I do not have much time, I would like to point out that a public pricing service for derivatives, as suggested by Levinson yesterday, will do nothing to fix the issue of reliable marks for fictitious instruments. All it takes is a little round table dinner among friends to start systematically manipulating the bids and asks on these illiquid instruments to significantly move the all important midpoints…there are much better ways to handicap marks that would produce more realistic results…but there is no way to handicap liquidity. This is something that the 80 trillion dollars of mismarked JPM derivatives is lacking…and also the reason that JPM is according to my calculations well in the trillions of dollars insolvent…TRILLION with a “T". The most amazing part of all this, being that I worked there for 14 years, is that so many people have made so much money in bonuses on positions that in reality are totally insolvent and held at huge losses.

This is not going to be pretty.

Below is a Beppe Grillo video…can you find anything wrong with what he’s saying…and how has Iceland fared versus Greece…both had the same decisions to make and made totally different ones with totally different outcomes…
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