Lump of Coal This Year
Some Truly Awful Numbers
In the week ending Dec. 20, the advance figure for seasonally adjusted initial jobless claims was 586,000, an increase of 30,000 from the previous week’s revised figure of 556,000. The 4-week moving average was 558,000, an increase of 13,750 from the previous week’s revised average of 544,250. That gobbledygook translated means this: Read more »
Are Bankers Idiots?
Or
Following the Gods of Money to the Gates
of Hell
As I sit here writing I’m listening to a pile driver banging away. Somebody is building another hi rise condo on the beach. Less than 1,000 ft. from this construction site sit two, new, twenty story condos that, near as I can tell, are totally empty. I’ve yet to see a car pull up to the front entrance. This building was finished a year ago.
Whoever is building the new condo is not the idiot because we know that he’s not building it with his own money but borrowed money that he managed to obtain from some idiot banker. This banker, within a year or so will end up calling the loan when said developer can no longer make the payments, and the bankster will end up as the proud owner of another empty building.
The banker is an idiot right? Whoa! not so fast here. Let’s not forget that Uncle Sugar just threw trillions of dollars at all the other idiot banksters, who took advantage of mana from taxpayer heaven to heap multimillion bonuses upon them selves. We, the people, are the ones being raped, robbed and pillaged. So who are really the idiots?
In No One We Trust
An interview with mall spokesmen this morning on CNBC produced the usual pack of lies. There was a lady from Mall of America who said that sales “were up 2%” but gave no indication for why this might be true in the face of disastrous sales data from everywhere else. There was also a guy from New Jersey who, somewhat to his credit, did not lie, but three times evaded answering the question by making reference to increased head counts in his mall. “Traffic is up,” he said, repeatedly. Oh goody! More gang-banger kids came to the mall this year to hang out and scare customers away.
So what does the liar lady from Wisconsin hope to gain by lying? I don’t know, except to speculate that she’s trying to stave off the banksters by pretending that revenues are up. All she really does is to add yet more confirmation to what we already know, namely that nothing corporate America says is to be believed. Our real crisis is not one of economics but of morality. From the banker to the developer to mall owner, what lies behind the disaster they have created is the sort of myopic blindness causes by relentless greed and lust for power. The simple fact is that developers don’t give a shit if their ill-considered project goes bust since its not their money. Bankers don’t care either for the same reason. And when you get to spend OPM with impunity, nobody gives a shit.
This is where we stand today, reaping the results of that morality. Remember Clinton and the “character doesn’t matter” crusade mounted by his fellow democrats? When you look out at the world around you, what you see is the inevitable result of that philosophy. No character, no truth, no trust, no economy.
I suspect that the US dollar will be the next victim of the ethos of greed.
Lemmings
Lemmings are small arctic rodents that, not unlike many animal species, have herding instincts that can appear to be quite bizarre. They’ve been known to stampede blindly off a precipice, sort of like bankers and stock market junkies. Indeed, the world of so-called investors – who are really nothing more than professional gamblers – have a great deal in common with lemmings. In the past few years they’ve exhibited an extraordinary tendency toward mass herding into areas of speculation such as real estate, commodities, stocks, and of late, US Treasury bonds of the variety that pay no interest. The fact that US bonds pay little interest and no yields whatever, and yet “investors” are falling all over themselves to buy them up, rather like the introduction of a new toy at WalMart in which people have been known to trample themselves to death to obtain, is nothing short of extraordinary. As it now goes with lemmings, so it will go with T-bonds.
It’s not that I care what they do, be it rampaging over a real cliff or more figuratively off a financial one , it is the consequence of this insanity that concerns me just a tad. The treasury market is a huge bubble every bit as big and bad as housing, commodities and stock market bubbles of the past. Everyone knows this, but . . . . that doesn’t matter. Herds are not made up of individuals but are a mass acting in concert. Even though they know that a cliff lies dead ahead, they are unable to break free of the herd.
So what happens when bubbles burst? One may have noticed that the object of the herd instinct tends to become rather hard to sell, sort of like mortgage bonds and houses. And since the very life blood of Uncle Sugar is his apparently limitless ability to borrow money by selling bonds, bills and cotton candy, is there not a possibility that in the very near future, the USG may find itself between a rock and a hard place. As in needing to borrow yet evermore, but unable to do so.
Happy Whatever Day
Here’s one of the most frequently copied bits of holliday cheer on the ‘net this week:
Best wishes for an environmentally conscious, socially responsible, low stress, non-addictive, gender neutral celebration of the winter solstice holiday, practiced with the most enjoyable traditions of religious persuasion or secular practices of your choice with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all.
I also wish you a fiscally successful, personally fulfilling and medically uncomplicated recognition of the onset of the generally accepted calendar year of 2009, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make our country great (not to imply that Canada, USA, Mexico is necessarily greater than any other country) and without regard the race, creed, color, age, physical ability, religious faith or sexual preference of the wishee.
By accepting this greeting, you are accepting these terms:
This greeting is subject to clarification or withdrawal. It is freely transferable with no alteration to the original greeting.
It implies no promise by the wisher to actually implement any of the wishes for her/him or others and is void where prohibited by law, and is revocable at the sole discretion of the wisher. The wish is warranted to perform as expected within the usual application of good tidings for a period of one year or until the issuance of a subsequent holiday greeting, whichever comes first, and warranty is limited to replacement of this wish or issuance of a new wish at the sole discretion of the wisher.
That’s not my attitude but sums up the present state of affairs rather nicely. We’re not even sure Christmas qualifies as a retail event anymore.
Here’s hoping that your 401K wasn’t stolen by a hedge fund or a government agent.
P.S.: Past performance is no guarantee of future results.
NAME CHANGE
Yep, I changed the blog name, there not being enough left of the boating biz to even talk about. Most of my work now involves lawsuits as one entity sues another trying to squeeze out a few bucks in order to keep the lights on.
I chose the name since that is obviously my position on the current state of affairs in this nation. We are in dire straits. My efforts at providing analysis of current economic events is to assist in helping keep your head above water, whether personally or in business.
Somebody Gets It
This from Lee Iacocca:
“Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, “Stay the course.”
Stay the course? You’ve got to be kidding. This is America, not the damned Titanic. I’ll give you a sound bite: Throw the bums out!”
Our national priorities favor financial engineering, financial speculation, consumption on credit. They penalize manufacturing and the median wage. Our “leaders” believe that wealth is created by the printing press of the Federal Reserve, a gang of private banks that all the power mongers would have us believe is a government entity. It is not; it is a private, for profit corporation that, as should now be abundantly clear, owns this nation, just as Thomas Jefferson warned two hundred years ago.
Many are now coming to believe that a disaster has been averted and happy days will soon follow. The price of fuel has fallen 75%; the total collapse of the economy has been averted – for now. It has merely been pushed off into the future, a tactic that has been ongoing for twenty years. Yet that future keeps getting closer and closer as the cycles between collapses gets shorter and shorter. The day of reckoning can’t be pushed off any longer. Bush, Bernanke & Co. have guaranteed our future by piling on another $8.4 trillion to date with much more to come. And that doesn’t include a debt level that this year will exceed an entire year’s gross national product.
Our future is a crumbling nation rapidly reverting to third world status. I know that as you look around you, you find such statements to be ridiculous, you are surrounded by the accouterments of richest nation in the world.
Hidden behind the numbers is the fact that GDP now consists largely of a measure of increasingly worthless dollars. When we measure national productivity by dollars that are shrinking in value, you end up with an exaggerated GDP. Even worse, GDP measures the results of financial speculations, manipulations and fraud. Gross Domestic Product consists of gambling profits, selling worthless mortgage debt, credit default swaps, currency speculations and the like. Real DGP adjusted for the bullshit is more like 8 trillion and not the claimed 14 trillion. We now define productivity as the profits made in the great Wall Street Casino. Cute.
So where are these countless trillions to bail out our collapsing “financial economy” coming from? They’re coming hot off the printing presses, authorized by a mortgage on your future. Its not so much a future in which what you have will be taxed away; oh, no, its a future in which there is nothing left to be taxed since we have consumed our national net worth in order to have consumer party. On credit. Its a future in which we have made no investment; we ate our seed corn, and we will face universal poverty.
Its a future in which as a business man, every year you have less and less business because the average American has less and less money to spend. And with no profits to be made, our Banksters will all move to Asia to begin sucking the life out of that part of the world, leaving North America the heap of rubble they made of it. They couldn’t care less.
Washington doesn’t like manufacturing, it damages the precious environment, so they got rid of it. Besides, the profit margins are way too small. We can make more money squeezing you for 28% credit card interest. Or handing out mortgages bankers know you can’t pay, but the schlubs to whom they sell their mortgage packages don’t know that.
Then, in order to “save the planet” of an imaginary climate change disaster, they will now proceed to eliminate combustion of hydrocarbons by making it too costly, thereby raising the cost of energy beyond what we can afford to pay, and further plunging us back into pre-electrical days. Not to worry, Goldman Sucks will get richer brokering the carbon credit m arket, which they will corner.
In less than a year’s time vast power has been shifted into the hands of but a few now mega banks. Congress is now their puppet and does whatever is asked. The media, owned by the big money corporations, concurs. In an incredibly short time power has concentrated in what amounts to an invisible and silent coup. Yet its only silent because the people simply are not looking and listening. One suspects that they will only be heard from once they face the prospect of homelessness and starvation.
Somebody gets it, but he’s only one guy. The rest of them are all part of the conspiracy to be part of the gang that rules. On or about this time, historians will pinpoint the date when the USA ceased to be a free republic. It more closely resembles Russia.
The Next Bubble to Pop
Last September I outlined how this financial catastrophe was likely to play out. I have surprised even myself with how closely reality has followed my script. In hindsight, its not difficult to see that the laws of economics have not been repealed, and that the outcome of an irresponsible teenager with Daddy’s credit cards is little different than what will happen to the US government. The only difference is that USG can print money, yet there are inexorable laws governing money creation. Those laws are now restoring the balance of natural law.
A huge new bubble has developed in the US Treasury bill and bond markets, which is what has funded the massive bailouts. But this comes at an awful and suicidal price. Zero interest rate Treasury bills and bonds? Who in their right mind would buy them?
The common wisdom explaining investors loaning money to USG for free is a “flight to quality.” But since when does loaning money to the government for free have anything to do with quality? The answer is that it doesn’t. So, what’s wrong with this picture? As always, to discover the reason for seemingly irrational money floes one needs to look below the surface appearance, to dig deeper into the paradox.
The government is borrowing money as if there were a bottomless pit from which to obtain it. First they exhausted the world market for T-bonds and now they’re sucking US economy dry. When there is no more money to be had from Mr. America, what will they do then? Well, the Fed is the bank that is authorized to create money and that will be the only option remaining them. And when they do, bond yeilds (now being at zero) have only one direction to go – up. So perhaps the bond buyers aren’t so stupid after all, at least assuming that USG does not by then totally destroy their “full faith and credit” to the point that everyone realizes the US is utterly and completely bankrupt and the dollar is destroyed and USG hyperinflates its way to oblivion, joining the ranks of the likes of Argentina, Iceland and Zimbabwe.
Think that sounds improbable? Well, look at the dollar which has returned to its death dance, having lost 12% in only nine days. Currency collapses are not slow processes; they happen with lightning speed since all currencies are nothing more than a confidence game, and once confidence is lost, the game is over. Just ask the folks of Iceland how fast it happens. Try one week!
USG is playing hot potato with a live hand grenade . . . . it will explode in the form of the T-bond market bubble meltdown. It has thrown around $8 trillion at the banks in the form of loans and guarantees yet they balk at a piddling $25 billion for the auto industry. Something really stinks here. If they’d simply given that $8 trillion to all homeowners, the so-called mortgage crisis would be ended and the banks no longer threatened by defaults, right? Yes, that is correct, but as always the government is a liar and a thief; the problem is not, and never was mortgages. Rather it is a monster, a beast of the banksters own creation, derivatives, $60-odd trillion worth of which there is no money to back them up.
What the banksters and the hedgies did was go to Las Vegas with borrowed money, gambled it all away, and then borrowed yet more money from the casino to cover their losses, AND THEY LOST IT ALL. Now you and I are being asked – no, that’s not right – extorted to pay.
With treasuries now at zero interest rate, the money market funds that most Americans invest in are also paying zero, destroying all incentive to save. Money market savings is the primary source for corporate and local government borrowing. When Mr. & Mrs. America begin withdrawing their money from these funds, the great game is over as more and more business go broke, unemployment soars and tax revenues dry up and USG is left with nothing but money printing to funds its insanity. Then the dollar becomes worthless.
The end result is total economic and financial collapse. And the reason it is happening is because they are trying to force more debt on top of too much debt. They are attempting to save the economy by violating the law of economics. It won’t work because it can’t work, any more than you keep on living by killing yourself. It is that simple and that insane.
There has never been a crisis, a panic, a recession, depression or collapse that was not caused by bankers. Not one.
Rotten to the Core
The “mighty dollar” is now tanking, as we knew it would once the mad scramble to unwind the world’s largest gambling casino played with borrowed money started to close down. The US Treasury bills and bonds are next, the last great funny money bubble to implode. These two events will rip the last shreds of cloth from the emperor’s body to reveal his nakedness as festering with corpulence, pustulence and corruptive decay. Read more »
Guest Post
We received this post as a reader comment. The writer is involved in boat auctions (www.boatrac.com) and is more knowledgeable than I am on the subject, so I decided to post his comment as a separate article, owing in part to its length. This is far from the first such comment about the state of the boating biz I’ve received, particularly on the subject of Yachtworld and other brokerage venues. The degree of corruption described is nothing new and goes back to the beginnings of the BUC Boating Guide books where the brokage biz was heavily involved in efforts at price manipulation. This was back in the days when BUC ran as a voluntary sales reporting service, and idea that obvious did not work out too well.
Keen observation as usual David, National Liquidators did reach a historical peak this past weekend posting 514 boats, 507 Tuesday, 489 Wednesday and 508 at this writing. On the surface it would seem that National liquidated 25 boats in the four days from Saturday to Wednesday, however if you look closely you’ll notice the same 22 boats flashing the same “on hold” sign that they were flashing last month. So if the inventory did not attrit the pending deals, where did these boats go? What’s the source of this churn? This has long been a business based on perception as reality, but this crippled market will never start to mend until reality becomes reality.
The market is confused and scared. Boat buyers are human, and human nature finds fear in the unknown. It’s time to pull the little man out from behind the curtain. It’s time for pricing schemes to dissolve into pricing clarity and allow the market to respond to intelligence rather than shrink from perception.
National Liquidators is the logical benchmark for scaling the retail activities of the repossession market. Controlling about 12% to 14% of the marine repo market, National is clearly the largest player in the field, with its nearest competitor carrying only about one third their inventory. The remaining 3200 or so repo marine assets are scattered amongst the likes of a handful of operators that closely follow the National Liquidators model, to branded dealers, auto dealers, tow-truck operators, individuals and the banks themselves.
On January 14, 2008, David you succinctly pointed out that these auctions; “aren’t auctions but merely a secondary market with unusual selling conditions”. And, it’s these unusual conditions that contribute to the market degradation. What does minimum bid mean? The operators that practice this model will accept any offer, accompanied by a deposit, (no matter how far below this minimum) and submit it to their client for consideration, hoping for acceptance or at least a counter. Does it mean that you can buy the boat today at this price? No. Does it mean that you can buy the boat today at any price? No, it simply means that your offer enters an opaque process where you loose the competitive advantage of a transparent trade. [Emphasis, ed.]
The Dealer’s explanation is grounded, “our methods are proven over years of practice; we work these buyers against each other within a blind process and develop the best possible deal for our clients”. And, therein David; lies the rub.
With this said, there is one repo operator in Ft. Lauderdale that turns his inventory every month. He does this through an online, no reserve, open bid auction. No hidden agenda and no words without meaning, like; “minimum bid”, just an open market, setting a price. I’ve monitored his sales for the past year and he has consistently remained 3 months or less ahead of market depreciation. The market trusts this process and responds affirmatively.
Pricing schemas or manipulation through classified media like Yachtworld will be short lived and fruitless. This market/industry is nose down and accelerating and is not unlike any other over-inflated, hyper-extended, credit-dependent segment of our economy. It needs a flat out cleansing and total price destruction to regain stability. And, that exercise needs to start in the repo segment.
The economic and cultural calamities that you’ve so accurately forecast can not/will not spare recreational boating. Not until pricing clarity becomes the new benchmark, and trading simplicity becomes the hallmark, will this market begin to repair.
It’s time for reality; the market needs to determine values at instant as prices descend, and this can only be accomplished through the transparency of open bidding. Brokers, dealers and price scheme operators attempting to prop-up and hold price levels simply mimic Kevin Beacon’s character Chip Diller, in “Animal House” and his two famous lines; “thank you sir, may I have another” and more to the point, “remain calm, all is well”. I’m afraid these dealers face Chip’s fate; steam-rolled and crushed under values that they simply refuse to accept.
As for perception; well that’s a vice we’ll indulge in the future as we reflect on 2007/2008 and pretend that we knew what we were doing. We’ll blame our failures on fickle buyers, the war in Iraq, Presidents Bush and Obama, global warming and the media’s inability to keep the train rolling. We will perceive that our schemes were right and just, but the market simply didn’t understand us. Well… we may then have at least one foot in reality.
Congress Rejects Autos
After throwing trillions at the parasitic bankers, congress refuses $15 billion to Detroit, proving themselves to be nothing more than a gang of jackals. The GM bankrupcty will will be a defining event like the Lehman collapse, taking the US economy over the edge of the abyss and into economic collapse.
This is it, we are headed into a self created depression of historical proportions. What is happening we have done to ourselves with no one else to blame.
Boat Notes
Boat Notes
“If you don’t read the newspaper, you are uniformed. If you do read the newspaper, you are misinformed” – Mark Twain
Just received a copy of Destination Fish an ultra-slick fishing mag, yet another of the proliferation of same. One way to keep tabs on the state of boat building is by means of counting ads in the magazines. These have been steadily declining over the last year. This mag had only two ads for boats I’d never heard of before. Two, in a magazine that is typically loaded with boat builder ads. There were ads for chartering executive jets and helicopters, but no boats. Amazing. Read more »
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