Time Bombs

Commercial loans ready to default, home loan resets, yet Geithner says all is well:


Do not be fooled – we are in the eye of the storm, and we have miles to go before we sleep. Elizabeth Warren knows her shit – mark me.


Please, just don’t bring it up, I don’t hear you, la la la la la la la.

The meltdown in 2008 was really just the beginning and all that the FI sector has done is prettied up the surface of their books. Structurally, we’re still 5-10 years from working through the mess, if we do everything right.

That is if the Chinese don’t just cut off the cash flow and the states devolves into cannibal anarchy.

ADD: Geithner needs to be kicked to death and thrown off of the 14th Street bridge. Warren needs to mate with former FHLBB examiner samurai Bill Black and breed a half dozen or so uberregulators to guide the American banking system back to sanity over the next two generations.

@FlyingChainSaw: Okay. I don’t understand economics at all; I’m truly ignorant. Where do the Chinese get their money? From all that poisonous stuff the EPA lets them sell us but the Europeans won’t have?

OK, yes, the whole world is in denial, Bush destroyed the universe, aided by Clinton before him, by allowing the finance industry to rape us for 8 years, passing their bad investments, all across the world, financial giants, they systematically engaged in profiteering on bad credit. They made bad loans, knew they were bad loans, and passed them on in such huge amounts, to the public, and to governments, as investments, that the governments were forced to socialize their losses, or else, the governments, and all the people, would have been bankrupted.

The various methods the finance industry used to facilitate this, thats the trees, the forest is very simple to see, the finance industry, once Gramm Leach Bliley obliterated the distinction between debt risk and capital investment risk, allowing the finance industry to take debt and sell it as capital, the finance industry exploited this to create sophisticated instruments that divorced lending risk from lending profit. There is big up-front profit in originating loans, if you are in a position to lay off the long term risk of default. You lose all motive to really give a shit about whether the borrower really has a hope in hell of actually making good on the debt. You make or 5% in fees simply for processing a bad loan, and its all 100% leveraged return, because you are never ever at risk for the principal amount at any point.

This is all semicoherent, oversimplified attempts at a description of the corrupt system that finally collapsed.

My only real point is, noone is doing anything, even proposing anything, that in any way addresses the real problem.

Obama and his administration has done nothing but desperately, and only partially succesfully, pump more liquidity into the same bankrupt, corrupt, system, in a futile attempt to keep it on life support a little longer.

The system survives, in a frankenstein monster, zombie-undead fashion, the survivors adjusting to a “new normal” in which its only the volume of the theft that has been reduced, the system still fundamentally relies on systemitized fraud and theft.

So, yeah, the trillions of dollars in financial industry losses that have been absorbed by the governments, who did so by simply printing default currency, they have done nothing but keep a Terry Schiavo economy technically “alive.”

So yes, Bloggie, its all gonna crash so horribly, sometime soon, and its too horrible to contemplate, because, for you and me, and the rest of the “people,” we are helpless, and can do nothing but watch.
So shut the fuck up, I am gonna go make another martini.

@JNOV: The Americans, mostly companies that hire their slaves to build all our crap. The money gets banked in PRC institutions. And recyled as purchases of Treasuries from the states. That money is used for all manner of imperial madness and economic madness. We’ll be eating tires when the Chinese stop showing up at the Treasury auctions.

@FlyingChainSaw: We are worse off than the japanese were, 20 years ago, when their reckoning came, and they are not out of it yet.

Of course there are time bombs, and the damage still to come, the whole financial sector since Reagan has been focused on milking today’s profits and pushing off to the future the risks, and also, here is where GLB ennabled them, divorcing themselves from exposure to the risk. So yes, these “time bombs,” thats just the risk pushed forward by the finance industry onto the investors, coming home to roost.

see, they found out a way to steal, but noone noticed, because they weren’t stealing from what you have today, they were stealing from tomorrow. Its now tomorrow, and all these things they sold us that we thought were worth something, are worthless, thats how you steal from tomorrow, you extract the present value of a projected investment, take a cut, sell the asset based on pie in the sky projection of future income stream, and let someone else deal with the risk that the projections might be off, might be, reallly, fraudulent.

@Promnight: All of it might have been sustainable if underwriting quality had not continued to erode at all levels – from origination to securitization to hedging – from the 1980s onward nearly without interruption. No one goes away for control frauds, not since the S&L meltdown. Great video by a personal her0, Bill Black, tells most of the story of the contemporary apocalypse in 8 minutes.: http://www.youtube.com/watch?v=3-HTylLzXu8

@FlyingChainSaw: Here’s another sign of Sino brilliance. Where we give away money to the lotus eaters for humanitarian band-aids and the occasional economic development scheme, the descendants of the Chin (“Ka-Ching?”) Dynasty are giving out loans. No strings attached to messy things like human rights or accountability for missing people, and their largesse is responsible for rebuilding roads, new ports and extending telecoms across the island. Do they hire any local labor in order to lessen the sharp pain that debt load will some day cause the lotus leaders? Nope – they import all their own workers, in order to skirt local labor laws, and no doubt prison labor at that.

So they’re extending their shipping lanes with new ports, creating new financial addicts through massive debt, and littering the countryside with the corpses of their use-’em-then-lose-’em “workforce”. Brilliant.

As I’ve said here once before: “我欢迎我的中国统治者”

@Nabisco: If the lotus eaters default, will the IMF help them? The IMF has some sort of psycho austerity programs, doesn’t it? I remember in the late 90s that LDC debt forgiveness was a big deal. Now I guess we’re in their shoes.

@FlyingChainSaw: We’re talking about T-Bills? There’s an actual auction for them? They’re not based on something like US GNP?

@JNOV: They’re a little non-compliant on certain issues related to human rights, so that’s why they get their financial smack from the streets. The bigger question is whether China will call in the loan if they have a brand spanking new port for their shipping lanes that nobody else uses (or paid for).

Oh and in today’s Ripped from the Headlines, prices up for lubricants, social and otherwise.

@nojo: It’s hard to get a laugh out of impending cannibal anarchy.

@JNOV: They hold the auction in a brothel on C Street.

@Dodgerblue: Haha! Right? I think it was a turn of phrase, but I’m not kidding when I write that I really don’t understand this stuff, but I want to learn.

Aside, we had a crazy storm come through yesterday, probs the one that set off tornado sirens in Chicago a couple of days ago. Lost cable connection, and must’ve lose some cell towers, bc this wireless card has two teeny bars.

I most likely will miss the CNN segment. Boo!

Interviewers who talk over the interviewees should have their mouths surgically removed. I want to reach through the screen, grab Bloomberg hottie by the throat and scream, “SHUT UP! I want to hear HER, not you.”

@JNOV: ::taking you by the hand and tiptoeing into the next room away from the bar so I won’t be embarrassed saying this in front of the Stinque honchos:: I’m totally ignorant but learned a huge amount from The Ascent of Money by Niall Fergusson. Did you know that a bank regards debt as an asset and deposits as a liability? I didn’t. I really did begin to understand a little of what’s going on. Highly recommended if, like me, you’ve spent your life thinking beautiful thoughts. OK. I’m going back to the bar. You want another drink? That outfit is so cute on you! And I love the new blonde look!

OK. Men of Stinque financial, is there such a thing right now as a good, or even tolerable investment? Or something I could read or look at for advice? The guy at the credit union works on commission and while I don’t necessarily distrust him– you know.

@Dave H: She looks like she ate her young on the way into make-up.

@Benedick: Ammunition. I really can’t think of anything that will be more useful, or valuable, when the cannibal anarchy comes.

@FlyingChainSaw: What do you think of the new financial “reform” bill – bunch of lipstick on a pig or some meaningful changes in there.
@Benedick: Alcohol companies. Those investments are depression-proof. Wal-Mart because they’ll be the only thing left with the cockroaches after the zombie apocalypse.

/figuring out how to split-screen CNN and World Cup in half an hour

@SanFranLefty: I’m blessed with two separate channels showing matches (Lil Kim’s Eleven is going down hard), but a CNN International feed that may not give me Dodge. On the other hand, a typhoon wind is a-blowin, which really just means the signal goes on the fritz from time to time.

Boy, Richard Roth has really gotten kind of heavy.

ADD: I have “The Brief” with Jim Clancy – is that domestic CNN? He actually said “holy blue sushi balls” as the lede to a story about Japan advancing in the WC.

@Nabisco: There’s a storm brewing in the Gulf.

Try CNN on the Tubez. Looking for Dodger…taking a break from futbol.

@SanFranLefty: The US site is horrible. I’ve learned that Anna Nicole Smith was killed, Jacko’s death anniversary is today, some woman posed with a baby and a bong, and USA SOCCER IS FUN!

ADD and Developing Hard: Carl Penhaul uncovers the fact that illegal immigration is deadly, and shows us that he has pretty decent Spanish behind that Ozzie accent.

@Nabisco: Yes, well imagine how I feel sitting through those same stories. I’m flipping over from the Brazil-Portugal game every minute or two to see if our favorite tree-hugger is on yet.

@Benedick: Thank you — will read it, and I usually do have to be led away by the hand. The last time my friend sweetly said, “JNOV, come with me” and I was like, “Oh! Okay!”

If we miss Dodge (I will — still no cable and intermittent wireless card bars), they’ll give him a CD of his appearance that he can post in the clubhouse if CNN doesn’t post the interview online.

@JNOV: Cristiano Ronaldo is so pleasing to the eye. And the Brazilian goalie is easy on the eyes, too.

@SanFranLefty: My local halftime hottie is easy on the eyes, as well.

@SanFranLefty: It’s crap. Obama needs to grow a pair and kick the banker to death on ESPN. The states at this juncture has to look like it is making the choice for financial probity. Really, the last 9 years on Wall Street has been a demonstrable period of rampant criminality. No one is going away. Nothing is changing. It looks like the Americas are trying to set up the second bubble before we even work through this one (we’re about 15% into the remedial arc). The states doesn’t need anything new in this regard. It just has to return to normal – say, the regulatory framework of, say, 1982, pre-Garn St. German, pre-Nolan Act (out you way), pre-commodities reform act craziness, etc. The states is running the risk of appearing as a gangland state (we know it is already) and its investment instruments being rejected wholesale by banks and investment houses. Any return to normal is simply not possible with thugs like Summers and Geithner at the table. A culture in which underwriting quality matters again won’t return until a lot – thousands, hopefully – of executives go away for long stretches for abandoning it with malicious and felonious intent.

@Benedick: She looks like a hooker. Shut up, bitch, and let the woman who knows what she’s doing talk.

@FlyingChainSaw: When I was in law school, I was taught that 100 years ago, there was pretty strong agreement among peoples, that investment = good, and speculation = bad. Investment leads to growth, speculation, to boom and bust.

What happened? Now its all about leveraging other people’s money to speculate, transaction fees, and taking side bets, plain and simple wagers, on the success or failure of the speculation.

@SanFranLefty: I still don’t have cable! Tell him I said, “Hi”?

@Mistress Cynica: And not in the good way.

I couldn’t find Dodger. I haz a sad.

I stuck it out for an hour on CNN and didn’t see Dodger. Does anyone know what happened?

@JNOV: @Mistress Cynica: @Benedick: @TJ/ Jamie Sommers /TJ: He’s posted a pic on FB – early fashionista reports are good w/r/t apparel. Rumor has it that Wolf really is a hologram, except when Shakira comes around.

Yep, he said it was taped, and that he was responding to a producer’s questions, which will presumably be intercut with Wolf acting like he’s really talking to Dodger. To air Some Time In The Future.

Look for him on the Situation Room…in between “a look back” pieces on Michael Jackson and the latest news on van der Sloot, apparently. I didn’t have much luck with the live feed, one channel of which is simply live footage of the oil spill gushing, gushing, gushing….very stabby-inducing.


Part of me thinks that we *need* another bubble – a green-tech version of the railroad bubble around the beginning of the 20th century. In that, an absolutely HUGE amount of infrastructure was built via invested cash and then roughly 90% of the companies went bankrupt. The investing class got screwed, but the remaining railroads got coverage at pennies on the dollar.

Add a Comment
Please log in to post a comment