This weeks guest is good.
May be SHE can tell me WHEN the £ will crash?
Max got a financial question for you.
Assuming a 50-1 leverage value. A hedge fund buys a cdo. so the cdo has a 50-1 leverage. That cdo is resecuritised and sold on in the form of a cdo squared. Does that mean its effective leverage value for that original tranche is now 50 * 50 = 2500 -1. And if that repackaged security is again repackaged and sold on in the form of a CDO cubed is that effective leverage rate 50*2500 = 125 000 – 1?
Follow my maths? Am i right?
I like your thoughts James. Iv no idea but I bet your right in many respects, as how would they create such large figures of nothing? I’m sure of one thing and that is these finance gurus have a poor understanding of probabilities and risks, for sure. They have kind of ended the world order dreams before it started themselves by continuously injecting risk by creating markets that lack transparency, that are to large, to interconnected and to dishonest. I don’t think Mike should worry too much the order has ended and the chaos has started and chaos means chaos.. I’m not betting against anything, but I would not invest in Dr Copper as I don’t think he cant afford to even run a bath.
Catherine Austin Fitz was in the Bush 1 administration……
If you use derivatives as money like that, how is it valuated? What buyers can track the actual value of the paper they hold? If that tracking is lost, what is to stop companies from issueing baseless derivatives?
@ Mother Earth,….Like the US $ you mean?
Hi Stacy and Max,
Could you talk about the Cap and Trade bill that is going through Congress right now? Matt Taibbi seems to think this will be the next bubble that will eventually devastate the US economy. See Matt’s article in Rolling Stone.
The Great American Bubble Machine
It’s at the very end of the article.
@Denninger .. freaking out a bit today…
*FLASH* Hearings: Quick Note (Updating)
… “(Will be updated during the hearing – check back often)
The hearing that is now on CSPAN (and being covered by CNBC, surprise!) leaves Bernanke looking very bad.
In fact, it appears that he may have been caught in perjury earlier this year when he testified that they had “no” influence on disclosure by BAC.”…
… “Bah. I’ll tell you what I think they’re preparing for:
CDC is now estimating that the novel H1N1 virus will be “Category 2” in severity. They are closely watching the situation in the Southern Hemisphere for validation of this estimate.
A category 2 pandemic has the following characteristics:
Case fatality ratio of 0.1 percent to less than 0.5 percent.
Between 90,000 and 450,000 deaths in the U.S. (compared with estimated 36,000 deaths during a typical influenza season).
Excess death rate of between 30 to less than 150 per 100,000 people.
Illness rate of between 20 and 40 percent.
Similar to 1957 pandemic.”
The UK is not involved in cyber espionage..
‘Yeah right!’ and if it where true: ‘Pussies!’
Ron Paul Fans will like this fresh video:
Don’t Panic! OECD Says things will only get worse!
I’ve been following Mike here for a long time.
He has a nice way of reporting bad news !
Just in case anyone’s interested !
Imagine a pie. That pie is total money in circulation, circulation defined as created by the Fed. Now imagine a smaller pie, and that is the amount of dollars in actual use, versus hoarded by the banks. As the circulation pie gets bigger, the dollars in use pie becomes a smaller percentage of the whole – that’s why we are seeing price deflation. Because the banks aren’t lending, the net effect is a shrinking of the money supply as dollars in use are measured both as a percentage of the pie, as well as in reality. Because the government pulls money out of that pie via taxes, and then instead of putting them back into circulation, distributes them to banks which are hoarding them, effectively shrinking the money supply over time as the tax effect takes hold. If that sounds familiar, it’s what made the Great Depression last 10 years. The money supply was methodically shrunk over that period, coupled with dollar devaluation, resulting in deflation. The only thing we are missing are protectionist tariffs now. That’s likely next.
What happens when that unknown trillions of dollars lent/scammed goes into circulation – provided it ever does as anything but buying deflated assets for pennies on the dollar? What is the only result of increasing the number of dollars in circulation by double digit percentages? With stagnant or shrinking GNP, isn’t devaluation of the currency the only outcome possible? More dollars backed by the same or smaller GNP. Hmmmm.
I think we’ll continue to see an effective shrinking of the money supply in use, even as all the pundits and economists pretend that’s mystifying or difficult to grasp. My hunch is that the end run is to crunch liquidity via this tax and hoard mechanism to the point where asset values collapse over time (deflation), and then those hoarding all the dollars can buy assets for pennies on the dollar; sure, there’s some inflation at that point, but that is all consistent with debasing the currency. As in the Depression, one must crush the middle class in order to confiscate their wealth, and that doesn’t happen overnight. It takes many years before someone is willing to sell their house to feed their kids today. Redistribution takes time, and requires patience.
Maybe I’m just paranoid. But that’s exactly what happened in the Depression, and I see the signs in this as well – lawlessness on the part of the money trust, a wholly captured government kowtowing to the will of a few NY interests, a broken market system, plunging home values, constrained money supply via tax and hoard….
That’s also why any rally is a sucker’s bet. My sense is that the reason the banks are throwing great profits is due to a combination of a boom in refinancing, as well access to dirt cheap money via the discount window, as well as via black boxes like AIG. Let’s see, you get X from TARP and make a big show out of paying it back, but you get Y via AIG (likely far more than borrowed via TARP) and then graciously agree to parse some and repay TARP. Not to mention the billions and billions via the Fed window. Owe X, take in far greater Y via subterfuge and secret loans, then chip off some Y to repay X. And we are being played, assisted by a captive media wholly owned by the same special interests who are stealing our national wealth.
Is this really fooling anyone?
It’s like a bad Laurel and Hardy skit, where Laurel steals Hardy’s wallet, and then pays him back the $5 he owes him.
And the real shame is that the rest of the world is being dragged down with us – if you want to sell things into the U.S., you have to be price competitive, which means you need to debase your currency right along with the U.S. or you have no export market. So the misery and theft becomes a global one, just as it did in the 1930’s, when protectionist policies effectively shut the U.S. market off from those who would export to us.
This is a very bad road. Naked short selling, or rather institutionalized counterfeiting, is bad. But it is a sliver compared to the larger evil we are seeing played out on a world stage.
As others are forced to debase their currencies to keep up (or rather down), their populations suffer as well, creating an environment where fascists or extremists can ascend to power when ordinarily prosperity would keep them at the margins. And that’s how wars get started.
This doesn’t look good through the lens of history, and it doesn’t look good through the lens of common sense. We are redistributing wealth to the cheats and scammers who ripped us off in the first place, effectively rewarding larceny and theft with the keys to the kingdom. This goes from bad to worse now. Mark my words.
check this out! http://www.nrc.nl/international/article2281859.ece/Dutch_banker_goes_missing%2C_and_so_do_his_guns
I swear, Max looks just like Bugs Bunny in that Youtube video still shot.
Max & Stacey,
I posted this at……
Apr 11, 2009 at 12:50 pm
“Re: Financial War Against Iceland.
Could we be looking at a headline “Financial War Against Ireland” in the coming months.
In thruth it has already started.
What’s the downside to letting the banks go to the wall (not the wolves). That is, bring in emergecny legistlation to take them into temporary state ownership and make the creditors take their share of the losses.
Why is NO country doing this.
Have all Western Governments been captured by Wall Street & London?
Help!! Help!! Help!!”
So I will ask you again.
Do you have ANY advice for the Citizens of Ireland?
The IMF (wolf) is at the door.
The ECB has been bailing out Ireland secretly for the last 18 months.
If there is going to be a currency war Dollar/Yuan/Euro/Yen ~ would Ireland not make a good playground to collapse the Euro. Ireland has given guarantees to local banks worth 3.5 times the entire GDP of the Nation.
The ECB knows this. They have been forced into providing €30bn to Anglo Irish Bank because anybody (or Corporation) with sense is getting the fuck out, and the ECB is replacing the lost deposits.
Ireland may be in deep shit. But it’s just an image of the western world.
Over borrowed, over consumed, over inflated…
Here is the IMF report…..
Where stands Greece, where Austria, where Spain.
What of Latvia.
Maybe the Dollar is stronger than the Euro.
China hasn’t got the balls to break the peg with the Dollar.
does max think there will be a revolution in the US or will it just become a 3d world toilet bowl.
Sensorship gives me the creeps, who and why with whos permissions does is this taking place. Maybe if the facts were know it would be a base for a great business.
Hay FRANK that article on the The Great American Bubble Machine you put up was a great read, some one has removed the links due to copy right infringement violations. I wonder what the author and owners really think? I would not have looked at Rolling Stone Magazine as I thought it was a music mag.
There is just one link that still works that I could find:-
still no bungee jumping!