Decision Time For Europe: The Definitive Presentation On The Future (Or Lack Thereof) Of The EurozoneWhen dealing with the daily barrage of headlines from Europe, it is easy to get lost in the trees and forget what the forest looks like. That's perfectly understandable - after all, it is precisely the intention of the Eurocrats to confound everyone with noise, so any track of the fact that the big picture is unfixable is if not lost then promptly forgotten, with reactionary newsflow dominating the flawed decision-making process. Luckily, the fact remains that no matter what, no matter the scale of lies out of Europe, the problem still remains: the math just does not make any sense. Conveniently reminding us precisely of this, we present to our readers the must read presentation by Swiss private bank Pictet titled "Decision time for monetary union" which puts the forest right back into focus, and explains why all attempts to kick the can down the street will be met with a prompt and furious response by the bond vigilante crowd, which has now officially been thawed out of cryogenic stasis. Because, all noise aside, the Eurozone has two options - continue the current course which is catastrophic: "Current response to the crisis has created conditions leading the euro area towards depression" or accept the reality and do something about it, yet "things are going to get worse before European authorities decide to wheel out their heavy artillery." Said otherwise: lose-lose. So without further ado, let's dig in...
Given the extent of our discussions both today and over the last two weeks of the EFSF, Moody's confirmation of all that we have said should come as no surprise. In their Weekly Credit Outlook the rating agency, that hasn't accidentally downgraded FrAAAnce recently, cites weak demand and investor's cold reception of proposals as betraying the limits of EFSF's powers. This development calls into question the ability of the EFSF to fund itself in the markets at low cost. The success of the EFSF as a tool to stabilize sovereign debt prices and the success of the current euro area-wide support mechanism comes into doubt if that ability is compromised. Clearly traders are also starting to wake up to this reality as EURUSD drops below Friday's close.
Back in May we penned, "Why A Hedge Fund Comprised Of Junior Congressional Democrats Should Outperform The Market By 9%" in which the simple conclusion was that insider trading is not only rampant in Congress, but completely unregulated, as it is perfectly legal for Congressional staffers to trade at their leisure on inside information: an exemption which the beta chasing 2 and 20 crowd on Wall Street would sell their first through fifth born to be granted, now that their glaring inability to generate alpha is laid out for all to see. Tonight we were happy to see that 60 Minutes has finally brought this gross and criminal injustice to the general public, and we expect that Congress will promptly legislate itself into actually complying with laws meant for the mere mortals out there. That said, we fully commiserate with the pathological excrement that makes up House of Representative these days: it is indeed a sad day when a Congressional member has to rely on honest work to make their millions as opposed to perfectly legal trading on inside information predicated upon laws that these very congress men and women legislate. Something tells us all the world's banana republics are just staring at the US with sheer and utter amazement as layer after layer of the unprecedented depravity of American society is exposed for all to see.
Deja Vu All Over Again: An Unsolicited Whitney Tilson Explains Why He Is Short Green Mountain, Long Netflix
The last time Whitney Tilson presented his "investing thesis" case in public, he got promptly anihilated as was to be expected - there is a reason why real hedge funds keep their positions secret. This time, "it will be different." Incidentally, it is not a hedge fund manager's job, no matter how tiny said hedge fund is, to plea to the broad investing public: it makes one appear like a petulant child. Their job is to outperform the S&P since inception: a task T2 still seems to find daunting...
This from Bix Weir:
Everyday more and more tidbits come out about the MF Global "missing assets". Here's the latest from Forbes:
MF Global Assets Have Left The Building: How, When, Where
What started as a little "brush fire" is quickly turning into a RAGING INFERNO!
It is estimate that over 50,000 accounts have been frozen and the $600M amount being thrown around as "missing money" is only a small fraction of the problem. The REAL problem is the $TRILLIONS in phantom transactions that flow through the corrupt brokerage system itself! It is the fundamental problem with every bank and brokerage house...
ALL BROKERAGES RUN ON A FRACTIONAL RESERVE SYSTEM!
Meaning quite simply that when you "buy" a stock, bond, commodity contract, etc. that brokerage company does NOT go out and conduct the exchange for you but rather USES your money to make more money! Sure they debit your account with an electronic entry and send you a crisp, clean statement every month BUT THEY DON'T FOLLOW THROUGH AND SECURE THE ASSET YOU PURCHASED! Not on a ONE-for-ONE basis at least.
Instead they lump it all into their "pool" of assets that is always ebbing and flowing along with billions of High Frequency Trades that are also never really "settled". That is the nature of our markets, banks and brokerage houses and the DTCC are knee deep in the scam.
So here we have a situation at MF Global where the MUSIC HAS STOPPED and everyone with an electronic statement is wondering "WHERE IS MY ASSET?"
It's not there my friends...and it NEVER WAS!
This little problem will continue to build until it is revealed that the "fractional reserve" system has BROKEN and the last SUCKERS to get their assets out of the system before the MUSIC STOPS will be left without a chair.
This is true with every brokerage house, 401k, mutual fund, bank, credit union...
ALL OF IT IS A FRACTIONAL FRAUD!
A few months back Clif High's reports kick out an odd reference to the coming "RICH RIOTS" where rich folks will be storming precious metal warehouses demanding their physical metal only to find that the warehouses are EMPTY!