European Crisis - Fritz the Cat

European Crisis

Maybe someday I'll be able to say told you so.  after all these years of losing money on the stock market maybe you should think of doing what all the rich fucks are doing, i.e. sit on it.  Buy some 5 year treasuries and worry about it then.  Or do you feel it your patroitic duty to throw cash out there and hope for the best?  Unless you can't envision a world without barns to rewire?  You could go on the retire-as-you-go program.  With 40 years experience you couldn't find a better consultant than yours truly.  And I work remarkably cheap!  

I can't figure out the European collapse either, as smart as I am.  Just finished a book about how the central banks from U.S., Britian, Germany, and France fucked the world's finances up after WW1 and ended up with the depression.  He blames it on rigid adherence to the gold standard, and is quite a fan of Maynard Keynes.  The author is a 25 year vetran stock advisor, and sits on the board of a couple of hedge funds and an insurance company.  The last few chapters are his evaluation of what went wrong, where every few paragraphs I have to stop and try to figure something out, then try to figure out the spin he is putting on it to help his hedge funds sell more derivitives in the here and now.  One of my buddies down here puts all the blame for the '08 U.S. collapse on derivitives, following the Democratic Party party line, and George Soros at MoveOn.com, while I follow the neocon line at Weekly Standard.  I poo pooed the derivitve angle until last week when I read that there were 380 TRILLION in derivitves bet against Greece in Europe, and another 250 TRILLION in the U.S.  A trillion here and a trillion there and pretty soon you are talking real money.  Derivitives, FYI, are a fairly recent concoction that allows people to bet on a securitized (bundled) stock that is derived from some other stock or security.  It involves selling short  (hedging your bet), i.e. buying a stock with the stipulation that you can sell it back at a future date at an agreed price.  If you think the stock will drop in price you can "short" the stock.  Banks who hold a lot of Greek bonds  may wish to "hedge their bets" by "shorting" those same bonds, or something linked to them, like the Greek DOW, if there is such a thing.  So if the Greeks default on their bond obligations the banks will make some of their money back on their derivitives position.  In '08 people were shorting banks like crazy until the Feds put a stop to it.  It was like shooting fish in a barrel at that point, and wasn't doing confidence in the banks much good.  Unfortunately derivitives are unregulated, so they have like 0 money on hand to back up these derivitives should they lose their bet, which looks quite likely.  Hence the panic amongst the various mucky mucks around the globe at the thought of a Greek default.  Who knows where the fuck that bet money is by now.  The state refuses to enforce gambling debts, but I guess this is different.  The banks made just a shit pot of money selling these thing, which complicates matters even further.

The book I was talking about has a bunch incidents that are spookily similar to what is going on during this fan-shit-hitting.  First thing FDR did when elected is create the Resolution Trust Association (or something like that) to pump a bunch of government money into the economy (funding CCC among other things).  Just like TARP.  The banks back then just sat on their money, like the banks today.  As to Keyenes, his whole program, which everyone in the world has pretty much been following since WW2, is for the government to suck money out of the economy durring a boom and inject it back into the economy (through cheap credit) during the bust phase of the business cycle.  When the bust phase just keeps going on and on and all that cheap money can't get any cheaper and still nothing happens we begin to doubt Mr. Keyenes insights.  At least us neocons do.

I see the Super Duper Committe has until Nov 23 to come up with 3 trillion in budget balancing or across the board cuts hit the fan, or something else happens wich may put those treasuries I was pimping awhile back a notch closer to junk status.  Ag subsidies will take a hit for sure, no matter what happens, so maybe the Avoca bank will get to loan out some of that 80 million, not on productive loans but to keep overextended farmer's heads above water.  I don't really have a Presidential hopefull I'm behind.  I kind of liked Cain, but the press is beating him to death now, so he is probably history.  Maybe the fat cats want to beat that poor fucking clueless community organizer we've got now over the head for another 4 years?  Who knows?  Gotta go