The Market Ticker
Commentary on The Capital Markets
2014-10-01 09:05 by Karl Denninger
in Flash , 230 references

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In a word, no.

(Reuters) - U.S. health officials said on Tuesday the first patient infected with the deadly Ebola virus had been diagnosed in the country after flying from Liberia to Texas, in a new sign of how the outbreak ravaging West Africa can spread globally.

The patient sought treatment six days after arriving in Texas on Sept. 20, Dr. Thomas Frieden, director of the U.S. Centers for Disease Control and Prevention (CDC), told reporters on Tuesday. He was admitted two days later to an isolation room at Texas Health Presbyterian Hospital in Dallas.

The problem here is that this patient was in the US for several days and wasn't hospitalized until a couple of days after showing symptoms, when he was able to pass the disease to others.

The probable impact of this is quite low, as this individual wasn't here with the intent to spread the virus, and thus only had contact with a few people.  Those people are about to find out all about how little your Constitutional Rights matter when government gets scared, as I suspect they will all be placed under strict, and likely guarded at gunpoint, quarantine for the next three weeks or so.

And yes, our President believes he has the authority to do that -- and he well might (I know of nobody who has brought such a challenge to the courts -- yet.)

The usual scaremongering nonsense has started and you should be able to winnow your reading list dramatically in terms of web-based resources this morning.  We'll see how many of the readers and commenting people here have the discernment to process this with a rational mind and how many are unfit to be engaged in public discourse on important topics of the day.

Does this mean you should ignore this event?  Absolutely NOT

A few dozen people with intent to spread this disease in the United States could cause an unbelievable amount of harm.  As I have noted before if you're not prepared to "bug in" for three to six months and perhaps as much as twelve to eighteen months you have no effective defense if things go sideways.

But today is not the day to bolt the door, and this particular event is not a trigger, despite the screaming coming from some quarters on the web -- including people who should know better.

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Come and get it!

Financial analyst and writer Karl Denninger says forget about President Obama’s promise of “no boots on the ground” in the fight with the Islamic State.  There will be boots, and Denninger explains, “Air power has never won a war, and it never will.  You can bomb people until you think you bomb them back into the Stone Age, and they just go hide.  You destroy their infrastructure, and they just come back out.  The only way you take territory is to go and take territory. . . . The real problem is we, as a nation, have looked the other way while a number of countries in that part of the world have armed and trained terrorists.  I will include on that list Saudi Arabia.  In the classified sections of the 9/11 Report, there is some pretty damning evidence about them being directly involved . . .  in the murder of 3,000 Americans on our soil.  That is not yet in the public, and it still is not in the public more than 10 years later.  There have been enough people talking about it that it is no longer in the realm of tinfoil speculation.  We can state we can be reasonably certain that this is, in fact, what happened, but these are our so-called best friends.”  Denninger goes on to say, “You have a group of people that don’t have the kind of political debate that we have in this country and most of the free world.  It is a very different view.  It is a medieval view.  It is a view that you used to see in 1100 A.D.  They understand one language, and it’s gunfire.”

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Things that make me blow my espresso all over the keyboard....

US officials want to make sure that investors, including hedge funds and other investment managers, are not exacerbating risks if they contemplate moving their money from Pimco, said people familiar with the efforts.

Representatives from the agencies concerned are telling investors to make sure they understand the potential knock-on effects of their actions.


I have to laugh at this.  The issue is that government regulators are concerned that there might be a run on PIMCO's asset base with the departure of Bill Gross.

Now let's look at this a bit dispassionately.  First, there is the fact that Gross had as his cudgel the size of his fund, and thus the impact that has on the market for government securities -- specifically, US Treasury and agency bonds.

Second, we have this:

(a) Transactions relating to purchase or sale of security
It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange—
(1) For the purpose of creating a false or misleading appearance of active trading in any security other than a government security, or a false or misleading appearance with respect to the market for any such security,
(A) to effect any transaction in such security which involves no change in the beneficial ownership thereof, or
(B) to enter an order or orders for the purchase of such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties, or
(C) to enter any order or orders for the sale of any such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the purchase of such security, has been or will be entered by or for the same or different parties.

In other words The Securities and Exchange Act explicitly exempts government securities from its anti-fraud and anti-market-rigging provisions.

The irony could not be more clear.  First we create systemic risk by allowing concentration such as exists with PIMCO, then we allow people like Bill Gross to make a ton of money through the expression of being able to throw his weight around because of that concentration, third we have explicitly exempted trading in such securities from anti-fraud provisions and then we complain about the potential for systemic risk when something happens to the people or firms that run such a book -- having been allowed, explicitly, to accrue that leverage and when the apple cart gets upset the exemption means that all sorts of games can (and probably will) be played!

Note that there's no allegation here (nor does there need to be) that PIMCO has done anything illegal. The mere presence of a firm with that concentration of assets is dangerous, and in this particular case Gross has run his mouth repeatedly in a form and fashion that many, myself included, took to be effectively using a cudgel to both influence policy and profit from it.

This is sort of like allowing a rattlesnake to live on your property because it eats some of the rats.  Unfortunately it is a venomous snake and one day, while your kid is in the yard, it bites and kills her.

This, you now claim, is the snake's fault, even though you knew the thing was there and allowed it to remain because of what you perceived to be some benefit -- never mind that being a snake and possessing venom you knew damn well there was a risk that it would bite anyone in said yard as it's just a snake and does what snakes do.

Yeah, right....

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There is never only one cockroach....

BEIJING -- China has fined the British pharmaceuticals giant GlaxoSmithKline (GSK) $488.8 million (3 billion Yuan) for a "massive bribery network" to get doctors and hospitals to use its products. Five former employees were sentenced to two to four years in jail, but ordered deported instead of imprisoned, according to state news agency Xinhua today.

So let's see here -- we have a firm that got caught bribing hospitals, doctors and other institutions on a massive scale.

Wait a minute -- isn't there a law in the United States bearing on firms that engage in foreign bribery if their shares are listed here?  I think there is!

Does that apply in this case?  Good question -- and one that Eric (Place)Holder won't be answering, will he?

Just wonderin', you know.......

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