The Market Ticker
Commentary on The Capital Markets
2015-02-01 07:32 by Karl Denninger
in Editorial , 124 references

This is how we ought to deal with these cranks.

Jordan has threatened to execute all of its Islamic State prisoners if militants kill Jordanian pilot Muath al-Kaseasbeh.

Government officials warned that Sajida al-Rishawi, a would-be suicide bomber, and other jailed Islamic State commanders would be “quickly judged and sentenced” in retaliation for the pilot’s death, The Daily Mail reported Friday.


Kill one of ours, we kill all of yours.

This is what I've long advocated when it comes to the Muhammad-powered-whackjobs, whether they call themselves Al Qaida or ISIS whatever else.

You simply announce this:

Do whatever the hell you want between yourselves.  The first time you kill an American or damage American property we will nuke Mecca.  Do it again and we will nuke Medina.  With both gone you are all going to Hell as you cannot fulfill your "holy obligations."

Then let them decide.

It's time to call a full-stop on this hate-filled nonsense.  Those who argue that Islam is the "great religion of peace" are free to do so; such a challenge, if they're right, does not result in anything getting nuked and nobody gets hurt.

You and I both know those arguing that position are full of crap and were this to be declared Mecca would be a sheet of glass within hours.  We would then see if they're foolish enough to believe that "they only have one of those" or "they won't do it again."

Wrong on both counts.

However, I must say this -- the latest update from Jordan also contains a wrong answer.  Swapping a convicted terrorist bomber for a uniformed serviceperson who is (legitimately) a POW is flat-out stupid -- almost as stupid as Obama swapping five known (and imprisoned) terrorists for one deserter.

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Are you angry enough yet to do something about this scam of a "government" we have at not only the federal but also the state and local levels?

Do you like being financially raped, and faced with the prospect of death after impoverishment should you get sick?

Do you accept that if you refuse to cooperate with same, and simply choose to accept that instead of being raped raw should you get seriously ill death is an option that is ok with you the government will then fine you an ever-increasing amount in an attempt to compel you to not make that choice?


Then why are you sitting on your ass?

The Republican-led House is set to begin February with a vote to repeal ObamaCare, making clear that trying to dismantle the health-care law remains a top priority.

The scheduled vote next week was announced in a new memo from House Majority Leader Rep. Kevin McCarthy to fellow GOP House members in which he said the effort to repeal the legislation will give them an opportunity to tell voters that health care decisions “should be made by patients and their doctors, not by Washington.”

Uh huh.

The California lawmaker also stated that members should remind Americans that the country needs solutions that reduce costs and give them access to “21st Century cures and treatments” -- an often repeated message at congressional Republicans’ policy retreat earlier this month.

How about 20th Century options -- like enforcement of Robinson-Patman, for openers, against the pharmaceutical and medical supply industries?

We don't even have to get into the Sherman and Clayton acts, although those would be even better because they're not limited to physical things (e.g. "commodities".)  Nope, Robinson-Patman is enough -- pricing disparity that cannot be defended on the basis of kind and quantity -- that is, beyond a rational discount for quantity purchases, and which tends to restrain trade or inhibit competition, is illegal.

You know what's utterly stupefying?  The average MRI scan costs about $2,500 in this country.  You can fly from Chicago to Narita, Japan for about $1,300, round trip, and the scan itself, including having it read, is a couple hundred bucks in Tokyo -- cash.  

So why would you pay $2,500 when you can have it done for $1,500 and see a foreign country at the same time -- even if it's just the airport and a cab ride?

You think that's unusual?  Nope.  It's utterly common and Japan isn't a third-world country either.  Indeed for most "expensive but not must have it this very instant" procedures you are far better pulling out your passport and VISA card to buy an airline ticket than you are to use your so-called "insurance" if you have a high-deductible policy -- or for whatever other reason won't be completely covered.

Oh, incidentally, that happens a lot, virtually always without warning and often in ways that ought to implicate consumer protection laws -- like the common practice of "out of network" drive-by "consultations" that happen in hospitals daily without your consent as a patient.

The GOP has utterly no intention of doing anything about this.  Nor do the state legislatures.  They won't even bring such a thing up in their caucus; I know, because I've been told that specifically and repeatedly, including as recently as last week.

**** these so-called "representatives" and "lawmakers."  All of them.  It appears to me that the law is being flagrantly violated on a literal every-second basis, and we're not talking about "little" laws here either -- Sherman and Clayton, for example, carry 10 year prison sentences and million dollar fines for individuals (ten times for corporations when it comes to the fine part.)

You can talk to me about doing something about medical costs when there are literally thousands of indictments issued across the entire swath of this gigantic scam -- but not until.

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I've tried to warn people. 

They don't listen.  They claim that it's paranoia -- that it's just advertising and that nothing nefarious is being done with the spying device they carry around in their pocket with many, if not dozens, of applications running stubs in the background all the time, whether they're using them or not.


British and Canadian spy agencies accumulated sensitive data on smartphone users, including location, app preferences, and unique device identifiers, by piggybacking on ubiquitous software from advertising and analytics companies, according to a document obtained by NSA whistleblower Edward Snowden.

Got it?

Those apps get your location on a continual basis, including in many cases while the app is closed.  They do so using the cell location data (coarse) and occasionally asking for a GPS position and, if they can get lock, using that as well.

This is then sent in the clear to advertising companies, which means anyone who taps the line can obtain it.  Included with the location is a "uuid", or unique user identifier.  That data is unique to your device and it is utterly trivial to correlate it to you as a person -- you need only do one thing, ever, that links you to that UUID and forevermore that UUID is known to belong to a specific person -- you.

The individual fragment of data is not the point.  It's the aggregation of several of those pieces of data.  Beyond a certain point the correlation is established with effective certainty and from that point onward you are tagged -- literally everywhere you go.

Wake up folks.

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The game is afoot...

Money is increasingly tight. Throughout the crisis, Greece has been able to meet its obligations, even while locked out of international debt markets, by issuing short-term bills that local banks can buy and then pledge to the ECB as collateral for further funding.

The government faces a string of tests to its solvency over the next two months, like the repayment of about 2.2 billion euros ($2.5 billion) in bailout loans and interest to the International Monetary Fund, while the trusted route of rolling over treasury bills is becoming less certain.

Greek banks have already reached a 3.5-billion-euro limit on treasury bills that the ECB authorizes as collateral for loans. To make matters worse, tax revenue has slumped by more than 2 billion euros in the past two months, leaving the government more reliant than ever on the banks.

Greek banks’ eligibility for ordinary ECB cash facilities, using junk-rated Greek government bonds as collateral, has always been subject to the country being in a euro-area bailout program.

That's illegal under the ECB's charter, but they don't care.  The ECB, as with our Fed, is only allowed to take bonds that are actually repayable (in other words, by their charter and the EU's Constitution the ECB is forbidden to issue what amounts to financed spending through currency depreciation.)

Of course this has now been famously ignored with their so-called "QE" program, but the fact remains that it's blatantly in violation of the foundational documents of the union.

It happened anyway because it was the only way to continue to pretend that the EU is able to "live within its means."

The fundamental problem Greece (and most of the rest of the EU) has is that their government has thus far been incapable of running on their cash flow. You can not continue to run beyond your cash flow indefinitely; you can borrow from tomorrow's cash flow but if tomorrow never comes and is always extended then the funds you "borrowed" were actually stolen exactly as if taxed through the destruction of purchasing power of your citizens.

This is a mathematical truth and no amount of arm-waving can change it.  It is the reason that "QE" cannot work as claimed.  It can boost asset prices (for a while) and it can (and does) create bubbles but it cannot create sustainable demand because the destruction in purchasing power is immediate when the QE operation takes place.

That is, the claim that it will "stimulate demand" and that demand will in turn lead to more economic activity on a forward basis is a lie as the destruction in purchasing power is exactly equal to the so-called "stimulation."  It has to be as a matter of arithmetic.

Greece now has a finance minister willing to say this in public, and he has.  The citizens of Spain are now watching closely, and I suspect that's true in other parts of the European Continent as well.

There is no actual solution that does not come about as a consequence of governments living within the amount of money that can be taxed in the present tense irrespective of claims otherwise.

You can delay recognition of this fact but you cannot avoid it.

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This just plain sucks.

Health officials have reported that an outbreak of measles that started at the Disneyland theme part in Southern California has now affected 95 people in eight states and Mexico. 

The Los Angeles Times, citing the California Department of Public Health, reported that 79 of the 95 cases were in California, and 52 of those could be linked directly to Disney Parks.

Measles is a nasty disease and one for which there is an effective (but not perfectly effective) vaccine.  You're nuts if you are not vaccinated against this.

But -- there's a problem.  We allow undocumented immigrants into this country, including children, and guess what -- many of them are unvaccinated.  


Then compound that with the point I recently raised: Our government lies about the effectiveness of other vaccines along with the risk of serious illness or death if you don't take said vaccine -- such as with the flu.

So what do you think is going to happen when people lie to you repeatedly?

It may take 20 or 30 years, and has, but you blow your own head off in terms of credibility and then people stop believing even the true things you say.

The result?


PS: To those who have immune-compromised kids or adults that "can't" take the vaccine, I respond thusly: Your little urchin is just as capable of acquiring and transmitting said disease as any other person who is not vaccinated. When you're willing to remove said un-vaccinated person from the general population you can demand others who are not vaccinated also remain outside public spaces -- and not before.  Why you are not vaccinated is immaterial to the fact that being so means you can easily acquire and transmit said infection and the outcome to others if you do.

Disagreement with this position is a display of open ignorance.  Measles is very infectious; that is, it's R(0), or number of  persons an infected individual likely infects him or herself, is around 12.  "Herd immunity" is claimed to "work" due to arithmetic; that is, if a vaccine is 93% effective (which is roughly correct for Measles) then it drops the R(0) of the disease to under 1.0; when that happens fewer than one person is infected by each person who has the disease, and the endemic spread stops by simple arithemetic (exponents, you see.)  This, however, does nothing for you individually if you come in contact with an infected person.  Further, vaccinated individuals in the case of Measles appear to be able to contact the disease in a sub-clinical form (as high as 45% of the vaccinated population) where they do not break out but are quite-capable of and do shed the virus; that is, they can and do pass it on to others without even realizing they are sick!

In short vaccination is all about you, not about "herd immunity."  So-called "herd immunity" is about reducing epidemic risks, not individual transmission.  If you want individual protection against a given disease then take the risk and the vaccine.  If you can't or won't for whatever reason, whether medically indicated or otherwise, then that's just tough cookies; if you don't like the risk of potentially being exposed then stay out of public places where you can be exposed and hope that nobody you do have contact with has a sub-clinical case they're not even aware of.

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