It's Over
The Market Ticker ® - Commentary on The Capital Markets
Posted 2011-09-09 13:05
by Karl Denninger
in Editorial
Ignore this thread
It's Over
 

Seriously.

There is persistent chatter about a Greek default over the weekend, which Greece denied, but the denier refused to be named.  If it's not true, then put your damned name on the statement or be considered what you are - liars.  Greece failed to place their short-term bill rollover.  That's a declaration by the market that even for short-term paper the market has utterly lost confidence in Greece and the Euro.

Germany's DAX market relative to the United States just hit a five year low today.

To add to the "liar liar pants on fire" calls Germany is now reported to be working a plan to recapitalize their banks if Greece defaults.  This in turn means three things:

  • A Greek default is considered credible by Germany and they are taking official actions related to that possibility.  So much for the denials.

  • German banks (and presumably French banks and all the other big banks too) are insolvent as they are carrying these bonds at well above their actual value in the marketplace.  If the bonds were carried at the claimed "loss" values, which is quoted as 50%, then there would be no need to recapitalize them would there?  This is an official statement of proof that the banks are lying about asset values and are in fact insolvent.

  • Remember that we were just told days ago that these banks were fine and needed no capital and in fact calls for more capital by the IMF were officially refused.  The same claim has been made about our banks.  You were just told officially by Germany that their claim of adequate capital just days ago was a lie as they are now planning to recapitalize the banks.  Do you believe our banks are not similarly exposed and also insolvent?  YOU'RE BETTING YOUR FUTURE ON THE BELIEF THAT THEY ARE, SO THIS QUESTION IS QUITE GERMANE AND TIMELY: ARE YOU SURE YOU'RE NOT BEING LIED TO EXACTLY AS WE WERE ABOUT GERMAN BANKS?

Coincident with this hitting the wires there was a massive flow of money into the Japanese Yen - and out of the Euro.  A monstrous safety trade - people fleeing the European common currency for what they perceive as a "safe haven."  At the same time our markets are down 300 DOW points, the S&P is down 2.5% on the day and more than forty points off the early-morning top -- and there's no sign that things are stabilizing at all.

I said the Euro was going to par, and that might be too conservative.  With that our stock market will get cut in half -- or more -- from here and once again the banks, insurance companies and everyone else will start crying poor mouth. 

The problem is that this time there's no money to bail them out with in the US and as a result if this outcome manifests they will fail.  The embedded losses in those institutions on mortgages alone total trillions, which is several times the available debt ceiling and so far beyond the FDIC's reserves that there is no way to cover you, the average person.

Nobody - and I do mean nobody - in our political establishment from either party gives a damn about the lies and outright fraud in our financial system.  Neither political party, including some very specific representatives that have railed about various problems in capital markets, the IMF and similar over the last couple of years will even open their damn mouths, say much less demand structural changes and an end to the frauds.

I have been making attempts to break through that "glass ceiling" now for four years with several representative and senatorial offices.  How many speeches have you seen on this topic, or even questions directed at like people such as Bernanke under oath? 

I'll answer that for you: ZERO.

The opportunity to fix these problems has been there since 2007 and I have steadfastly put forward plans that will work to resolve these issues, albeit at the cost of there being no more leverage-driven asset-stripping games.  I've written over four thousand Tickers since 2007 and a couple of White Papers and distributed them to Congressional offices by postal mail and fax.  In addition there are literal hundreds of staffers that access The Ticker on a regular basis along with every three-letter government agency, including the law-enforcement ones. 

There can be no claim that "nobody saw this coming" because I assure you that not only did plenty of people see it coming I have repeatedly warned of the "end game" and consequences - loudly.

Nobody from either party will address this or even discuss this and the reason should be obvious - the banks own the politicians.  That's fine - they can both hang on the rope of their own construction through their willful and intentional acts of malfeasance and fraud. Absolutely none of this was a mistake.

I believe the alarm has now rung.  The market calls all bluffs and that's exactly what it's doing right here, right now, today.  The lies have been overwhelmed by the functional facts - that you cannot make payroll or pay the light bill with imaginary money - you need real money, and there isn't any.  The time has run out on the fraud pulled in 2009 by Kanjorski with his "mark to fantasy" crap game.

We are doing the same thing right here in the United States with Obama's demands for "more stimulus" with no way to pay for it, games being run by banks suppressing price discovery and hiding losses on mortgages engendered by nine trillion in residential property value loss, the asset-stripping that was performed on the citizens of Jefferson County Alabama and more.  Not one damn thing has been done to fix the underlying problems and nobody has gone to jail for these acts. 

You cannot solve a debt crisis with more debt any more than you can fix a drunk with a case of whiskey.  Yet that is exactly what we've tried to do both in the United States and internationally.  The end point of that process here is exactly the same as it is there.  You're getting a preview America, and if you think that a 20% sell-off in the stock market is what we get when it happens here, you're wrong.  Try a 90% loss on for size followed by the utter failure of every pension fund and insurance company that has sold annuities - including yours. 

Our economic system and quite-possibly our government is finished if we allow this to occur.

The claims that "it will all be ok if we just help these people bridge the gap" is now being exposed as an outright and intentional fraud.  That fraud has been perpetrated against you, the American taxpayer, by your government and central bank

Three years into this since the 2008 collapse and not a damn thing has been addressed or fixed.  You can see that proof in the employment statistics which, incidentally, are about to get much worse.

YOU have been seduced by the siren song of "Guns, Gays and God" (or "Obama's gonna pay my mortgage!" if you prefer) instead of the truth - a bunch of *******s stole your future sequentially over more than 30 years by levering up on your back, knowing full well they couldn't cover their debts.  These intentional acts, which are acts of fraud -- all of them -- occurred in Washington DC and on Wall Street, and they were not limited to the United States. This is a worldwide phenomena.

We're now in the endgame.  Greece, if you recall, showed up in early 2010 as a problem.  Did our government take this warning and act on it, stop the frauds, prosecute the wrongdoers, close the insolvent banks, and force the recognition of the nine trillion in lost value in residential housing?  Did we see bankruptcy occur for those who are in fact bankrupt?

NO. 

EVERY ONE OF THE POLITICIANS ON BOTH SIDES OF THE AISLE - ALL OF THEM WITHOUT EXCEPTION - HAVE LIED, CHEATED AND STOLE FROM YOU TO PROTECT A GANG THAT HAS REPEATEDLY ABUSED LEVERAGE TO ROB YOU BLIND.  NOW THE PONZI SCHEME IS COLLAPSING AS WE ARE OUT OF SUCKERS - GLOBALLY - WITH WHICH TO PERPETUATE IT.

While I write this CNBC runs claims of "we're going to show you how to protect yourself in this market."  Oh really?  Why didn't you just tell people to get the hell out in 2007 as I advised and sit back with a bunch of popcorn?  You'd still have all your damn money and none of the heartburn.  NOW, after the market is down nearly 20% off the recent highs, you want to talk about "protection"?  NOW?

You have one final opportunity to choose America: Watch Dancing With the Stars or demand and enforce your demand that this crap stop right now.

Just be aware - if you choose "Dancing With The Stars" that it won't be long before you have no job, no money and perhaps no electricity with which to power your TV and no "free stuff" coming from a bankrupt government either.  Yes, it can happen here, and if you think not you're dumber than a box-of-rocks and deserve exactly what is coming.

Choose now, choose here and choose wisely.

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User Info It's Over in forum [Market-Ticker]
Lowbeyond
Posts: 16892
Incept: 2008-02-11
Green A True American Patriot!
CO aka West NJ/East CA
Online
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Quote:
Choose now, choose here and choose wisely.

The choice will be to kick the can until it hits the wall. You know it, I know it. Its a forgone conclusion.

The only question is where the wall is....

smiley

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Maybe it was a birdy bread-bomber from the future?!
Particenens
Posts: 9669
Incept: 2008-01-16
Gold
Peak Bund
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form Stress Test

to Distressed Bank


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A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain
Ghopper
Posts: 2315
Incept: 2011-06-11

Staten Island, NY
Online
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My long term cash left the equity market when the Dow was 9400 (when I started reading the Ticker). In a cash fund.

So I am...smiley
Nbpundit
Posts: 60
Incept: 2011-04-05

Texas
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Meanwhile it's safer to keep your wealth in a water soaked mattress to
keep the thieves and the fires from taking it.
Zzt
Posts: 3036
Incept: 2007-06-26
Green
Glendale az
Online
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A crash doesnt bother me because I believe it cannot be avoided. It will happen and we will survive so I am acclimated to the possibility/probability.

What bothers me is who or what road will inbred Americans choose to follow after the fall.

THAT scares the **** outta me.
Ghopper
Posts: 2315
Incept: 2011-06-11

Staten Island, NY
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Quote:
"What bothers me is who or what road will inbred Americans choose to follow after the fall"


Hoffa gave you a preview of what is coming.
Zzt
Posts: 3036
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Green
Glendale az
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Zactly what I'm worried about Hop.........and about 100 other possibilities
Uncleoxidant
Posts: 2200
Incept: 2007-07-10

Stumptown
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Quote:
Coincident with this hitting the wires there was a massive flow of money into the Japanese Yen - and out of the Euro. A monstrous safety trade - people fleeing the European common currency for what they perceive as a "safe haven."


Kind of scary that the "safe haven" play is to move into the currency of a country with one of the highest debt/GDP ratios (for a developed country) which also recently suffered a devastating earthquake that led to meltdowns of 3 nuke plants and massive damage to infrastructure, private property and manufacturing capability... Oh, and they've had over 20 years of economic stagnation. When that's the "safe haven" play we're screwed.

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I am not a consumer. I am a Citizen!

Gates
Posts: 6272
Incept: 2008-01-29
Gold A True American Patriot!
Scottsdale
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Lol... indeed.
Arrack979
Posts: 1354
Incept: 2008-07-15
Green
Blue State Hell
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Regarding the FDIC not having the money to cover:

1) Is it likely that the more conservative/solid local banks (never engaged in subprime, NINJA loans, keep all the loans they originate, etc) will not be affected?

2) If all banks go TU in the scenario above, what's the best thing to do with the cash...not comfortable keeping that much @ home, etc.

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Go green, kill yourself.
Chuckstermd
Posts: 34
Incept: 2011-02-22

baltimore
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Karl you need to be more passionate when writing your articles. lol

Unbelievable our politicians have their heads so far up their asses it makes them incapable of doing the right thing and let these big banks fail.

As a business owner, nothing Obama said last night will make me hire another employee until business picks up.....way up. What he needed to say was he was going to put tariffs on goods from Asia namely China so that the products made in the USA can be competitive with imports from those countries.

That would be putting Americans back to work without more debt and keeping our dollars here. Gee solar panels and windmills would be a good start.

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Change? Not until we change the people in Congress with people who understand how to run a government of the people, by the people and for the people.
Downrange
Posts: 5384
Incept: 2007-09-26
Green
Just Say No to RomnobamaDingDong!
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Please keep in mind that every act of our .gov since 9/11/01 has been towards this coming day. They are ready. There are elements that want to bring this down and implement their plans, enforced by lawfully composed authority, that WILL restore order, once chaos breaks out, as it will.

There is no fuhrer waiting in the wings to establish a Reich here. The powers that be, if you will, have thoroughly planned for all these contingencies. There will be no upwelling of "popular will." So, relax and enjoy the ride! Swirling the bowl is so much fun!!

Once this all comes apart globally, we'll be sitting here at our keyboards saying to ourselves, "it was so obvious." "We lost our country long, long, ago, and this is all just the end game."

Thanks Gen., for all you've tried to do. It must be difficult at this point to believe that not one word you've said for years has been heeded, and yet, if you stop to consider the whole picture, and the innate venality of man, it was always inevitable they would choose this course. The bottom line is that the people demand it. They demand to be lied to by their leaders, to be told sweet promises of impossible futures, to be led into battle against their brothers to further the causes and interests of their masters. This game has been going on for centuries - it's just reached an epic, global, scale, and everything's connected by technology now, so it's more visible.

Thanks for trying.

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"If this is how the state treats its law-abiding citizens, it doesn't deserve to have any" A. Solzhenitzen

Reason: typo
Sloonie
Posts: 2109
Incept: 2008-04-16
Silver
waaaaay up North
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Genesis-
Isn't this the second ticker (in the last week) titled 'It's Over'? Just saying....might be confusing...

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"If might is right, then love has no place in the world. It may be so, it may be so. But I don't have the strength to live in a world like that..."-Father Gabriel, 'The Mission'


Taint
Posts: 238
Incept: 2008-12-24

texas
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been pulling cash out of the bank left and right over the last 12 months. going today and getting another 10K. Nothing is more enjoyable than watching the bank manager pout like a bitch as you walkout with their money. HA ha.
Gates
Posts: 6272
Incept: 2008-01-29
Gold A True American Patriot!
Scottsdale
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Nothing the politicians have done is surprising - it's fairly apparent they all know if they try to change course we blow up - they also seem to know we're going to blow up regardless so why not ride the happy train until the wheels fall off and we head off the cliff - we KNOW there are some critters that were DIRECTLY briefed by our host here - they know - for sure! what have they done since Karl briefed them...
Mortgageguymn
Posts: 1563
Incept: 2009-03-09
Green
North Coast
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Default is for wimps. Real countries repudiate. What would the rest of Europe do - start a war? With what troops? It's not like a home foreclosure. Either way, Greece keeps Greece. The Acropolis, the olives, the ski slopes, Santorini... Really, what the **** were the other Europeans thinking when they lent to them?
Debtpie
Posts: 534
Incept: 2009-12-17

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"You have one final opportunity to choose America: Watch Dancing With the Stars or demand and enforce your demand that this crap stop right now."

OK! OK! AND FOR THE LAST F'eN TIME, WE WANT TO WATCH DANCING WITH THE STARS!

NOW LEAVE US ALONE!

Sarcasm off:)

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A Leader, or an Opportunist? "A leader has the capacity of vision, the ability to see where things are headed before people in general see those things." Mitt Romney --- DebtPie's definition: a leader decides where "things" should head and "leads" us there.
Tsherry
Posts: 193
Incept: 2008-12-09

Spokane WA
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>>been pulling cash out of the bank left and right over the last 12 months. going today and getting another 10K. Nothing is more enjoyable than watching the bank manager pout like a bitch as you walkout with their money. HA ha.>>

THEIR money?
Mortgageguymn
Posts: 1563
Incept: 2009-03-09
Green
North Coast
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This just adds to the excuses:

Bush's fault. Japan tsunami. Global warming. "Partisan" S&P downgrade (never mind Egan-Jones downgrade three weeks wealier). Hurricane Irene. European countries & banks blowing up. Racism.

Obviously, Obama should be re-elected.
Debtpie
Posts: 534
Incept: 2009-12-17

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"Really, what the **** were the other Europeans thinking when they lent to them? "

They (the banks) figured that if they could loan enough money to become "to big to fail", that even if it went wrong they would be bailed out and still be able to keep their jobs, bonuses, pensions and fat paychecks.

Guess what...they were right!

But...what they didn't figure was that everyone would need to be bailed out...not enough money for that...oh, no...

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A Leader, or an Opportunist? "A leader has the capacity of vision, the ability to see where things are headed before people in general see those things." Mitt Romney --- DebtPie's definition: a leader decides where "things" should head and "leads" us there.

Gamma
Posts: 5556
Incept: 2008-01-20
Gold
Northern CA
Online
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Quote:
Really, what the **** were the other Europeans thinking when they lent to them?



"Mmmmmm, martinis, think of those yummy olives"

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This stuff we're going through, this is nothing compared to the Middle Ages.
They told me if I voted for John McCain, an idiot would be a heartbeat away from the presidency. Sure enough...
Rdgdawg
Posts: 165
Incept: 2010-04-30

WI... but no brats or cheese...
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Is there something that comes after "totally ****ed?"

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I work hard because millions on welfare depend on me!
Jal
Posts: 512
Incept: 2009-03-25

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What!!!

The financial advisors are saying "Buy the dips"

The G7 are meeting and will coordinate a last minute emergency package.

Swrichmond
Posts: 327
Incept: 2009-02-12
A True American Patriot!
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Quote:
Why didn't you just tell people to get the hell out in 2007


I sold all of my stocks etc in October and November 2007, DOW 13K+, right after the expected market ramp job that the Fed and dot gov did to try to blunt the crisis. It had always worked for them up until this time, and none of them expected it to fail this time. I'd done enough math to see it wasn't going to work this time. The deficit was the key, along with interest rates at historic lows. Saved my wife and myself the equivalent of multiple years combined pay in avoided losses. I still feel great about it.

Been a goldbug ever since. I still feel great about that, too.

Karl has been diligent and relentless in pointing out that, not only has this thing not ended yet, it hasn't really even started yet. None of the conditions that caused it have been corrected; instead, they have been exacerbated. Losses have not been taken, they've been moved onto the public balance sheet or hidden. Assets cannot be put back into play until the market has confidence they've been accurately repriced. Because of all of the interventions, the market has confidence in exactly nothing; the prices are all false. Capital stays on the sidelines. Assets sit idle. Idle assets require zero employees.

There are no mysteries here. Everyone in any position of power knows this, therefore conditions are deliberate. No other conclusion is possible.
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