By the way, Karl Denninger needs a reality check. He does great forensic analysis, but has not produced a single original thought or global hypothesis in memory.
Global hypothesis? You mean global conspiracy theory, right? Why bother with those unless you're trying to drive someone toward a paid "newsletter" in which one can push some "alternative" that relies on something that "will happen tomorrow" - and when it doesn't, well, we just got the day wrong, but it will happen tomorrow!
Why do spooky visions of Jim Jones keep flashing before my eyes?
His view of a need for a New Resolution Trust Corp to clean up the mess shows a big blind spot. Any New RTC must be designed to operate as an independent entity, capable of turning a profit in a vast liquidation cycle with fees earned.
Absolute nonsense. The purpose of an RTC is not to make a profit. In fact, it will generate a loss - a big one. Probably as much as a trillion dollars, maybe two trillion when one considers the backstop of depositors that has to be provided (and which we will do, one way or another, as the alternative - screwing Granny out of her $30 large - means the shotguns come out, and the government knows it.)
The purpose of an RTC is to take out the trash and fix the US credit intermediation system by removing the clog. We must do so in order to restore sound fundamentals and, on a forward basis, the ability to prosper and clear ordinary commercial credit transactions - a necessity if we are going to participate in the global monetary structure on a full and fair basis. Since all modern monetary systems are in fact debt-based there is no real alternative to this that does not lead to us being left behind in an economically-crippled state, with the high likelihood of economic depression.
The fact that many individual properties under mortgage are linked to multiple mortgage bond securities hints that the trust would actually lose quite a handy sum of money.
Prove it. This is simple; while these complex securities are "complex", they are so by obscurity. That CDROM (or worse, DVD-ROM!) delivered content that lists each "thing" in the security pool does exist. We also have things called computers, which can analyze and crosslink the data.
I've heard this allegation for years - going back to at least 2003. That's a hella-long-time for this to be sitting out there without substantiation. And while there are certainly lots of people who do not want this uncovered, the fact remains that the data is available, it was put on those CDROMs and DVDROMs, and it hasn't been destroyed.
Hundreds of billions of dollars have been lost by investors worldwide in this collapse, and each of those dollars is a reason for someone to chase this. I have never in my life subscribed to a conspiracy theory that requires me to buy into the belief that a whole lot of separately-interested parties, specifically lawyers, all of whom earn a fee on contingency, would fail to investigate and rip to shreds any such conspiracy on such a grand scale.
Further, the moment that such a thing was proved hundreds if not thousands of people would wind up in prison. Yes, some of them would make threats (cf. Keating and what he said with regards to William Black) but that doesn't change the outcome - note that Bill Black's body remains at an elevated temperature compared to the room.
Other mortgage bonds are pure counterfeit, with no property income stream linkage.
Again, prove it. There are billions of reasons for people to prove this if it is true. Nobody has.
I look to motivation - the scammers have lots of reasons not to disclose but the harmed have billions of reasons to sue and press discovery if necessary. It hasn't happened in this light to any material degree. I don't buy it; this sort of kook-a-berry inspired rant does nothing to advance the debate on how we got here and how we get out.
Some bonds would cost more than they could redeem, while other bonds would not be redeemable at all. Mortgage bond fraud represents the gigantic shoe in the machinery. No meaningful home loan modifications, no New RTC, only top-down solutions favoring the big banks. My clarion call for a New RTC was made in 2007, but stopped in 2008 when that criminal fraud detail was revealed. Denninger must have been asleep back then. He has a great knack for dissecting trees, plants, and ferns, many rotten or acidic, but he misses the forests. Every squirrel has its expertise, but some have limited vision.
Bah. Willie is great at putting forward what others have said, but of course he has a newsletter to sell. I don't.
Oh, and what is Willie's prescription for investors? Here we are again with the same old tired song:
But real money emerges triumphant after the inevitable crisis that ensues. THAT REAL MONEY IS GOLD, ALONG WITH SILVER, EVEN PLATINUM.
Of course he's been calling for this "huge move" for a while. I know, I know, gold is "screamingly undervalued" even at $1,000. Ok. So when will the big move come, and what's the target? Willie, like most of these clowns, plays coy - he doesn't want to be caught having to "revise his calendar" when the end of the world does not materialize (or worse, hand you a cup of grape KoolAid) so he merely says this:
The gold breakout will come suddenly, without warning. In my view it could easily come from ENEMIES AT THE GATE, foreign creditors responding to their own stress.
Emphasis his, of course. But this lack of a means to discern when (or if) the event is coming means that he can never have to say "I blew it"; unlike those of us who put forth an annual forecast with material and objective targets that we can grade a year later, he doesn't. I wonder why not?
The "rush to junk" is one that I and many other commentators have pointed out on multiple occasions. This isn't some conspiracy - it is how these sorts of parabolic blow-off movements come. If you think this isn't a parabolic move, chart the S&P 500's price .vs. P/E over the last six months and tell me if your opinion changes.
As of July 31st we stand at 143.95 for that ratio, with a new update out in a few days. By any measurement you care to use this is a parabolic move and those always follow the same pattern coming off the base (or bottom):
Not long thereafter the move collapses.
The foundational error that Willie and most other so-called analysts (AND "degreed economists") make is that they fail to properly recognize what the monetary base is in a debt-based monetary system. Most will cite M1, M' or some other similar stupidity. This is false and a bit of cogitation will lead you to the right answer, if you think about it for a while. Consider the facts of all such modern systems: Your $100 bill spends identically to your VISA card. What is the "monetary base" of your VISA card? Now consider what, on a population-wide basis, this means for the monetary base of a nation's currency and credit system and the light should come on. If it doesn't please check your cranium for the presence of a functioning set of neurons and if you have an economics degree make sure you turn it in to the university that issued it as it should clearly be revoked.
PS: At least the "bio" on FSN says this about Jim's intentions - in tiny, small print at the bottom, of course:
Articles in this series are promotional, an unabashed gesture to induce readers to subscribe.
To which I reply: No, really?
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