The Market Ticker
Commentary on The Capital Markets

It's not that the bank has "agreed" to pay $16.65 billion, of which about $9 billion is real money (the rest is "soft" in that it's alleged consumer relief -- we saw how worthless that was and is with HAMP, HARP and similar.)

It's not even that nobody has been criminally charged, although that's a big problem too -- you can't deter corporate misbehavior with fines (unless they're large enough to blow up the company) because the firm can and does simply shift the cost to either shareholders, customers or both.  That is, such a "fine" never actually impacts the firm but rather in many cases simply adds further injury to the already-hurt!

No, it's that the fundamental character of what the bank did is counterfeiting, and the injured parties are not just those who bought CDOs, bogus mortgage securities or even homes with alleged "loans" they couldn't possibly afford.

The injured parties are in fact every single person who transacts using the currency involved!

 All money in modern economic systems is in fact debt.  Look at the money in your wallet; you will see that it carries the moniker Federal Reserve Note.

A "note" is a debt instrument.  All financial transactions have two sides; a debit and credit.  A modern monetary system is in balance when the amount of circulating credit (of which every single note is to the person who has the credit side) exactly balances the economic output of the nation less the increase in productivity per unit of labor.

In other words the buying power of a unit of currency should increase as productivity improves.

When a bank issues a loan that is not backed by an actual asset at its current market value, that is, it sells such a debt instrument (like a mortgage security or CDO) to someone that it knows is "vomit" yet collects funds from someone as if it was good debt the net effect of this transaction is to increase the amount of money in the system exactly as if you printed up pages of counterfeit $100 bills.

That net effect, to the tune of trillions of dollars, is why we had the financial "crisis" of 2008.  It was not animal spirits and it was not irrational exuberance, just as it was not in 2000.  It was fraud committed by effectively counterfeiting the US dollar.

The transactions underlying CDOs and similar instruments are difficult to understand; even financial professionals who live and breathe this stuff take hours, days, weeks or more to actually get to the bottom of what's being offered and why.  Many of these instruments are offered via paperwork that can't possibly be read in the time available with much of the detailed information behind them running to the thousands of pages or not even available at all at the time of the offering.  

But again, that's not the issue.  The issue is that unbacked credit creation is exactly identical in economic impact to counterfeiting the currency.

That's the underlying offense, and no "fine" compensates for it because the trillions of dollars of purchasing power that was stolen from people all around the world has not been returned to the injured parties, nor can it be.

The only proper act to take against all such entities and each individual involved is criminal prosecution, because money damages are not only insufficient, they're a bad joke.

We have not recovered from the 2008 financial crisis and households are in worse shape than they were on balance before that time because the damage was never unwound and the value stolen was not returned to the injured parties -- everyone that uses the US Dollar as a means of savings and transaction, whether they transacted in some form in a bogus "loan product" or not.

View this entry with comments (registration required to post)
 

As Fox News says, "Exclusive":

EXCLUSIVE: Darren Wilson, the Ferguson, Mo., police officer whose fatal shooting of Michael Brown touched off more than a week of demonstrations, suffered severe facial injuries, including an orbital (eye socket) fracture, and was nearly beaten unconscious by Brown moments before firing his gun, a source close to the department's top brass told FoxNews.com.

Even assuming all of this is true it does not matter when it comes to the officer shooting Brown.

If you remember when Zimmerman shot Martin I took the exact opposite position based on the available evidence that I am taking here.  The reason is simple: The evidence clearly established that Martin was on top of Zimmerman after having punched him, knocked him down and was beating his head into concrete.

He was shot while committing that assault.

The physical evidence supported this in that Zimmerman had wounds on the back of his head.  Being punched from the front, standing alone, could not have produced that injury.  Despite conflicting witness statements as to who was on top of whom the injury on the back of the head was dispositive in regards to that question and established the reasonable expectation that the assault in process was going to produce great bodily injury or death if it was not immediately stopped.

Note carefully: If he had punched Zimmerman, even if he nearly knocked him out, and walked away had Zimmerman shot him he should have, and likely would have, gone to prison for Second Degree Murder.

It was only the continuing assault at the time the shot was fired that made it lawful.

In the end the court system agreed with me and Zimmerman was found not guilty.

The same standard applies here to this case.

If Brown beat the officer in his car and went for his gun at that moment in time the officer was entirely justified in shooting him to stop that assault.  However, once Brown ceases the assault the justification for shooting disappears.

The cited article also claims all of the following; unfortunately in totality it is essentially impossible for all of it to be true:

  • The two fought over the officer's weapon while Brown was beating the officer through the car window and the officer's gun discharged in his vehicle.  This means both the officer and Brown should have powder residue on their persons.  In addition they should have both been temporarily deafened by the unprotected discharge of the officer's weapon in a confined space and in close proximity to their ears.

  • Brown walked away after the encounter; the officer exited the vehicle, pulled his gun (how did it go off in the car if it was still in his holster?) and ordered Brown to freeze.  Brown did freeze, turned around, raised his hands, said "What, you going to shoot me?" and then charged the officer.

  • The officer then allegedly fired at least six shots at Brown, producing the injuries in the autopsy.

Here's the problem -- whether it's a good shoot or manslaughter (at best) turns entirely on whether Brown was actively assaulting the officer when he was shot because the legal justification to shoot him for the previous assault ended when that assault terminated.

My issue with the claim that it was a good shoot predicated on the above is the following:

  • How could Brown have heard a command to stop when his ears were, seconds before, a few inches from a weapon that discharged in a confined space with no hearing protection?  I don't recommend you try reproducing this on your own, by the way.  If the "command" was in fact shots fired at his back (which Brown could hear, deafened or not, and of course if he was hit in the hand, which is possible from a ballistics perspective, he'd feel that).....

  • The evidence does not support that Brown went for the officer's gun and it discharged during said altercation.  Specifically, there was no evidence of powder residue anywhere on Brown, including his hands.  I assume for the moment there is physical evidence of a discharge in the vehicle (somewhere in the vehicle there is a hole from the inside out, etc.) -- but to assert that Brown caused the discharge or was within inches of the weapon when it happened should have deposited evidence of same on his body, and that evidence is missing.

  • Show me the ballistics and geometric solution that allows an average-height man to shoot a 6'4" guy, who is roughly 6" taller than the officer, in the head and face with the known angles of entry and (for the shot to the eye) exit while that man is on his feet, charging or not.  He did not fall to his knees while charging as the autopsy showed no abrasions on his knees or legs -- inescapable injuries if you are charging someone, are shot, and fall forward on pavement.  The only abrasion injury was a very light and flat-forward impact injury to Brown's face consistent with a face-first fall from a stationary position.  He thus could not have suffered the fatal shots in a scenario where he is hit superficially in the arm or hand, falls to his knees while running and thus presents the necessary angle for the last two rounds to go into his head that are being fired at an actively-charging suspect.

You have to get past these facts that get in the way of the claims in the Fox News story, and you have to do it with physical facts, not supposition, because the physical evidence released to date points the other way.

If you can do that then the shoot was good and I'll change my mind; anyone, including this officer, is within his rights to shoot a man that is at that instant in time presents a credible threat of assault to do great bodily harm or worse, and Brown, according to this story, had demonstrated his ability to do exactly that.

But if you can't get past the above problems with objective evidence the officer needs to charged with and convicted of either Manslaughter or Murder 2.

View this entry with comments (registration required to post)
 

Gonna try to tell me that's not photographic evidence of felonies committed by at least three people (I see at least three weapons pointed at the man with his hands in the air.)

Care to explain how and why, given that the person that those guns are pointed at appears to be unarmed?

Care to explain why a false arrest and kidnapping charge hasn't been laid against those very same cops for arresting the journalist that took that picture?

Or perhaps you prefer this example, with Officer Go **** Yourself threatening to shoot unarmed people on video, including journalists.

Where are the arrests, indictments and charges for acts that were you or I to commit them would land us in the slammer -- and properly so!

View this entry with comments (registration required to post)
 

I knew I'd get hate mail and lots of vehement push-back when I wrote my column The Truth About Your Consentit's a topic I've raised privately with people in the past, and the reaction has always been the same -- anger, shock and usually a nasty response.

So I think you should go read it again -- and not because I'm trying to break my record for hate email (although it's already close in that regard.)

No, you should read it again because it's true, and in addition if we are to ever make progress in this country the people of this nation need to understand the principle in that column and accept responsibility for it.

The people in Ferguson need to accept responsibility for their consent to a police department and city government that manages to issue 3 arrest warrants per household per year, and imposes fines that amount to $130 per man, woman, child and infant.

That consent put in place an environment of distrust and hatred between the police department and citizens -- and irrespective of whether Mr. Brown was lawfully shot by an officer in the line of duty or was unlawfully killed by him, the reaction that followed was in large part if not exclusively caused by that environment.

The people in Jefferson County, Alabama need to accept responsibility for their consent to a so-called "justice system" that refused to hold to account the banksters that profited from and arranged the swap deals that were entered into in part due to bribery and led to their water bills doubling.  How do I know they consented and still do?  Do a search for "Chase Bank" locations in and around Birmingham; why is the number (much) greater than zero?

How is it that the Hospitals in California, or those in Arizona, that have bilked people out of $10,000 for a $100 test or $60,000 for two $100 vials of scorpion anti-venom are still open?  How about the hospital that charged a guy $9,000 to put a bandage on his finger?

The people didn't and don't consent?  They sure do, otherwise those institutions would be closed -- one way or another.

Or how about the cops pointing guns at peaceful protesters in Ferguson?  That's assault with a deadly weapon in virtually every jurisdiction if you or I do it.  Why do the people there and around the nation consent?  And yes, you do consent, because if you didn't then one way or another that would stop.

I am not saying, by the way, that you should burn the hospital to the ground or do harm to any particular person.  To the contrary; I fully understand that the means by which this sort of crap happens is that the persons and institutions get laws passed that make their conduct legal, either explicitly or by "wink-wink-nod-nod" willful indifference to what would otherwise be a criminal act.

That doesn't change whether or not it's right, just, and should be permitted to occur.

An alcoholic cannot stop drinking until he admits that he is an alcoholic and drinks because he voluntarily raises the glass to his lips and consumes the contents therein.  A drug abuser cannot stop abusing drugs until he admits he is an addict and that each and every "hit" he takes from the pipe, down his throat or up his arm occurs because he willingly consumes the drug.  

Likewise we will not stop being robbed and abused by the people involved in these outrages until you admit that the reason it happens is that you give your consent each and every day to every single one of those acts.

To effect a change you must first accept and admit to what is happening on an objective basis.  In this case you must accept and admit that you personally give your consent to all of those things I outlined in my article on consent and the thousands I have written over the last 7 years and more every single day of your life.

One of the arguments I've had thrown back in my face repeatedly when raising this is the old saw that goes "Well what are you saying, that I should go get my gun?"

I'm saying no such thing.  You don't see me standing out in my front yard with a gun, do you?

Yet I freely admit that I gave consent this morning to every one of the outrages I outlined and more, I gave consent yesterday, the day before, and every day back to when they first happened.  I can predict with a high degree of confidence that I will give consent tomorrow too.  I will do so because my evaluation today is that the risks and potential rewards stack up to giving consent being the logical thing to do.  That I am a law-abiding citizen weighs heavily in that evaluation, as it probably does for you as well.

But -- that doesn't change the essence of what happened this morning when I got out of bed.

I consented -- and so did you.

We will find solutions to the problems I outlined and more only when we have broad acceptance and recognition that we each, individually, give consent each and every day to every one of those outrages and more.

Open, public admission of our complicity and consent is the threshold, exactly as it is for the alcoholic.

Let me know when you're ready to stop being an alcoholic, a journey that begins only when you admit you are one and that you consent each and every day to your condition.

Until that day comes may you enjoy your drink and may the consequences of consuming that beverage be tolerable.

View this entry with comments (registration required to post)
 

Oh, the amused smile I have on my face this morning...

Argentina plans to pay its foreign-currency bonds locally to sidestep a U.S. court ruling that blocked payments last month and caused the nation to default for a second time in 13 years.

The government will submit a bill to Congress that lets overseas debt holders swap into new bonds governed by domestic law with the same terms, President Cristina Fernandez de Kirchner said in a nationwide address yesterday. Payments will be made into accounts at the central bank instead of through Bank of New York Mellon Corp., the current trustee.

What's going on here is that a US Court tried to tell a foreign government (ha!) what they had to do.  Specifically, it tried to bar Argentina from imposing a preference on paying newer bondholders instead of the "holdouts" that had bought their debt on the secondary market as it collapsed, then sued to try to gain a windfall profit.

They got a series of US Court rulings that blocked payments to other, unrelated bondholders that had been issued new bonds, unless the holdouts got paid.

That happened because the payment agent through which the money flowed was in the US, and therefore the US Courts could block the payments.

Nice try guys.

What Argentina is now going to do is offer the newer bondholders, who had the US Government prevent them from getting paid even though Argentina both has the ability and desire to pay them, a swap to local-jurisdiction bonds on the same terms.  In other words, no more US payment agent.

Poof! goes the US ability to block those payments.

Of course there will be more threats, but the fact of the matter is that the US Government has zero jurisdiction over Argentina.  If it wishes to offer a swap to creditors and the creditors accept it, that's up to them.  Given that if they take it they get paid immediately and on a forward basis and if they don't who knows if they'll ever get paid, well..... 

What do you think is going to happen?

View this entry with comments (registration required to post)
 

Main Navigation
Full-Text Search & Archives
Archive Access
Get Adobe Flash player
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.