Thursday, May 31, 2012

Friday, May 25, 2012

I need to elaborate.

At the end of the second paragraph in the last post I concluded,
But with the monetizing of JPM liabilities, and all that euro trash, I hardly see concern for deflation at the operational level.
 My thoughts are as follows:
  • The "derivative" industry sometimes called shadow banking is a parallel universe of leverage and risk.  In theory, the principal behind the risk should not be monetized - it is the leverage that produces the return by collecting premium.
  • By defaulting Greece in CDS while also bailing out Greece and other nations with the LTRO, both parties win and are winning.  This is the same with bailing out Goldman, et al through AIG nationalization.
  • The IMF ( has agreed to back the ECB, who has agreed to fund the LTRO and Greece, who has agreed to fund it's insolvent banks through the Bank of Greece.
  • In these examples money has entered the system in a way that should be more binary.  Zerohedge does enough with M2, but suffice to conclude that the problem is that a capitalist economy is predicated on "there is no such thing as a free lunch."  No longer the case.
  • Any government dispensing money, whether through corporate subsidy (Solyndra), bailout (GM), or social engineering (food stamps) is decidedly ham-fisted.  As such, the markets for inputs become less competitive as the governments have no theoretical competitive limitation while brandishing the keys to a printing-press.  Therefore, the price of labor but especially food becomes more expensive.

Thursday, May 24, 2012

Free Form Ruminations

The positive correlation between crude and the SPX is senseless.  Oil is the base of the pyramid, the hub of the wheel.  For every dollar the price of crude increases, earnings power on the part of every other industry is impaired.  It says something when OPEC indicates that oil is overpriced vs. supply.  Whether you believe that they are scared of the slow down in China, or that the lunacy in contract pricing has choked American growth, you decide, but with a full year of increasing prices to combat inputs, many stand to benefit from this pullback in Texas Tea.  Look at SBUX and the three price increases they rammed through before contract coffee imploded last year.

So what's going on with gold?  Does the drop in crude imply deflation?  Is everyone so hungry for UST's that even gold goes out the window?  Wrap my wallet with eurobonds?  Look, if you actually care about the game of trading stocks, and enjoy the stories behind all this wackiness you know that for the Greek negotiating tactics you need look no further than ONAV and DRYS.  You're either going to get a Greek exit after the summer elections, or you're going to get money flowing into the black hole with no visible end.  Greeks are expert tacticians, greedy motherfuckers, and lovingly cling to their "scorched earth" composition.  To be Greek is capitalism incarnate.  So if I'm Greek I see inflation down this path and disorderly exit down that one.  Your choices become debt jubilee or confidence collapse.  Will the ECB's LTRO have a hard drive malfunction in the next 6 months?  But with the monetizing of JPM liabilities, and all that euro trash, I hardly see concern for deflation at the operational level.

I am on the record for a long time endorsing a neo-WPA.  All this doodoo bandied about on the European continent serve as a lesson in what not to do when America's card gets called.  We have bailed out banks, the auto industry, the insurance industry, and by extension every other industry, with the sad exemption of the American people.  Lo, they take their bail out in the form of food stamps.  But I say, when and if Germany shows the hair on its ass and cuts Greece out of the picture, there's nothing left but spiraling crime into civil war as people go hungry.

Here, as there, it would be more favorable to pay people to walk on hamster wheels 8 hours a day than give them food money for doing nothing.  On the one hand, hamster wheels may be viewed as demeaning, while on the other, governments pay their people to procreate and scheme.

Finally, I believe that the Western Financialization of Africa, and quite possibly this trans-Asian train system will continue to furnish spurts of global growth, but we must embrace the notion of commercial space flight and extra-terrestrial habitation.  Labor efficiency is the enemy to growth because more can be done with less manpower, and therefore progress must be achieved by undertaking labor intensive tasks, or through purely notional exercises like inflation, and social engineering.  Excusing war, which itself has become more efficient with long-range guided munitions and drones, and bubble activity like proprietary frozen yogurt shops, our own nation would be well served to construct a nationwide rail system and pay people to drive each individual rail spike rather than focus on miles of progress per day by automated cars.

The FT wrote an article today about how Allianz sees no benefit in allocating to equities.  That's funny because I was visiting with a quant yesterday who showed me some contrarian charts that have triggered 3 times since the 1950's that then lead to a decade of robust bullish performance.  On the other hand, this Facebook trainwreck highlights the fact that our hallowed exchanges are now viewed as exit markets by the National Venture Capitalist Association, and others.  With the rise of Second Market there is less reason than ever to "invest" in a big name IPO.  It used to be you came public to raise equity, now there are 8 layers of bonds and convertible preferred securities before you even get to equity.  For shame.

It must be tricky when you have $1.7T AUM.  Fucking hell, you could build a railway to the moon for that. I always get a rofflecopter out of Pimco's marionettes pontificating economical on government stimulus with the amount of jack they control.  If they told their people to take some of their goddamn money back and invent something we'd all be better off.

Hope is not getting by.  Hope is accomplishment.  You give people something they can put their name on and it's as if they were baptized in rain.

Tuesday, May 15, 2012

Thursday, May 10, 2012

A Bone to Pick with Reality.

Everyone's writing books these days.  I credit James Altucher (@jaltucher) with getting me off the fence, but having a son really helped get over the hump, too.  The problem has always been subject matter.  You see, no one really gives a fuck about what anyone else has done.  There's always a schadenfreude or smug "I could do that" attitude that goes into reading autobiographies.  For me anyway.  And maybe that's the problem.  To my thinking the truest virtue of all is follow-through, and when a car ride with Buttercup turned into a conversation about some friend of her parents dying, it occurred to me that I simply wanted to be remembered as a philosopher - and philosophers write philosophy.

Here's the opening paragraph of Sur le Pontification:  Shit I Learned the Hard Way for Ego and Id:

First and most importantly, branding yourself hurts like a motherfucker, for a protracted period of time.  We're not talking tattoo here.  I did make it through the first week.  And the second.  But she found out today, and that was not ideal - and there's the rub.

She asked me what I would tell my son, as if he'd ever have occasion to see the upper third of the outside of my thigh.  I'd tell him it hurt like a motherfucker, just like I told you.  But beyond that, is it any of his fucking business what I had done or why?  Libertarian isn't a convenience.  Individual will and desire aren't to be labeled.  This is why Waffler-in-Chief Obama's statement on gay marriage was even hollower than it sounded.

The true fact is that your rights end at my nose.

Remember that.

book's coming this fall, get excited.