Inside Job
Nothing is as expensive as free money.
Rare Photo of FOMC Meeting in Progress:
The U.S. Needs Economic Regime Change
History will give a full accounting of the grave errors committed in recent years in economic policy. A central lesson is already clear: Nothing is as expensive as free money.
Not if “history” is written by shills like Nick Timiraos, Jon Hilsenrath, Jeanna Smialek or Steve Liesman.
“Inflation is a choice, and the Fed chose higher inflation. That’s exactly what we got.”
Until every one of these people listed here is completely discredited, and run out of town on a rail, and Powell, Yellen, Bernanke, Greenspan and all their Renfield shills are no longer omnipresent, presented in the MSM as wise sages, the wealth-inequality and instability will continue to grow.
Congress needs to put the Fed on a tight leash (or END IT).
But first, I think we’d need a new Congress.
“I’m not worried about inflation.” - Andy Brenner
I’m sure you’re not, Andy. I’m sure you have a very nice job, and net worth, and are doing fine, and want the gravy train to keep rolling for you. (Not just picking on Andy. Countless tools like this regularly appear on our abysmal financial media. For years they told us there was no inflation, and we needed more inflation, and inflation was good, and transitory etc. Inflation is great for people at the top.)
Speaking of Milken...1
Like clockwork, it's Cantillon Effect Man® Paul “Let’s have a housing bubble” McCulley!
CNBS can’t help themselves.
Kelly: Um, Mr. Drug Addict, how do you feel about your drug dealer?
McCulley: Um, my dealer needs to lower his prices on the meth I want, and give me more of it.
Steve: Good stuff, Kelly
You can tell if someone was a villain in the 2010 movie "Inside Job" if you see them today being asked their opinions on CNBC and Bloomberg and in the New York Times.
Naturally CNBS today also brought out again Larry Fink’s Rick Rieder, who always looks like he just left Hunter Biden’s apartment (the photo is from 2022)…
Getting back to Andy above, it’s really hard to feel sorry for bond (or stock) investors. You had a nice 40 year secular run, in recent decades turbocharged by insane monetary policy, and disinflationary globalization (i.e., labor arbitrage), and now you're down, blah blah blah.
Suck it up and quit crying.
"What happens when the government cuts interest rates? The price of the bond goes up. What does that do? It provides you with additional collateral to then go and buy stuff...We've effectively built a system predicated on collateral."
- Mike Green on Realvision, January 2020
Right now, government bonds are accorded zero risk in calculating bank capital ratios. The idea that government bonds are riskless when governments are planning to flood the market and when the expenditures are consumed (building no collateral) may prove to be the latest delusion. (2015)
Central banks give money to institutions, which are not solvent, against doubtful collateral for zero interest. This is not capitalism. - Daniel Stetler (2014)
New York Community Bank's agreement with Signature Bank involves the acquisition of loans, but notably excludes the multifamily mortgages and commercial real estate loans of the distressed financial institution…NYCB's recent agreement does not cover Signature's commercial real estate portfolio, which was worth $35B as of the end of 2022, and their multifamily loan book valued at $19.5B.
Then there’s this:
“The approximately $20 trillion commercial and multifamily commercial real estate market is financed with $5.5 trillion of debt, 50.3% of which is provided by commercial banks (in general, conservative leverage when originated). Of that outstanding debt, approximately $936 billion of CRE and MF debt is maturing in 2023 and 2024,” the Roundtable said in a letter to federal banking regulators. The concern is that with rising rates, CRE borrowers may not have many options and might have to add considerable equity [boo hoo! - RH] that could “be expected to result in significant job losses, small business closures, greatly reduced municipal revenue, countless bankruptcies and foreclosures.”
Oh yeah. All that, plus frogs, boils and water turning to blood.
Good grief, how about this: Overleveraged CRE guys take losses for once, and get replaced by well-capitalized, competent people?
What say you, 2009 Jim Rogers?
Banks have been going bankrupt for a few hundreds years. The way the system works is when somebody fails you let him fail. What we’re doing now is we’re taking the assets away from the competent people and giving them to incompetent people and telling them now you can compete with competent people with their money.”
Right now Barry Sternlicht and Stephen Schwarzman and all the rest of these guys are lobbying hard for a bailout, and they’ll probably get one, because everyone in power is so corrupt.
Anxiety Strikes $8 Trillion Mortgage-Debt Market After SVB Collapse Investors fear other banks will sell mortgage-backed securities, pushing down prices
Oh, so sad. You mean these investors have anxiety? They might lose some money? Isn’t that illegal? Clearly a bailout is called for.
Heck, I’m so old I remember when the biggest MBS investor was not the Federal Reserve (which has monetized TWO-POINT SIX TRILLION DOLLARS of MBS, up from ZERO DOLLARS in 2008.)
Remember? When someone middle-class with a job could actually afford a house? Before ZIRP and QE enabled Blackstone and Starwood to roll in and bid everything up in a frenzy of avarice, a desperate reach for yield? Remember?
Blackstone’s Real Estate Shopping Spree Is Now A Mortgage Default Crisis
Fink’s on the prowl again, And he’s got a 12-bore shotgun. Super!
Asia investors ‘gobsmacked’ by $17bn Credit Suisse bond wipeout
Lack of Grownups in the Room Exacerbates Bank Freakout Have you seen the type of person who works at the Fed?
Short seller warned US regulator about Signature Bank in January “SBNY has played a central role as a facilitator, even if unwitting, for countless illegal crypto transactions,” Marc Cohodes wrote
“I’m calling for an independent investigation of the Fed and the whole regulatory system here. The Fed doesn’t just get to do its own investigation.” — Sen. Elizabeth Warren
You know, I’m not a fan, but she is the only one talking about this.
Today’s CNBC Drinking Word is “Ringfencing.”
The Internet Archive is defending its digital library in court today
I’ve been “working” at a job for 7 months with no boss and no work to do.
Scratched EV battery? Your insurer may have to junk the whole car
Berkshire Hathaway's 2023 Proxy Statement Berkshire is a very unique company
"The thing I worry about is you can maintain relationships on Zoom, but you can't build new relationships on Zoom" - Chris Whalen
How Elon Musk's tweets unleashed a wave of hate Sigh. Hate is now defined (especially by people with titles' like ‘BBC Disinformation and social media correspondent’) as “anything critical.”
Other than actual death threats, block and mute work fine.
You have to understand this to understand our media class: the number one priority in their entire lives, above and beyond literally any other, is to earn insider status with other people in media. That’s it. That is their lodestar, their true north. They want other people in media to see them as cool and smart and fuckable, and most of all they want to have the right opinions, the opinions that the group doesn’t laugh at. The mirror image of the desperation to be considered cool is the intense, all-consuming fear of being made fun of by cool people in media. Look at the way they write, report, communicate with each other; these people are absolutely terrified that someone’s going to take something they say and hold it up for mockery on Twitter. This seems to me to be pretty much exactly the opposite attitude you should want among writers and journalists, who literally can only perform their function when they are pissing most people off. But that’s the professional culture of media, a culture defined by the fear of being made fun of.
The press was supposed to be a check on government, and it has become a tool of the government as a check on the average citizen.
Fake news has a long history in America. Its most pernicious incarnation is never the work of small-time scam artists. The worst “fake news” almost always involves broad-scale deceptions foisted on the public by official (and often unnamed) sources, in conjunction with oligopolistic media companies, usually in service of rallying the public behind a dubious policy objective like a war or authoritarian crackdown.
"Of course they hate us. They see us as people who write about them as hicks and losers and idiots, and who are not on their side - and why wouldn't they hate us, right?"
- Matt Taibbi talking about the crowds at campaign events attitude towards the press
"You would think that every reporter in that room just has nothing to do anymore except figure out what [Acosta] meant by that. What do you mean this mass serial child-trafficker 'belongs to intelligence'? What did you mean by that? And nobody is asking him that question."
I’m anything but a crypto guy, but the smug, goofy way that people like Sara Eisen talk about “risky crypto” is a bit annoying, as something like First Republic Bank falls 90%+.
Maybe CNBC could one day look into abysmal bank regulation, or something useful.
Gee, if only someone had warned us about terrible Fed bank regulation…
Credit Suisse CEO Tidjane Thiam, 2017: "From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble."
Dude…
Great discussion with Brandon Adams and Edward Chancellor
I liked Chancellor's quip that economists don't like Hyman Minsky because, "he's hard to model."
Meanwhile, Marko Kolanovic says "the possibility of a Minsky moment in markets and geopolitics has increased."
EXCELLENT review of Chancellor’s new book, The Price of Time:
"Rich people are the only ones who have sufficient collateral to borrow massive amounts of cheap money, their first access to the money printer allows them to buy & bid up assets. Borrowing begets bidding which begets price appreciation which begets more collateral for borrowing"
Great book by Edward Chancellor. Chancellor understands the scam, like Jim Grant, Jeremy Grantham, Lacy Hunt, William White, Grant Williams, Bill Fleckenstein, and too few others.
“A disconnect between finance and the real world lies at the heart of all great bubbles.”
The Common Haus Price Index (CHPI), a home price index of asking prices for the most common American home: a three-bed, two-bath, 1,500-square-foot home built in 1977 on a quarter-acre lot.
Here is one of the most absurd headlines of all time, and for Bloomberg, that’s really saying something:
Milken, Mnuchin Join Blankfein in the Hamptons to Fix World
Seriously, read the article. I can’t emphasize enough how slavish it is to power and wealth. It’s an embarrassment.
“Ask me, who’s going to cure cancer? Ask me who’s going to save capitalism?” Luntz said. “Mike Milken. He was a victim of the system and now he is the savior.”
OK, so you think - Rudy, surely that was a one-off. Bloomberg can’t be that obsequious, right?
What It’s Like at a Beach Party Where Goldman’s David Solomon Is the DJ
It was chill, yet exuberant. A few women in bikinis danced by the booth. A couple of cornhole games were in play. The loungers on the day beds sipped rose. There was a bachelorette party, the lead singer of the band East Love and a Quick Fix IV specialist, who’d just returned from infusing a client with a hangover…
On the sand in front of the DJ, tanned-and-toned bodies danced to recognizable samples ranging from the Beatles ("Twist and Shout") to the Bee Gees ("Stayin’ Alive")…
One millennial banker was a fan of Solomon’s picks. "I liked the throwback disco funk," Drew Regan said. “I’m a big trance guy, but it’s disco funk that’s coming up now." When the 28-year-old found out that the DJ was Solomon, his jaw dropped.
One admirer who approached the DJ was Kellan Carter, a 2009 college grad and venture capitalist, who was wearing a T-shirt printed with the dubious honorific "Lehman Brothers Trader of the Year 2008." He asked to pose for a photo and Solomon obliged.
"He’s amazing," Carter said afterward as the duo Disco Killerz took over the DJ booth and kept the party going. "It’s a remarkable guy who can be CEO and also appeal to young people."
Cash in now, Janet
Cash in now
Cash in now, Alan
Cash in now, Geithner
Cash in Bernanke
Cash in Jay Powell
Oh-oh-oh, oh-oh
It's just like the show before
The news is
Just another show
I had to wiki Jane's Addiction to see if any of them survived. Apparently, I gave up drugs in the 80s for . . . literally . . . no reason.
If ETs are real and here, (admit it it's possible), they're the ones in charge, and the leaders we shake our fists at are just supplicants to the technology they possess and drip out to the MICs of the world.