OMG! They Killed Zucky...!!

Actually, they killed Zucky's unlucky punters. Yeah, well, what did you expect ? Paying stratospheric prices for something more or less impossible to value on any model is a mugs game. I have little sympathy for any involved.

Those seeking headlines are now falling over themselves pointing fingers at "the process", but surely this misses the most pertinent point: FB (and anything else flogged) is worth what The People will pay. The IBs, like Sotheby's auctioneers, are hired to maximize the proceeds to the seller. They have no frickin' idea "what it is worth". Skeptics (like me) will tell you they wouldn't pay more than $5 or $10 (already an impossible large margin of error. Optimists will point to all manner of metrics and prognostications that justify multiples many times greater than that. Old-timers will remember the days when one of the most trusty investment strategies was to short ALL IPOs, whereas their (privileged) sons (and occasionally their daughters) have subscribed and flipped their way to riches, watching and participating in debut price-vaults that would make the consigners of impressionist art at auction weep.

It is shock to my sensibility that people rationally seek deals that tether value to need in almost every aspect of their life, lose all sense of errrr umm rational expectation [value, measure, proportion etc] when it comes to the Hot IPO. And while 2-cent nickels can pile up unloved in the eddies of slow-growth, or earnings downgrades, the $5-dollar quarters attract financial magpies like a shiny pull-top from an aluminum can.

Maybe FB will metamorphosize into a GOOG, an AAPL, or an AMZN. Maybe not. But I see nothing in the process that is any different from an unwary punter paying $2000 (or $4000!!! for the '88)-a-throw for a "Le Pin", and subsequently complaining it wasn't as good as they thought it would be, or as good as Parker rated it.  This is NOT an apology for the bankers, or the touting analysts, who's honesty ranks just above Nigerian Scam Artist-Phishers and Payment Protection Insurance Salesmen. But the ultimate responsibility lies with the buyers who should look introspectively rather than point fingers.

Farewell W

It is a miracle that I am here. 

At the very least, because you, yourself, were improbable according to statistics and circumstance. 

Your father, navigated uncertainty and turbulence, coming to America circuitiously from Russia via Egypt.

Your mother - who also managed against the odds to arrive here from the Lithuania - was late in her years when she bore you - even by today's standards. 

She was told repeatedly by doctors that she would never have children. 

Despite these obstacles, your arrival, defied the odds....and was - in the truest sense - a miracle.

Improbably, but thankfully (for your children), you found my mother.

From which my siblings and I are of further miraculous result.  

Any manner of happenstance or wrinkle in events prior, and I would not be writing these words.

If that were all, it might be dismissed as unlikely, though simple fate.

But it is not.

From this miracle came ripples of magic that extended far-and-wide to those you touched.

Your magic is part of me.

It is why I like to cook; why I love mountains, why I enjoy throwing a ball with my kids; why I have patience; why I drag my children on hikes; why I can identify the birds from their songs, and crucial to why I love and feel pride in my children, the way you felt about yours.

Your touch, however, extends well-beyond me. 

I see your miracle in my siblings, my own children, and my nieces. 

I see the numbers of people you have profoundly touched in your life with your care, attention and smile - extended family, friends, neighbors, colleagues, as well as your students. I do so with both awe and admiration  - and I am humbled. 

Few have such impact or can visibly attest to such lasting and a meaningful impressions upon others. 

And fewer still, do so in as many different ways as you: as partner, leader, teacher, friend, organizer, advisor, sage, confidant, parent, and grandparent. 

You are a challenging act to follow, but the path you have made is profoundly good and worth heeding.

I will miss you a lot.

Unplugged

What is the worst business you can imagine? It would be retail, flogging commodity-like products, with more or less perfect competition, large square-footage requirements, large inventories with associated carrying costs, big staff requirements, low margins, high macroeconomic dependency, transient or unreliable employees, high after-sales service requirements, high internal pilferage rates, and uber-rapid product obsolescence. Guessed it yet?

The history of American retail is littered with the carcasses of electronics retailers. Crazy Eddie, The Brick, Musicland, Sam Goody, Radio Shack, Circuit City, and most recently, the humbled Best Buy. And if the aforementioned challenges are in and of themselves not sufficient to deter retail entrepreneurs and their investors, then just add the challenge of web retail, where prices are lower, sales  taxes non-existent, fulfillment rapid, and the comparative technical information, more informed. Strangely, somehow, a few Europeans have managed to prosper in their restricted markets (e.g. FNAC, Darty, Interdiscount, Saturn). They are all reasonably pleasant to frequent, and have managed to preserve margins - perhaps because they have achieved scale, straddled both web and bricks&mortar, and perhaps due to logistical bottlenecks and pervasive and unavoidable VAT, weathered on-line competition. The UK experience (witness Dixons and Comet/Kesa!) has been equally as dismal, despite Kesa's ownership of the excellent Darty franchise. Only Apple has prospered, and they, as of this moment, haven't turned their attention to Vacuums or Toasters....yet.

But as quickly as the lights go out, the plug is pulled, the speakers are blown, and the latest Top Dog is at best humbled or worse, liquidated, investors - ever hopeful (or merely gluttons for punishment) - try their luck anew. This time, it's Texas-based Conn's, a former favourite of the IBD crowd when they pumped it up to absurd heights back in the mid-noughties, before souring and returning it's share price to panhandles altitude. 

Analysts (the few who cover it) are again optimistic, despite their poor 2011, and leverage which is double that of former heavyweight champion, Best Buy, along with an ev/sales 5x that of BBY,  and an ev/ebitda more than 3x BBY's - both on historic and forward-looking measures.  Historical margins are inferior in every way, though, they are forecast to sparkle in the coming year. What CONN's does have going for it is a short interest nearly double that of highly-shorted BBY. Perhaps it is the the fact that Texas is NOT the USA. Perhaps it is CONN's marginally-broader offering - a few lawnmowers and some furniture - that separate it. Maybe it's made the IBD TOP-50, again with its Donchian channel breakout and high momentum. Or perhaps it is the starry-eyed belief that like Tractor Supply, good 'ol boy Conn's may be on the cusp on succeeding nationally where the dull methodical no-nonsense midwestern Best Buy could not. I really do not know.

What I do know is that, outside the hasidic bucket shops in Manhattan where it seems to be as much a way of life as a business, electronics retailing well-and-truly sucks.  And investors should be ever-wary of paying up, or being optimistic, or thinking that THIS time it's different. It's not. And it won't be. At 6x next year's forecast, with a reasonable balance sheet, huge scale, BBY might be cheap enough provided the macro status quo doesn't further deteriorate. I am not long, and am unlikely to be so, but there are no shortage of bottom-fishers that may think otherwise. As for Conn's, god bless them and their investors. They will need all the help they can get in order to fulfill expectations.

Protecting the Imaginary Spoils

While listening to a programme on corruption, my 12-year old daughter was incensed. "Thats's awful!" she chimed, to which I sighed and nodded my agreement, while navigating the slip road.  She has inherited my current-event-junkie gene, and so I posed the following question: "What percentage of the population, given the chance to be corrupt, or steal or embezzle, would do so, were the opportunity presented and the probabilty of punishment low?"

"Ummm ten percent....", she suggested. "Really??? Hmmm", I replied. "No umm errr ninety percent!!", she tried alternatively at the other end of the spectrum. "That high??", I inquired. "No wait, FORTY PERCENT!!", she cried, this time more confidently. "Ohh no, I know,  "Seventy percenty....yes... it's seventy percent". She really didn't really didn't have a clue, though nor did I. In all likelihood, however, the question was slightly unfair, and required a qualified answer, for the percentages almost certainly differ depending upon the country, whether one is Kyoto or Petropavlovsk, Des Moines or Mumbai, Helsinki or Beirut. And it probably is impacted by whether one is in a rural and urban location. Research has also shown that the people in power are primed to feel more entitled to such spoils, hence are both more likely to capitalize on the opportunity and feel less remorse.

And so listening to the BBC the other day, I chanced upon a programme focused upon Nigeria and corruption.  Interviewed, amongst many others, was an "honest" minister who admitted with some apologies that most ministers and officials left government vastly wealthier than before they took their posts, adding that such an outcome was unlikely given their official remuneration.  The interviewer sternly inquired why the people don't revolt demand justice, and vote them out, pointing out that few if any have ever been brought to justice for their misdeeds and avarice. The minister chuckled, before proceeding with his answer. Paraphrasing, he said that no one wants to shut it down because everyone thinks and hopes that one day, they THEY TOO might find in themselves in the position to make a big score, and no one wants to potentially shoot themselves in the foot and shut it down, thereby denying themselves an oppportunity  which they see as their right, no matter the societal consequences and petty injustices such existing corruption perpetuates. Wow!!!! And the interviewer proceeded to ask the very question to the man in the street who with gusto and honesty, frankly and jovially confirmed the thesis.

Interestingly, this aspiration and ability to project themselves into a position of power and privilege is the same reason that lower-income voters in the US problemmatically eschew higher marginal rates  and enforceable estate taxes on the wealthy. I find this parallel attitude interesting if for no other reason than corruption is in general culturally-specific, whilst the attitude towards power/wealth aspiration and therefore the prtoection of its privileges, somewhat more universal.

Hanging Around For Justice

In Japan, generally speaking ,it is 'shame' which keeps people on the straight and narrow. In Douala (Cameroun), it is apparently something else altogether per this article. And THAT was a purse!!  Kleptocrats and cronies in the West take (and China) note....

Farewell Dynegy

So farewell
then Dynegy,
highly leveraged
wholesale supplier
of electricity.

One can endlessly generate
apt puns:
"Ohm my God, DYN has a reVolting balance sheet!"
"Lenders finally switched-off the credit to DYN
"DYN 'Lights out' really hertz equity holders..."
"Creditors pulled the plug on DYN..."
"Investors shocked by short-circuit in DYN"
"Bankruptcy will be transforming for DYN"
etc. etc. etc.

But my catchphrase -
for you (& replicants) shall be:
"The light that shines
twice as bright
burns for half
as long".

For once you

aspired to 

be more like 

ENRON.

Now,

your wish 

has finally

been granted.

(with apologies to Private Eye & EJ Thribb)

Another One Bites The Dust (Updated)

Things, people, ideas believed to have integrity now seemingly compromised...(the updated and expanded version)


The "risk-free" rate
LIBOR as a Benchmark
Public Sector Pensions
HFT as a Beneficial Provider of liquidity
Diversifying properties of Hedge Fund's
Einstein's Theory of Special Relativity 
Celtic Rangers
Macroeconomic Forecasts
John Paulson
FRB Open Market Operations
Standardized Educational Testing
Swiss National Bank
A Relaxing Cruise
WTI as Oil Benchmark 
Olympus Corp.
TEPCO
Payment Protection Insurance
DSK
HM Revenue & Customs
Sony Playstation Network
Google
Privacy
Social Mobility
Actuarial Return Assumptions for Pension Funds
Marmite
Ryan Giggs
Acupuncture
USA Govt AAA
France   AAA
Voicemail
Boob Jobs
Snooker
David Einhorn
Nuclear Power
Deepwater Drilling
Tiger Woods
Professional Cricket
Sumo
Professional Cycling
High-Frequency Trading
Professional Baseball
FIFA
Professional Tennis
Municipal Bond Underwriting
The Catholic Church 
Track & Field Athletics
NCAA Sports
US Congress
UK Parliament
Analyst Research
Credit Ratings
Banks
Newtonian Physics
The Stock Market
The Food Pyramid
Incentive Stock Options
Reinsurance Brokerage 
Lou Dobbs
The Mortgage-Backed Securities Market
Hedge Funds
Social Security
Government Balance Sheets
Tooth Fairy



Errr ummm Professional Wrestling is starting to look good by comparison - at least it makes no pretensions to be anything other than it is. What's left?

Get Shorty 3

Irony amuses me. Maybe not as much as tannic satire, or creatively-apt word-smithing, but as a close of cousin of hypocrisy, it stands apart from mere smile-inducing happenstance or serendipity. Most of my efforts are admittedly sophmoric and rather feeble. And even if they weren't wooden imitations, they certainly couldn't compare to the surreality of people's own flaws and foibles.

For example, Rand and Hayek were, unbeknownst to most of their disciples, rather contented beneficiaries of Medicare. Or that the wholesome-imaged founder/CEO of Wholefoods, John Mackey was caught with his trousers around his ankles, perennially-posting potshots against competitor Wild Oats under a pseudonym on Yahoo! message boards. Or how, according to former IMF Economist Per Kurowski, the very Basel II risk-weightings meant to limit the risk of banks actually turbocharged the feedback loop encouraging banks to gorge themselves on now-risky Euro-Area sovereign debt. Or that Daily Mail journalists were phone-hacked by their fleet-street rivals at Murdoch's NOTW. All amusing in their way.

But what separates the merely humorous from the absolutely riotous is when irony glaringly overlaps with hypocrisy (as highlighted by The StreetWise Professor who knows more than a thing or two about market manipulation).  Such was the case when this lawsuit was filed in December by a West Coast Private Equity Firm alleging conspiracy, fraud and market manipulation by a cabal of larger-than-life characters involving several grifters, felons, a haplesss Forbes blogger, Bulgaria, and centrally and most amusingly ZeroHedge, that popular blog well-known for conjuring and lambasting ummm ... errrr ..... yes, fraud, conspiracy and market manipulation. You couldn't make it up if you'd wanted to. It's a long but illuminating accusatory read, but rewarding for those who persevere. And it serves yet again to highlight the omnipresence of conflicted interests that should cause all readers to carefully consider carefully their sources, and critically examine such sources' underlying motivations.  

The Elmore Leonard version ("Get Shorty III"? or "Getting Shorty Again") loosely-based on the same will no doubt be out soon.

SPORTS LATEST: (In Extra Time) US Federal Rangers 0 - Stanford Rovers 0

Reuters reports in late breaking news that neither side has been able to hit the back of the net during regulation time. The referee ordered players back onto the pitch to continue their battle in extra-time. The Feds most potent weapon failed to convert numerous opportunities after being continually dogged by Stanford defenders. Stanford played most of second half short-handed as player-manager Alan Stanford was taken injured and declared unfit to play as a result of apparent abuse whilst in the locker room. He did, however, manage a high-five to his trainer following the whistle at regulation time. Given what's at stake in the match a draw would be a massive victory for Stanford, and most embarrassing for Rangers, given their numerical and home-pitch advantage.

Does Your Financial Guru or Doomster Resemble A Cult?

Does your financial Guru or Doomster resemble a cult? To satisfy your curiosity, it might be worth taking  simple test that will give you an idea whether what you thought was innocent objective altruistic financial advice and unbiased analysis is actually something more nefarious that wants to control your mind, your trades, and empty your bank account.


1. Does your Guru always make out like he's right?
2. Does you Guru paint a picture that the other [non-disciples] are always wrong?
3. Is there any exit from the Guru's philosophy without following the philosophy?
4. Does the Guru's group use its own "Cult-speak"?
5. Does "group-think" dominate, suppressing dissent and enforcing conformity of thinking?
6. Is Guru's advice irrational at times, contradicting previous or other tenets of Guru advice?
7. Does Guru's philosophy suppress disbelief?
8. Does Guru's philosophy denigrate competing ideas, schools of thought, and other Guru's?
9. Does Guru make personal attacks upon critics?
10. Does Guru believe non-followers need "fixing"?
11. Does Guru insist that his interpretation is the only correct way?
12. Does Guru and his disciples make you feel that by following you are "special"?
13. Is Guru's philosophy an unquestionable dogma, sacred science, or infallible ideology?
14. Does Guru's philosophy appeal to perceived unquestionable authorities ?
15. Does following Guru confer a feeling of "instant community"?
16. Is your Guru inconsistent and does he speak contradictory messages?
17. Does your Guru use personal testimonies of the success of earlier converts to validate advice?
18. Is your Guru self-absorbed?
19. Are there potential dual purposes, hidden agendas, ulterior motives, in Guru's advice?
20. Does your Guru readily admit when he is wrong?
21. Does your Guru undertake deceptive recruiting and/or aggressive promotion?
22. Does your Guru's ideas implant phobias and self-doubt into your psyche?
23. Is Guru and his disciples money grubbing?
24. Are you pressured to change your beliefs and adopt the Guru's beliefs?
25. Does your Guru hold ideology and dogma higher than experience, probability and logic?
26. Does your Guru ascribe unexplained or contrary events to mystical manipulation?
27. Does your Guru demand your faith, trust (and money?)
28. Does your Guru use thought-stopping language and thought-terminating cliches and slogans?
29. Does Guru use affiliate front groups, hidden promoters, or disguised propagandists?
30. Does your Guru imply his belief equals truth?
31. Does your Guru make use of double-binds?
32. Is your Guru held accountable for his performance?
33. Is your Guru a charismatic leader?
34. Does your Guru prevent you from trusting you're own mind?
35. Does your Guru claim to have the panacea for market problems or all market conditions?
36. Does your Guru see he world through permanently tinted lenses?
37. Does your Guru make you think you can't make it without his advice?
38. Does your Guru use unchallengeable sources of information?
39. Does your Guru inflate his experience or make bombastic grandiose claims about performance?
40. Does your Guru employ black and white thinking?


Score Key:
Add up  your "yes" answers and compare to the table below.


1 to 8        Probably Safe and reasonably selfless like Gandhi
9 to 17      Heard of one Werner Erhard & EST? Self-improvement with a dark twist.
18 to 26    Think of L. Ron & Scientology - Weird and NSFW.
27 to 35    Jonestown...plausible fringe idea gone horribly horribly wrong. Watch what you drink...
36 to 40    Put on your trainers & trackies and prepare for a Slim Pickens ride on Hale-Bopp

Contrapreneurship For the Lazy Ex-Financier

Making money the old-old fashioned way (manufacturing or providing a service to fulfill an under-fulfilled need) or even making money the old-fashioned way (honest-to-goodness lying, cheating, defrauding and/or insider-trading) has become either far too difficult in an era of heightened due-diligence, or is fast-becoming too legally precarious for most people (and many professional investment managers). But all is not lost. Some niches remain robust and ripe for the opportunist demagogue. Here's a shortlist of some easy and attractive money-spinners for anyone sufficiently lazy and light on conscience.....

1. Create a Financial Doomsday Website (with on-line retail affiliate)

HyperHyperHyperInflation.com, MyKaczynskiTrade.com, ShortingFinancials.eu UnderTheMattress.Com, BoomersGloomers&Doomers.net, JustFedUp.com, MyBigFatOrlovianHedge.com, all have the right cache to attract sufficient sympathetic eyeballs to get some sort of business rolling. The beauty of this is that you can sell all manner of related merchandise to your loyal following of paranoiacs – things such as Miracle-Fibre Dirt-repelling T-Shirts (with your logo) since in the feared dystopian future there will be no electricity to run your washing machine, and your gold or oil will clearly be too precious to trade for something as frivolous as new clothes. There are many teats to milk with this too. You can also sell off-the-grid technology, water-purification technology, surveillance and defense equipment, seeds and agricultural implements, remote seaside cottages with fishing rights in black-fly infested Labrador, as well as offering time-shares in your Swiss-bomb shelter (complete with bullion storage and assaying services).

2. Create a “Talk-My-Trading-Book” InfomercialAdvertorialSocialMediaWebChannelSite

We've come a long way since Wholefoods CEO John Mackey was busted dissing WildOats on Yahoo a message board.  Propaganda and disinformation are far more professional now, whether it is through commissioning of bespoke reserach reports or, in the macro world, through creating websites(s) with the right advertorial view. Conjure a good name. TheMacroChannel, SmartestTrades.Com, Best Informed Investor, Real Macro Research, AlphaSeeker, Divergent Perspectives, Deep Market Insider, Daily Dose of Macro, Base-Nine Scenarios or anything like that will do fine so long as it sounds professional. Get a front man and a web-designer. Pepper it with cross-links. Then use it a platform for talking your book. Be certain NOT to disclose your conflicts of interest, or if you must do, then bury them somewhere obscure in the smallest fine print possible. Be outrageous and provocative. Do NOT be held back by your lack of education or your degree from an on-line university. Do NOT be held hostage by the truth. Exaggeration and mis-information are your friends providing they are wrapped in plausible garb, and presented by a white-toothed, well-groomed spokespeople with conviction (and a book-deal). Whatever you do, DO NOT give attention to competing theses or points of view unless they are soundbytes by Al Sharpton, or someone from Brussels who looks shifty “and don't speak good English”.

3. Create Yet ANOTHER Online FX Bucket Shop

It is a fact that most retail spec FX traders are losers. I do not mean that in the pejorative by implying they are losers as in worthless human beings, rather just that, statistically, they are overwhelmingly long and wrong or short and caught-out, which when leveraged 100-to-1 is a ticket-to-paradise for whoever sees the flow and holds the account. Indeed, considering the average gross casino take in Vegas or AC is less than 5% across all games, systematically taking the opposite side against your retail FX Customers probably yields an edge considerably larger without the overhead and headaches. All you need is a fiduciary-sounding name containing “FX”, preferable a three-letter meaningless acronym, a colourful GUI, and some adverts featuring formula-one race cars (sorry NASCAR fans – wrong demographic) a few bikini-clad models, and you're off to the races (no pun intended).

4. Create a Stock-Market Trading System & Newsletter With a Cool Sounding Name 

Since most people have more difficulty, and know less about, choosing stocks than they do about choosing a bottle of wine (something that sufficiently mystifies most ordinary people into a state of ordering by colour or choosing the prettiest label), ANYONE who sounds authoritative, boasts of preposterously monstrous returns and statistically Madoff-like Win-Loss ratios will find a ready-made clientele desperately in need of help, to churn-and-burn. In areas of such confusion and innocence, people (especially trusting Midwesterners) NEED to be told what to do, and when to do it. It doesn't matter that the Pinata Method or the Fortune-Cookie Method would do equally-as-well, if not better. Some pointers are in order for the newbie contrapreneurial tipster: (1) Make it momentum-based. It just sounds better. Reversion, contrarian, or counter-trend sounds like an incurable disease or that you're a communist trouble maker; (2) Emphasise Trend-Following. Ameica is a don't rock-the-boat culture from its immigrant roots (despite current political polarisation). People have a natural tendency to want to fit-in and they want to be part of the trend. And, since most people possess sheep-like tendencies, they want to follow, and do not understand the power of contrarian thinking. (3) Choose Small-Cap, Low-Liquidity Near-Dead Stocks . And that's it. Now all you need is a website, purchase some banner ads on a relevant high-traffic site. Oh, and one more thing. If you really want to clean up, make sure you can borrow the stock, and do so BEFORE selling it to yourself from different accounts at different brokers. Then, sell your longs slowly to the pigeons as they come in to buy your recommendations, and buy in your shorts as they sell dispiritedly sell their longs. And to think some suckers actually WORK for a living...

5. Promote and Trade PennyStocks

There are sufficient number of people in the world who sadly equate the raw price of the stock with its implied value, the same way they are drawn to 99-Cent Shops. If cheaper is better when buying flatware, why not stocks? Why would one buy just 1 share of Berkshire Hathaway (symbol=BRK-A $11,910.00) when one can buy 1,000,000 shares of Acme Superconducting Solar & Oil Exploration Research (Symbol=ASSOL) at $0.0119 cents???!? Dearie me. While this may be an intellectual affront to some of you ex-fixed-income guys, it is precisely these qualities that you will value and a cherish in a customer as a newly-minted penny-stock promoter. If you have a guilty conscience. Look at the bright side: you are redistributing the wealth from those that obviously have no ability to do so, to those that have only less of an ability, but will spend it on all manner of wonderful things with beneficial trickle-down effects such as Bentley's, Beach and Ski homes, and for the truly talented promoter, a shiny used Gulfstream...at least until the Feds catch up with you, if they can.

6. Write a Cantankerous Financial Best-Seller

This has been popular a popular way to raise your profile, and there are no shortage of topics or plausibly-culpable villains that will provide colourful and readily-marketable material. The Fed, Bankers, Congressmen, Lobbysists, Economists, Madoff, Detroit, Paulson, ex-Presidents, China, Japan, Insider Traders, Research Analysts, The Rating Agencies, Landlords, The Mafia, Immigrants, Rich People, McDonalds, The Plunge Protection Team, Real Estate Agents, Hedge Funds, Arabs, Jews, Oil Companies, Drugmakers, The Weather, Robert Mugabe, Sunspots, The Kennedy Dynasty, Saddam Hussein, and best and most stealthily of all, my fav, the Canadians, all make for excellent scapegoats for people to read about, rage and avoid introspection. NB: Avoid dissing Ronald Reagan (no matter how culpable you think he is) if you want to move the merchandise. NB2: Avoid blaming the readers themselves. HL Mencken made the mistake of rubbing his readers' noses in it, and he was completely and wholly despised thereafter since no one want to be told “I told you so”. So if you want to write (and sell copies) of another or a sequel, heed this important advice.

7. Author An Aspirational “How-To” Financial Book

There are many verticals in this already crowded but always buoyant market. And it is not very difficult- just look at Suze Ormond – so long as one slaps a suitably optimistic and aspirational title on the jacket. Some suggestions:

“10-Step Plan To Successful Insider Trading ”,

“Using Friends & Family to Build Your Own Expert Network”,

“Investing for the Very Very Long Long Long Run”,

“How to Get Truly Rich Without Luck, Brains or Money”

“Gold Coins and Precious Metals Investing for Dummies”,

“Chant Your Way To Financial Freedom: The Best Mantras and Affirmations To Help You Realize The Rewards You Deserve”,

“Rich Dad, Richer Dad, Richest Dad – Lessons From My Millionaire Father A Trustafarian”

“The How-To Book of Writing Successful How-To Books”,

“Pessimism is for Losers: Riding the Next SuperCycle to Dow 100,000 1,000,000”,

“Winner's Guide To Day-trading: Surfing the Momentum Wave”.

“From Tenement to Bel-Air in Twelve Months: How I Made Money in Real Estate (And YOU Can Too!)”

“Channeling Graham & Dodd – Investment Tips From Beyond The Grave”.

(NB to Publishers – These have all been copyrighted!!)

8. Give “5-Minute Abs” "How-To" Trading Seminars

“Give a man a fish, he'll eat for a day...teach a man to fish and you'll feed him for a lifetime”. Fishing is hard work of course, and ignoring the fallacy of composition with this parable, there appears to be no shortage of people who want to become self-sufficient the 5-Minute Abs Way, by attending your “Trading For Winners” Seminars or Seminar-Lite (sm) that you will give at cheesy airport hotel conference rooms all around the country. You can teach them about “CANSLIM”, golden crosses, gaps, volume surges, can't lose set-ups, Donchian channel break-outs, FX Carry, and perennially shorting the Euro and USD, so they can “earn BIG returns” and “make millions in up and down markets” in order to fulfill your their dreams. And for the true sheep, you can offer them your daily premium alert service where (for a not ungodly sum) you TELL them what to do – at least until they piss away all of their stake.

9. Become a Rage-a-holic Presenter on Fox News –

There are few things more objectionable in the realm of non-violent crime than cynically preying upon the financially-ignorant for parochial gain. But toying with the real emotions of frustration and bewilderment that an increasing percentage of the American population feel in the face of globalization, increasing inequality, and falling real incomes, for financial gain and media market share, must certainly be one of them. But if you have little shame and even less scruples, then becoming a rage-a-holic media personality is a viable option. You'll probably have to start local, on radio, and work the graveyard shift. You'll need to hone an outrageous and angry persona , perfect the art of distorting facts, practice using innuendo, smear and ad-hominems against opponents and mis-characterization of their opposing arguments to discredit them in the minds of your listeners. It is arguably more difficult than selling Pennystocks, but for the truly misanthropic, far more rewarding.

[Almost] Unvarnished Truth

My first radio was a black, sixties, Japanese made transistor brick of no import, given to me by my grandfather when I was no more than six years old. At eight, I received a modern ball-shaped plastic one whose precise, late 60's psychedelic colour now-escapes me, with two dials (for eyes) and a lucite window dial (the nose) for the frequency. Both were 9v powered and limited to AM or FM. At ten, I withdrew my accumulated savings and bought a cool-looking Sears ten band receiver (with all the shortwave spectrum) that called out to me from its display shelf every time I passed enroute to the hardware department with my father. I strung an "X" of wires from the corners of my room in a crude attempt to mimic a di-pole antenna. And with that, the world entered my bedroom through this box, and I was never the same.

Although day-time transmissions can be received on the higher frequencies, it was after dusk that the world seemed to truly come alive. "Lights-out" was never bedtime for me. It was only the beginning of my nightly travels. The BBC World Service was my first and daily fare, but "Tom Meier" of Radio Nederland, was my favorite, mostly for reasons of its strong signal relayed through their station in Bonaire, Netherlands Antilles. Radio Moscow punched through every band, and occupied what seemed to be the entire 41meter frequencies with their 200kw transmitter, holding up their end of the propaganda wars then raging. So strong and prevalent were they, they trampled and bled into more diminutively-powered neighboring stations that had the misfortune of living adjacent to them.  Radio Kiev, sharing facilities and transmitters, was almost indistinguishable in brashness (unless one wishes to learn Ukrainian over the airwaves). Radio Habana Cuba, Peking Radio, Radio Sofia, Vatican Radio, and half-hour english-language broadcasts from every capital in Europe never failed to intrigue and fascinate as I sought to determine their location in my World Atlas.

By eleven, I had reached the limitations of this box, whose low sensitivity and poor filters prevented me from visiting more exotic lands, and caused the unstable signal to drift and waver. I watched the newspaper classifieds daily for used army surplus gear receivers (or transceivers) made by military suppliers Hammarlund or Hallicrafters, bedazzled as I was by their dimensions, knobs and toggles and super-sensitive tuning wheels. I finally found one and my mother hesitantly drove the two hours to exchange my $35 for a grey metal behemoth filled with glowing-orange tubes, weighing at least twenty kilos, that looked as if it belonged on the bridge of a WWII aircraft carrier, or in the control-room of a nuclear power station.

I pestered my mother for a trip to the nearest Radio Shack to buy big spools of copper wire, and insulators. Upon returning home, I shimmied up the trees in the backyard and created a large array - a 75m by 75m di-pole, complete with a ground, and ran it to control box that I built which allowed me  to create single directional poles, as well as attenuate their lengths. Now, inserting it into the antenna receptacle  of the receiver,  I was able to visit almost every nation of the world from my bedroom. I would send them letters attesting to my reception on the east coast of America. In exchange, they would send a post card of verification (a "QSL") - typically with a lovely photo or image from their capital or something iconic from the country, in addition to a schedule, magazines, pennants, and tourist info to entice the potential traveller. And for the ones with ulterior political motives, they sent reams of propaganda (The Ba'ath Party Manifesto, History of Socialism in Albania, The Christian Word Afrikaans Life, and dozens of LPs from Springbok Radio that were intolerably boring but which looked great on my bookshelf). Some were after my soul, which I would gladly rent for a large pretty colour-postcard of Ecaudor's majestic snow-capped Mount Cotopaxi, whereas others were as eager for international contact from their remote studios in Kabul or Irian Jaya, as I was. For at eleven, the many politics were dwarfed by the novelty value of correspondence from around the world. I might go to bed with ABC Brisbane's morning show, dial down to the multitude of local small-power stations in rural Venezuela or Colombia, before drop in to Tashkent and Yerevan. I'd set my alarm to rise at 3am to catch the afternoon news on Radio New Zealand, before drifting back to sleep under the magical spell of Radio Cairo's non-stop show-casing of Umm Kulthum. I started receiving more mail than my parents. All my money was spent on postage, and I fretted when Mr Smiley (real name, no fooling!), our local postman was late for his route.

Within two years, lightning had not yet taken out my installation, and solid state technology was advancing rapidly. The tubes and heat generated by the Hallicrafters (not to mention the space it took up on my desk) were becoming a liability and I upgraded to a best-in-class Japanese-made Yaesu FRG-1-0-something-or-other. I initiated the formation of a regional club of similarly socially-awkward radio geeks, and began publishing a specialty shortwave radio publication, gathering several hundred of members from the area, organizing in-depth, surveys of frequencies, equipment reviews, and tips, as well as occasional get-togethers. This was quite an undertaking since it was all done before word-processing and home computers, requiring final drafts all typed on an IBM Executive (without an eraser-key relying wholly upon good typing and bottles of "Liquid Paper"), before the monthly two dozen pages were arranged, reduced and printed on my father's IBM Copier, to make a neat package. Dues just about covered postage, but it was enjoyable and engaging nonetheless.

As a result of my virtual travels, I matured and rapidly developed intellectually. Political sensitivities arose early as result of the many hours of listening. My bullshit detectors were raised to hypersensitive levels, as I mastered the art of distilling fact from fiction or opinion. The sheer hyperbole of Radio Tirana's or Radio Pyongyang's english service was comical, even to a twelve-year-old. It was possible to listen to both All India Radio and Radio Pakistan's versions of the Indo-Pakistani war, before being mediated by the BBC for the central case, or the Voice of Israel's version of the Yom Kippur war relative to that of Radio Moscow. It became obvious that, by comparison to the BBC World Service, The Voice of America was almost as tainted as Radio Moscow, fighting as they were for minds on the front line of the cold war. Though despite all these defects, the variety of programs from talk radio, classical music, interviews with artists and writers in their respective countries provided enlightenment unavailable in American television or radio media, let alone my middle-school in an anodyne middle-class suburb. World capitals, major cities their industries and life, were memorized as were world leaders, forms of government and regional and historical travails. Geography and history became my favorite subjects, though my writing skills were honed as well.

But it was the BBC (and to a lesser extent CBC and CBC Northern Service) which provided the daily stability - the continuous unexaggerated voice to navigate the extremes of bullshit, propaganda, and outright lies. They were the gold standard, and I became addicted, and remain so to this day. As I went to university and travelled abroad, I brought a SONY ICF-5100 and now, still possess an even a smaller version, that has allowed me have the BEEB with me, wherever and whenever, which was particularly important when travelling back to the USA where intelligent international news was and remains well-nigh impossible to find without a broadband connection.

Of course the internet has changed everything. Short-waves while still important to outlying areas and less-developed nations, are almost wholly irrelevant where connectivity is ubiquitous and live stream from all over the world are the norm. Yet, the BBC, more than any other news, information, or media organization has continued to make itself relevant in walking the line of [almost] unvarnished truth in an increasingly tainted world of slant and disinformation, airing diverse views and opinions, producing unfathomable quantities of fascinating content that would otherwise be nearly-impossible hear, as well as developing methods of audience participation on many contentious issues. Some may take exception and find fault in the BBC World Service and they are not perfect, but, to me, they are valued beyond measure. And to this end, I wish them and all associated, a very very happy happy 80th anniversary. You impacted my life, and changed MY world for the better, and I will always be extremely grateful.

Doubting Your Doubter or There Is Always A Bull Market Somewhere

One of the first "Old Saws" I learned in my market apprenticeship several decades ago was the adage: "There is always a bull market somewhere". Despite plummeting prices of Greek and Portuguese sovereign debt, the flat-lined bid-side for McMansions in Vegas, Phoenix and non-prime Fla, or real wages for unskilled labour in much of America, the advent of internet coupled with good web-design, and a Silly-Putty-like stretching of the truth, has enabled a definitive bull market in the power of self-invention and consequential rise of the self-proclaimed-though-untrained-expert. 


Nowhere is this more apparent than the sphere of macroeconomics and financial advice, where by sheer force of will, clever obfuscation and exaggeration, or the adoption of an impressive-sounding title, one can instantly step-up onto their virtual soapbox and turn plausible-sounding kernels of truth into dangerous demagoguery. Charlatans abound, creating the financial equivalent of doomsday cults built upon membrane-thin educations, and even finer and more dubious layers of "experience", though never for wont of hyperbole or adjectives.  Such suspicion and derision directed towards the aspirational self-invented commentator is NOT meant to idolize bona-fide, (i.e. more educated and certificated) economists. They too have been known to get it wrong, missing the obvious, as well as being guilty of putting conclusions before objective observation and research. Rather, it is meant to serve as a warning for those relying upon authoritative but tainted 7-Minute Ab equivalent of macro-like advice.  


So, you might ask, what's wrong with the power of self-invention and positive thinking (or in case of the doomsday web-ring, negative thinking)? Can you not be what you aspire to be by sheer power of a desire to be so?  Despite the hijacking of Nichiren-Shoshu, I think not. I do not see how one can place value (other than psychic confirmation of prior bias) on "research" or observations of those whose point of departure is an already-formed conclusion, and who then work backwards, witnessing each and every event through a unitary (often distorted) lens. Oh, they will  inevitably be "right" about some things. And their distillation too, will on occasion, hit close to the target, just as the broken clock will be right once in the day. But how can a perma-view maintaining a narrow static unitary macroeconomic view of the world have value in respect to markets whose relative values fluctuate largely and significantly? 


Bear Stearns lost a 2002 lawsuit involving former Fed Gov and their FX strategist Wayne Angell over advice to a rich and silly Canadian FX Spec named Count Henryk Kwiatowski. Bear's Angell gave advice to the Count who subsequently lost hundreds of millions punting FX. It's a funny docket and should be read in its entirety by everyone with a sense of humour. The Count was obviously sore after taking such a beating while following the advice of Mr Angell and wanted his money back. Bear tried to argue (unsuccessfully) that they, and Angell, were not responsible since he was in fact "an entertainer", and therefore whose advice shouldn't be relied upon. I'd long thought this an amusing, and somewhat accurate line of defense. However, they were found culpable since the court believed there are certain fiduciary responsibilities incumbent upon firms to their clients. As I said, I think their defense WAS apt, up to a point. Angell, despite his FRB pedigree WAS an entertainer. And I put to you, so too are the great majority of newly-minted self-invented  macro-strategist-commentators and members of the doomster-ring. They do NOT have your interests in mind. They have NO fiduciary responsibility, toward you or anyone. And though credentials guarantee neither accuracy, nor impartiality, such charlatans frequently offer little to none of consequence. They are cynically, like Glenn Beck, simple entertainers, parochially-self-interested, scraping a living by media appearances, online advertising, premium newsletters, referral payments for click-throughs, and in some instances, talking their, and their friends books and positions. And if one accuses this pot of calling the kettle black, let it be said here and now that this blog, too, is entertainment, albeit less-tainted and conflicted due to its entirely non-commercial nature. I also, hope it sets itself apart by occasionally eliciting a few chuckles, rather than unending tears. 


So be wary. And in the event you have doubts about doubting your favourite doubter, just consider that your "trusted source of economic analysis" for interpreting the latest US unemployment numbers, Spanish trade figures, or Euro-area CDS-spreads may have just been interviewed on Coast-to-Coast AM, sandwiched in between George Noori's talk with "Crypto-Hunter John Rhodes's Tales of Underground Reptilian Bases"; Greg Braden's exposition about the end of the Mayan 5,125 year cycle which is now meant to be impacting us all; Nostradamus' forecast of the Obama Presidency; and a report on ET Intrusions into America's most secret nuclear weapons sites. Next time, don't forget to have the popcorn ready before opening your RSS reader...  

AIJ - I [Strangely] Never Knew Ye

When Bernie Came Out of The Closet, I was not the least bit surprised he was doing something illegal. But as I stated in what was the most cross-posted and commented account I've ever related through this blog, I was NOT expecting a full-frontal Ponzi. Cheating? Yes. Stealing from other market participants? Maybe. But complete total and utter fabrication over nearly twenty-years and forty-billion USDs?  Surely no one would have the chutzpah...would they?  My sensibilities were right, and these were lauded, but I was way off the actual mark and undeserving of anything other than acknowledgement of possessing some common sense.

I'd never heard of AIJ...until the day-before-yesterday. And one might well say "So What?!!?". They might even say it derisively (particularly if they've been dissed in these spaces). But after nearly twenty years in the Japanese equity markets, participating reasonably actively, and with reasonable success, I would with modesty say, that this would be unusual. Not because I myself am well known. I've paraded on no catwalks or investment beauty contests; eschewed analysts and research-salesman and  ordinary  brokers; retained as low-a-profile as humanly possible due the value I place upon privacy coupled with a curmudgeonly streak. But rather it would be unusual because I am OCD about the names that have graced my portfolio on both the long and short side, and I have always been fastidiously keen to know who I am trading both with, and against. And during these twenty years, I've fought (and won) guerilla battles against virtually everyone who was anyone in this market. And during this time I've never ever ever ever knowingly fought against AIJ, nor seen them in battle, not in the sky, or on the ground, or in the trenches.

This is unusual because the Japanese equity market is NOT a big market. It may have (or had in the past) bouts of large size capitalization, but this is not the same thing as being a big market. The majority of floats don't trade. Most brokerage houses from two decades ago do not exist anymore. Perhaps 9 of 10 stockbrokers over this period have NOT maintained the same vocation. You can get lost in the city, but out in the countryside, or in a smaller town, everyone knows everything metaphorically. Tracks are visible in one form or another. And the thing about being OCD about something like this is that one remembers everyone, and it would be most unusual for someone that large, to NEVER have left tracks, to never have been seen, directly or indirectly. And to be sizeable, and have unusual returns, returns that stick out, one has to be doing something different. And this too, would likely have been seen. And lauded. And, to raise more assets, marketed. Perhaps their alleged forte was asset allocation. Perhaps they told their clients they used futures and derivatives. Or, perhaps they, like Bernie, just fabricated it.

All I know, is I never "saw" them, ever. And I think this says something. Anyone else with similar OCD ever have a sighting of them in the markets?

Now Speechless?

Despite parts of New Jersey objectively resembling the armpit of the world, others, defying popular belief, are gorgeous, charming and even bucolic. I speak with some authority on this having grown up and studied in this often-maligned state. My (late) mother, who was a veteran employee of a most liberal mind, working within the State's most liberal bureau, would undoubtedly have HATED Chris Christie almost as much as she uncharacteristically spewed venom at the other Christie - Christie Todd Whitman who trampled upon and  slimmed her bureau before ironically taking over the same at the national level for Bush-the-Lesser. I admired her (and still do) and we shared many sentiments, though she was not fond of my political pragmatism that often resulted in me traversing party lines and hacking away at some of her most cherished ideals. While memories have a notorious habit of softening their edgier bits over time, such conflicts, unlike the poisonous political debate of the present era, never resulted in hatred, obstructed conversation, or prevented the pouring of another  after-dinner glass of wine.

Despite my mothers opinion, I liked Christie Todd-Whitman both as Governor of NJ (irrespective of  her unpopular decisions including those that infuriated my mother) for her balanced leadership and the moral position she took against the Bush admin (and Dick Cheney in particular) by voting with her feet rather than towing the lame-ass GOP party line that "The Best Public Interest is NO Public Interest...". And as a pragmatist, I cannot help but admire hers, especially in respect of trying to bridge the divide between wing-nuts of both parties.

Yet, there are times when shibboleths NEED to be outed and contrary opinions voiced boldly...when bureaucratic processes take on a life of their own in stark contrast to prevailing realities, and perhaps even their original mission, or that foreseen by original lawmakers and beneficiaries alike. At such junctures, larger-than-life provocateurs speaking the increasingly obvious (but too-often unsaid) - however painful - is not only entertaining to behold, but also both useful and necessary, for The People (even if they don't know it....yet). I have, to date, viewed Chris Christie in this way, and will admit to admiring his willingness to jump in the pool and make a large splash by saying things that need to be said, and doing things that more diminutive men (or women) just cannot do. He is unashamedly unashamed of his [frequent] insensitivity, political incorrectness, his gaffes, and for that matter his girth, all which is as it should be (except speaking with mal-intent about his waistline). It has been enojyable and refreshing.

But such men come with baggage. Speaking your mind, and shooting from one's proverbial hip, runs risks - for those far-from-perfect, for better or for worse. Sometimes such honest and unscripted quips are more apt than anything Safire or Frum could conjure working late into the night with a well-worn thesaurus. But others - those that go awry - perchance give insight into the real person. At one extreme, recall Jimmy Carter's infamous Playboy interview. At the other end are Governor Christie's, and this should be concerning to all concerned - even those who otherwise *like* him, such as myself. And what such a peek-under-the-hood reveals is the presence of some of the least-desirable traits in a leader: an ignorant intolerant bully.

Whether you-the-reader or Mr Christie agrees or disagrees with WB regarding the present level of marginal tax rates, or whether higher rates should be *optional*, is wholly irrelevant. As a citizen, WB has every to right the the soapbox. In fact, in issues of wealth that effect the uber-rich and business, he perhaps deserves even a larger pulpit with a more ornate lecturn. The political process with all its warts is precisely about airing contrary views, and letting them be kicked around, and judged by the polity. Some have direct access by position or money. Some have more direct access than they should. Others have indirect access, but all are entitled, and should be encouraged to express their views without being told to "Shut-Up" by a large, loud-mouthed, bully, just because its contrary to his (or his party's) position. By extension, if you, as a citizen in a democracy think the public interest would be improved by a road expansion, rather than bring it to the attention of other citizens, in "Mr Christie's world you should just "Shut The Fuck Up And Build It Yourself". If believe that an existing law insufficiently and unsustainably protects fish-stocks, I suppose in Mr Christie's world you should just "Shut The Fuck Up and east Spam" or alternatively going down the action-path, Mr Christie might encourage you to take matters in your own hands and become a Vigilante-Of-The-Sea.  If capital-expenditure on sewage treatment is insufficient to purify drinking water or prevent noxious gases from permeating the neighborhood, by extension, I presume Mr Christie would suggest you "Shut The Fuck Up, buy bottled water and shut your friggin' windows". Politics as it should be?, one might ask?

Perhaps one cannot know what Mr Christie really meant. Perhaps he was just misunderstood. But I have the suspicion that this super-sized New Jersey Djinn, now out of the bottle, is displaying his true persona. And it is NOT a pretty sight...unless of course you're a brown-shirt.

The Markets 2012 H2 European Pandemonium Explained

Like carbon-dating, one's film references define one's epoch and frames of reference. With the exception of The Life of Brian, and Les Visiteurs my children look at me quizzically should I perchance mention Animal House, Stripes, or Caddyshack versus their Hangover, American Pie, or Harold & Kumar.

So my description of the markets' H2 European pandemonium (please watch!!) as seen through the eyes of Harold Ramis was completely lost upon them...

It's [Still] a Shame There's No More Shame

Ask a German about his skiing ability, he might unassumingly suggest that he "can get down the mountain alight". Ask an American, and he is likely say he is an expert, and boast about the ease of which he conquers near-vertically-faced triple-black diamonds with names like "Widow-Maker", "Knee Shredder"  or "Sonny Bono's Lament"  Ask a Japanese Fund manager who has had a good year, and he will self-effacingly attribute it to a conspiracy of luck.  Ask an American, and he will be unashamedly attribute it to his superior intelligence and skill. Ask the same Japanese Fund manager why he did poorly, and he will culpably volunteer that he didn't work hard enough, whereas  his American counterpart - someone like Fairholme's Bruce Berkowitz - will (or did) hold to his Martingale-like near-death that it was the market that was wrong - NOT him.  

Confidence is a wonderful thing (at times). It is the stuff that provided the inspiration to deposit men on the moon, cure previously incurable diseases, allow Shackleton to set out for South Georgia Island in a duct-taped dinghy, and help our forefathers make Hitler and his cohorts Shut The Fuck Up, permanently.  But when it goes awry, it also leads to such things as the invasion of Iraq, New Coke, The Rainbow Warrior debacle, Ishtar,  a $50bn++ markcap for JDS Uniphase, and an errant belief that one might be above the law.  

Confidence from within often begets confidence from others. This is frequently a trait of strong leadership, inspiring others to overcome obstacles hitherto insurmountable. But this confidence from others in oneself, should not be taken for granted, for it is fickle and easily (and quickly) squandered. Indeed it takes little more than the discovery of but a few lies, being caught with one's trousers around one's ankles cigar-in-hand, or failure to admit that you're culpable when caught on tape to alter one's reliability factor in the eyes of the public from the green zone of "Abraham Lincoln" to the red zone of "Radio Pyongyang". Such miscalculations can spell the near instant death of credibility, or worse. How one behaves in the face of adversity is often, as Sidney Poitier put it, the measure of a man.   

So it curious to see David Einhorn's reactions to his own misfortune. In somewhat stereotypically-American fashion, he appears to have launched himself down that triple-black diamond run called "Denial", clinging to the utmost of truth-stretching and verbal contortions to avoid the rocks of culpability, to such an extent that observers are left wondering whether he will make it down the proverbial piste at all. It is precisely this attitude, this lack of humility, or sense of shame that one's truth may be far from more widely accepted perceptions of truth, that has led to extreme polarization of American politics: a result of digging in one's heels into an often-indefensible position by lack of willingness to concede that truth and reality lay somewhere in between the parochially beneficial ideal, and that sought by the opposition - or in Mr Einhorn's case, the law. The result: a caricature of self-righteousness and a hollowing out of trust which for a public political figure, or, in this case, a large investor can result in a less-than-intentional, though no less self-inflicted death. 

Mea culpa.

Battle of the Alamo - The Sequel

Perhaps Kyle Bass is right. Perhaps we are all buggered and everything is FUBAR. Perhaps what we really need is not VIX protection, CDS and variance swaps, but guns and ammo and a defensible place to hide with arable land and reliable water. Oh and some luck, too. And perhaps one NEEDS Gold, preferably lots of it, either to barter with, or to rather recursively pay one's private army to protect one's errrr ummm Gold, oh and presumably one's spouse too. Mr Bass, being in Texas, seems in the right place to achieve all these things, though one could go further and imagine all of the great unwashed engaging Mr Bass's private army in what might be thought of as The Alamo, Part II. And while we can sit over another beer and conjure all manner of future frightening tail probabilities, we needn't try too hard as we can just touch the popcorn button on the microwave, press ">PLAY>" on the DVD remote, and watch Mad Max 1,2, or 3 or the The Postman (yuck), or any manner of Disturbing Dystopian Visions (DDV) about what the future might resemble.    

At the moment, however, I have far less conviction than Mr Bass. Perhaps my bank will spontaneously combust, and my neighbors will loot my humble abode and my wine cellar, (or worse), and I will have been rather unprepared. What I DO know at present are two things: one is that my in-box is increasingly filled with Gold related rubbish and scams replacing of all variety, replacing the Nigerian 501 scams of yesterday, which is in itself a telltale of errrrr welll something. And second, that while everyone is paying thru the nose for left-tail protection, many investors are vastly underweight as are risk-parity portfolios, and as vols drop, they become MORE underweight. So if I were to offer any advice, it would be thus: wait until those guns, ammo and jerry-cans go on-sale before backing up the truck.

Liar Liar Pants on Fire

Oh please.  Surely, David Einhorn cannot have actually used THAT as his defense. And the FSA, like The Revenue in the Vodafone and Goldman Tax cases, and who remains in apparent awe of corporate celebrity, has seemingly bought at least some of it, judging by their willingness to accept his representations at face value.  By comparison with former GLG Chief Spec Philippe Jabre's torpedoing of Sumitomo Bank shares with thermonuclear ordnance in front of their imminent CB issue while still on the bat-phone to GS's "Philby", Einhorn's corporal caning by the FSA was a step in the right direction.  However, despite Mr Einhorn's attempt to nuance his rather implausible defense, I really see little difference in spirit between IMCL's Waksman, Martha Stewart, Raj-Raj or other examples of law-breaking financial malfeasance.

The thing is, Mr Einhorn paints himself to be, well, errrr ummm like David, representing Truth, Honesty, Goodwill Towards Men (OK maybe not the latter) and the Light of Virtue versus the evil dishonest greedy Goliath-like titans of Allied, MBIA and the gorgon's of Lehman. So today's ruling by the FSA, even if not what it should have been since few of his peers or practitioners would doubt that he knows very well what constitutes material non-public information, knew this approach was material non-public information, and yet brazenly acted upon it for parochial advantage, thereby representing yet one more "another one bites the dust" moment for what previously passed for integrity. He has been found out to be a cheat, playing his preferred game with marked cards.

And so it is a sad day for anti-cheats.  And I too am a bit forlorn because Mr Einhorn has been right  about a number of the well-researched cases he's made, and seemed somehow different to others-who-shall-not-be-named. ***Sigh*** But now, investors, stringers, financial journalists and even his acolytes, will need to scrutinize him, and his public proclamations  carefully - far more carefully than before. Because cheats are often liars, and the line between a cheat and a liar, and a sociopath who will talk his own book and harvest from his neighbors' Victory Gardens for parochial advantage, irrespective of collateral damage, is very thin indeed.

Kudos for his lawyers (they must have earned their fees)...shame (again) on the FSA.

Final Result: ZH Mob-417, PK-4

I will sheepishly admit that I occasionally read the odd ZeroHedge post. Sometimes, it is because they provide some useful information (such as a reprint of a Richar Koo research article). More often it is out of some morbid fascination with demagoguery and how it palpably impacts people's belief structures. 

Today, the post  entitled United Welfare States of America 2011 - Nearly Half Population Received Some Form of Government Benefit caught my attention. Not because I thought it overstated the case, but because I reckon it UNDERSTATED the case. Indeed, the number is closer to 100%. The post was highlighting entitlement recipients, and their rise as a apercet of the population and a percent of GDP. Indeed, since the beginning of the crisis from an average of 12% of GDP for the preceding three decades to a conspiratorial 15% of GDP post crisis.   

The numbers reveal a reasonably counter-cyclical pattern of rising during recessions and falling (even if slightly) during recoveries.  

I would argue for fairness, it should be 100%, as they have conveniently forgotten or ignored those receiving other benefits or subsidies. For if taxpayers are incensed, they should be as outraged, not by the extra five percent thrown onto the benefit rolls during hard times, but by the other 50% of the people whose non-welfare benefits are received 100% of the time, such as those using mortgage interest deductions, and all manner of tax-reducing loop-holes, grants, and other deduction to reduce their level of tax, and therefore keep the federal income statement deep in the red. Indeed, there is likley no one in the country who did not receive some benefit - in kind, or service - be it a road, defense of the nation, hospital or educational grant, or beneficiary of technological or medical research financed in part or whole by the government.  But this is subject matter for another post.  

More interestingly, it appeared that Dr Paul Krugman made a surprise appearance in the comments section, pointing out, that, such countercyclical sensitivity was not only to be be expected (as in the past) but needed, and debating with other commenters. It could have been a ruse or hoax, but it actually appeared veritable, with the correct language and timbre of Dr PK himself (not that this would be too difficult to fake).  I would like to say that Dr Paul Krugman emerged unscathed today from this Zero-Hedge-sponsored rumble with the likes of YogiBear, AlienIQ, JPMHater001, SHEEPFUKKER, Satan2Liberals, Blindman, and HarBanger and a horde of apparently brown-shirted zealots, but it was akin to what one might imagine of Dr Martin Luther King trying to chat to the hooded-chapter of a KKK at a midnight cross-burning.  And he did not fare well. While the PK was calm and measured, the crowd, in not unexpected ZH fashion tarred and feathered him, pissed downwind upon from behind the bushes, before the lynch-mob hoisted him up by a rope into the tree. 

The final tally was a disappointment for those interested in informed debate. I felt sorry for Dr Krugman - if it WAS PK - sorry that he felt it necessary to try and debate folks that have no interest in discussion, little grasp of the facts, and that his calm discourse only inflamed seeming hatred and rage already burning our of control. I wonder aloud with some dread whether THIS is the precursor of what awaits America, the mob of Atwood & Roth's dread.