25 July 2012

Charles Biderman On the Markets and the Treasury Ponzi Scheme - The Speculative Life



I am not so sure the Bernanke put is dead. But this is certainly well worth watching.

I lost well over a million dollars, marked to market, underestimating Bernanke and Greenspan, and the government's willingness to whore out the public and the integrity of the markets in the most obvious of fashions once before, in the American housing bubble and fraudulent credit frenzy, whilst all the regulators, economists, and pundits stood aside and did or said nothing. Their hypocrisy knew no bounds.

I am not likely to do that again. That sort of experience leaves an impression. And I learned a great deal from it.

Traders will always tell you about their wins, but rarely about the losses. They think the wins are due to their superior intellect, and the losses are just bad luck. And it keeps them coming back for more, until most of them bust their banks.

I don't think you can really be called a seasoned trader until you have at made and lost a million and won it back again. Or more, if you are playing with Other People's Money. Most just lose.

But don't feel badly for me. I am well ahead of the game, in large part on the other ends of the same deals, both going in and coming out, and that I think is by the grace of God and not by my own devices.

I have made most of my money by taking a sound position and then doing nothing with it, not tinkering with it, or frittering it away in fees and small losses that add up over time. The mispricing of risk creates an enormous amount of transactional friction that is almost impossible to beat.

Investment is one thing, and speculation is another. One rises in wisdom by falling in folly.

The speculative life has a lot of volatility, too much my tastes now, although I have been a 'gamer' most of my life, from horsetracks to computer screens to casino tables. It is not for the money, it is for the effects of a game on a restless mind.

Although like the old dog that I am, I still rise to the hunt, just more slowly and quietly. But with much less interest, now that the markets are so obviously rigged. The Banks and wiseguys are destroying them with their excessive greed and cheating, as they have done so many times before.

When I first started trading many years ago the market was a dead fish, and no average person wanted anything to do with it. We will go back there again, if we are not there already.

As I told my son, who is going on so well at university through his diligent work and bright intellect, the speculative life is not a worthwhile use of one's time and mind, especially if I compare to to the creating of new products and technologies. Or even being a plumber, if one is a good one. They have my sincere admiration; water is unforgiving of error. Whenever I do it, it seems as though one thing always leads to another.

As Thomas More said to Sir Richard Rich, 'Better to be a teacher.' Speculators produce nothing, but a teacher can bring light to the darker corners of life.



24 July 2012

Chris Hedges: The Careerists and the Banality of Evil - The Sickness Unto Death


“We run heedlessly into the abyss after putting something in front of us to stop us from seeing it.”

Blaise Pascal, Pensées

The consciousless functionary guided by expediency is the very image of the regulatory and banking bureaucrat of today, from Tim Geithner to Gary Gensler to Ben Bernanke, and further, almost every member of the governments of the Western World. Expedient amorality is de rigeur these days among the entitled class of power brokers who serve the system, which in their minds is themselves, as a privileged, ruling class.

And it is that very dryness of human empathy, the lack of vigor in moral conviction, the willingness to accept great crimes and injustices as the unfortunate but "necessary outcomes" required by The System, that makes all the difference between a Franklin D. Roosevelt and a Barack H. Obama, between a living human being and a whited sepulchre full of dead men's bones.

After a time it becomes so easy to day, 'I am sorry madam, but the system requires that your child must die.' And so the ceremony of innocence is drowned.

This is not capitalism.  Capitalism does not demand that we destroy human lives for the sake of maximizing profits using any and all means which that end justifies.  The Market is not an end to itself. The Market is not God.  This is beyond capitalism.  This is tyranny.  It is a pernicious form of selfishness and self-indulgence, a privileged arrogance.

To paraphrase John Kenneth Galbraith, 'The modern economist is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior justification for selfishness.'

And this is not a choice between poverty for the sake of truth and a very comfortable living, but the overwhelming need for a fabulous, ostentatious wealth and power that seems to have become the god of  this generation.   And it is a sickness, a sickness unto death.

TruthDig
The Careerists
By Chris Hedges
Jul 23, 2012

The greatest crimes of human history are made possible by the most colorless human beings. They are the careerists. The bureaucrats. The cynics. They do the little chores that make vast, complicated systems of exploitation and death a reality. They collect and read the personal data gathered on tens of millions of us by the security and surveillance state. They keep the accounts of ExxonMobil, BP and Goldman Sachs. They build or pilot aerial drones. They work in corporate advertising and public relations. They issue the forms. They process the papers. They deny food stamps to some and unemployment benefits or medical coverage to others. They enforce the laws and the regulations. And they do not ask questions.

Good. Evil. These words do not mean anything to them. They are beyond morality. They are there to make corporate systems function. If insurance companies abandon tens of millions of sick to suffer and die, so be it. If banks and sheriff departments toss families out of their homes, so be it. If financial firms rob citizens of their savings, so be it. If the government shuts down schools and libraries, so be it. If the military murders children in Pakistan or Afghanistan, so be it. If commodity speculators drive up the cost of rice and corn and wheat so that they are unaffordable for hundreds of millions of poor across the planet, so be it. If Congress and the courts strip citizens of basic civil liberties, so be it. If the fossil fuel industry turns the earth into a broiler of greenhouse gases that doom us, so be it. They serve the system. The god of profit and exploitation. The most dangerous force in the industrialized world does not come from those who wield radical creeds, whether Islamic radicalism or Christian fundamentalism, but from legions of faceless bureaucrats who claw their way up layered corporate and governmental machines. They serve any system that meets their pathetic quota of needs.

These systems managers believe nothing. They have no loyalty. They are rootless. They do not think beyond their tiny, insignificant roles. They are blind and deaf. They are, at least regarding the great ideas and patterns of human civilization and history, utterly illiterate. And we churn them out of universities. Lawyers. Technocrats. Business majors. Financial managers. IT specialists. Consultants. Petroleum engineers. “Positive psychologists.” Communications majors. Cadets. Sales representatives. Computer programmers. Men and women who know no history, know no ideas. They live and think in an intellectual vacuum, a world of stultifying minutia. They are T.S. Eliot’s “the hollow men,” “the stuffed men.” “Shape without form, shade without colour,” the poet wrote. “Paralysed force, gesture without motion.”

It was the careerists who made possible the genocides, from the extermination of Native Americans to the Turkish slaughter of the Armenians to the Nazi Holocaust to Stalin’s liquidations. They were the ones who kept the trains running. They filled out the forms and presided over the property confiscations. They rationed the food while children starved. They manufactured the guns. They ran the prisons. They enforced travel bans, confiscated passports, seized bank accounts and carried out segregation. They enforced the law. They did their jobs.

Political and military careerists, backed by war profiteers, have led us into useless wars, including World War I, Vietnam, Iraq and Afghanistan. And millions followed them. Duty. Honor. Country. Carnivals of death. They sacrifice us all. In the futile battles of Verdun and the Somme in World War I, 1.8 million on both sides were killed, wounded or never found. In July of 1917 British Field Marshal Douglas Haig, despite the seas of dead, doomed even more in the mud of Passchendaele. By November, when it was clear his promised breakthrough at Passchendaele had failed, he jettisoned the initial goal—as we did in Iraq when it turned out there were no weapons of mass destruction and in Afghanistan when al-Qaida left the country—and opted for a simple war of attrition. Haig “won” if more Germans than allied troops died. Death as score card. Passchendaele took 600,000 more lives on both sides of the line before it ended. It is not a new story. Generals are almost always buffoons. Soldiers followed John the Blind, who had lost his eyesight a decade earlier, to resounding defeat at the Battle of Crécy in 1337 during the Hundred Years War. We discover that leaders are mediocrities only when it is too late.

David Lloyd George, who was the British prime minister during the Passchendaele campaign, wrote in his memoirs: “[Before the battle of Passchendaele] the Tanks Corps Staff prepared maps to show how a bombardment which obliterated the drainage would inevitably lead to a series of pools, and they located the exact spots where the waters would gather. The only reply was a peremptory order that they were to ‘Send no more of these ridiculous maps.’ Maps must conform to plans and not plans to maps. Facts that interfered with plans were impertinencies.”

Here you have the explanation of why our ruling elites do nothing about climate change, refuse to respond rationally to economic meltdown and are incapable of coping with the collapse of globalization and empire. These are circumstances that interfere with the very viability and sustainability of the system. And bureaucrats know only how to serve the system. They know only the managerial skills they ingested at West Point or Harvard Business School. They cannot think on their own. They cannot challenge assumptions or structures. They cannot intellectually or emotionally recognize that the system might implode. And so they do what Napoleon warned was the worst mistake a general could make—paint an imaginary picture of a situation and accept it as real. But we blithely ignore reality along with them. The mania for a happy ending blinds us. We do not want to believe what we see. It is too depressing. So we all retreat into collective self-delusion.

In Claude Lanzmann’s monumental documentary film “Shoah,” on the Holocaust, he interviews Filip Müller, a Czech Jew who survived the liquidations in Auschwitz as a member of the “special detail.” Müller relates this story:
“One day in 1943 when I was already in Crematorium 5, a train from Bialystok arrived. A prisoner on the ‘special detail’ saw a woman in the ‘undressing room’ who was the wife of a friend of his. He came right out and told her: ‘You are going to be exterminated. In three hours you’ll be ashes.’ The woman believed him because she knew him. She ran all over and warned to the other women. ‘We’re going to be killed. We’re going to be gassed.’ Mothers carrying their children on their shoulders didn’t want to hear that. They decided the woman was crazy. They chased her away. So she went to the men. To no avail. Not that they didn’t believe her. They’d heard rumors in the Bialystok ghetto, or in Grodno, and elsewhere. But who wanted to hear that? When she saw that no one would listen, she scratched her whole face. Out of despair. In shock. And she started to scream..."

Read the rest here.

Choose your loyalty wisely, because you may be spending a very long time with what you serve. And even if it is not a conscious choice of the moment, what you do, or do not, determines to whom you belong.
"Know you not, that to whom you yield yourselves as servants to obey, his servants you are; whether of a corruption unto death, or of a righteousness unto life?"
It is not surprising that people sell themselves so badly, but rather that they also do it so cheaply.

SP 500 and NDX Futures Daily Charts - APPL and Netflix


Stocks were lower much of the day, with a brief short covering pop into the close.

AAPL missed its numbers, both earnings and revenues in a big way, and the stock is down about six percent after the bell. They also guided lower on lackluster iPhone sales. There is some speculation that consumers are waiting for the new version.

Netflix is taking the gas pipe after hours, as it came in line on the numbers, but streaming subscribers was light. Stock is down ten percent.

Norfolk Southern nailed earnings but missed revenues.

UPS gave a forecast today that boded ill for the US GDP for the rest of the year, showing numbers in the one percent growth range.


Gold Daily and Silver Weekly Commentary



Gold and silver are still obviously coiling into a compression end formation.