Wednesday, 21 April 2010

Time To Raise The Scornful Finger And The Hooting Voice

Still Doing God's Work

When, well prior to the onset of the financial crisis, we first started moaning on about the trading strategies and market capture ventures orchestrated by Goldman Sachs, there were few takers.

Fair dinkum.

Robert Khuzame, the SEC Enforcement Director: "The product was new and complex but the deceptions and conflicts are old and simple. Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in investment portfolios."

And then there was the short-selling of a sovereign state.
Iceland and Greece.

John Gapper in the Financial Times: "Studying the claims made by Goldman Sachs is like Kremlinology in the days of the Soviet Union."

But this wasn't simply market abuse at the expense of other market participants, it was regulatory capture.
Christian Scientist Hank "The Hammer" Paulson took the strategic aims of the investment bank into the White House and, along with Ben Bernanke, directed the crisis with the puppetry of power.

This is an example of the State and Big Business carving up the booty to all of our detriments.

As John Authers stated, also in the FT, Goldman Sachs would help themselves in the future if their results "were not so conspicuously good."

That should solve it.
Pretend that you are not super-systemic market abusers for a couple of days per quarter and we'll allow you to go on regressively slaughtering the planet.

Meanwhile... How Is The Recovery Going?

The Economist: "Tim Lee of pi Economics points out that the profit surge has not been accompanied, as it usually is, by a rise in business investment."
Lee: "It is as if the government has simply borrowed a huge sum of money and handed it over to the companies."

The release yesterday of the IMF Global Financial Stability Report includes the following holistic, again courtesy of The Economist: "Concerns about sovereign risks could also undermine stability gains and take the credit crisis into a new phase, as nations reach the limit of public sector support for the financial system and the real economy [our italics]."

Firstly and obviously, the support was State rather than public - this is only to be expected in a state-based economic system [Soviet Union = China = HyperImperium].
Secondly, what is this "real" economy of which you speak?

As the FT tongue-in-cheeked: "Irrational equanimity - investor sentiment back in the comfort zone."

Nirad Chaudhuri: "The American industrialist is the old European conquistador in a new incarnation."

Senator Ted Kaufman of Delaware (as Danny Schechter says, the state where most US corporations are registered due to the secrecy laws) believes that the whole crisis rests on the foundations of a crime.

Graydon Carter: "[This] may well turn out to be the greatest non-violent [our's again] crime against humanity in history... Never before have so few done so much to so many."

As is usually the case with the Friedmanian template, violence doesn't include that which hits the most invisibly disenfranchised...

Bubbling Bubbling Bubbling...

A bull market in any loci is a once in a forty year event.
There have been 34 bubbles since records began.
Every single one has burst and returned to trend apart from two - the current Australian and British housing markets.

Quoting Jeremy Grantham of GMO, the chances of these bubbles not deflating would be "the first time in history and not something I'd want to bet on."

Me neither.

How comfortable do you feel about your Anglo-Property-Fake-Wealth now?

Ken Rogoff: "As the global economy reflates, many people are asking: “Is the next bubble in gold? Is it in Chinese real estate? Emerging market stocks? Or something else?” A short answer is “no, yes, no, government debt”."

And Rogoff it is who is able to put the jigsaw holistically together: "Science moves on. Eventually, economists realised that in a real-world setting replete with non-linearities and imperfect markets, the same set of fundamentals can, in principle, support entirely different classes of equilibria. It all depends on how market participants co-ordinate their expectations. In principle, prices can jump suddenly and randomly from one equilibrium to another as if driven by sunspots. (I believe this notion of self-fulfulling multiple equilibria is quite closely related to George Soros’s notion of “reflexivity”.)

'Tis too...

Equilibrium states will be the death of Friedmanism and, more pertinently, Earth.

So, why are bubbles allowed when they are so risky to everybody and everything?

Bubbles are, at foundation, a regressive structure to reward insiders.

Or, rather more poetically, bubbles reward the passing of thresholds in illusory spasms of opportunity by atomised performativity within a hyperreality.

Or, in Reality, corporate larceny...

But in the state of decay of late capitalism, it might well be that the only option is to buy into the housing bubbles as at least property will always retain some value.
As Grantham concludes, there is "a rising distrust in paper currency everywhere."

A Bloomy Noisome Smell

"Believe me! Unbelievable!!" stated a joyous hillbilly departing the stadium after Wigan had terminated Arsenal last weekend.

The hillbilly could have been reflecting on our acceptance of this financial alchemy.

Amy Goodman: "The role of the journalist is to go where the silences are."

Noticed the silence of Dark Pools recently?
They remain the platform where the insiders will be able to close out their positions before the shit hits the phantasmagoric edifice.


Howard Zinn in his last interview before he died: "I would propose as a master narrative the continual struggle of people for justice, the continual struggle of people for equal rights, because I think this is a theme that runs all through history: the people struggling for a better world. I think all of the information that you can put together in history can fit into that master narrative. You can see the history of the United States as one long struggle for justice by the majority of the American people against a small elite of slave owners, of bondholders, of rich people who have so far dominated our political system and who so far have monopolized the wealth of this country. One long struggle of people for their rights."

He continued: "If you don't take risks, you're not doing the right thing. You have to take risks."

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