Archive for the ‘Depression 2.0’ category

Chronicles Of Depression 2.0: #473: Addicts

December 16, 2008

Downturn Spurs “Survival Panic” for Some in the U.S.

A paralegal, recently laid off, wanted to get back at the “establishment” that he felt was to blame for his lost job. So when he craved an expensive new tie, he went out and stole one.

The story, relayed by psychiatrist Timothy Fong at the UCLA Neuropsychiatric Institute and Hospital, is an example of the rash behaviors exhibited by more Americans as a recession undermines a lifestyle built on spending.

In the coming months, mental health experts expect a rise in theft, depression, drug use, anxiety and even violence as consumers confront a harsh new reality and must live within diminished means.

“People start seeing their economic situation change, and it stimulates a sort of survival panic,” said Gaetano Vaccaro, deputy clinical director of Moonview Sanctuary, which treats patients for emotional and behavioral disorders. “When we are in a survival panic, we are prone to really extreme behaviors.”

Emphasis added by me.

That’s a smart move: adding a shoplifting arrest to your background check!

“We don’t buy products, we buy feelings,” Vaccaro said. “We’re buying the anticipation of the feeling that we think that product or service is going to give us.”

I can see what my future will be like.

I’ll be surrounded by tens of millions of insane bastards addicted to spending who are going out of their fucking minds from cold turkey withdrawal.

Many of you will die.

Many more of you will need killing.

If you can’t adjust to little money, you’re no damned good to yourself — or the human race.

Chronicles Of Depression 2.0: #472: P$ychopaths

December 12, 2008

‘Financial psychopaths’ wreak havoc

With everything that has happened on Wall Street over the past 18 months, you’d think we had seen just about everything right? Wrong!

Two of the most remarkable frauds in the history of finance were exposed this week. They are just beginning to unravel and as such we don’t fully understand the magnitude of the crimes. But already I can tell you they are of epic, even cinematic, proportions. This is really from the “can’t make this stuff up” school of news. These two miscreants aren’t just every day corner-cutters, they are world-class whack.

Emphasis added by me.

Go to the article for the gruesome details.

Why did it take everyone so long to wake up the fact that people who want to swing around multi-billion-dollar dicks are not normal, are not sane, are creatures who should be locked out of the financial system?

A normal person comes into a windfall and it’s often more than enough. Someone who, for example. is a big lottery winner often doesn’t go around trying to pump up the volume on that. They know when they’ve been lucky, they know the value of money, they know themselves, and they’ve had a grounding in reality and in real, everyday life.

These people who pocket four-hundred million dollar bonuses from a Board of Directors they appoint — this is not normal greed. This is Ultra Avarice. This is Fuck You Sociopathology.

Previously here:

Ayn Rand: Discredited By Greenspan
Chronicles Of Depression 2.0: #351: Sociopaths
Chronicles Of Depression 2.0: #255: Jackals
Chronicles Of Depression 2.0: #238: Lottery
Chronicles Of Depression 2.0: #174
Chronicles Of Depression 2.0: #011

Chronicles Of Depression 2.0: #471: A-Word

December 12, 2008

Collapse of BCE plan fuels private equity industry concern

Fear of financial “Armageddon” is starving private equity of fresh funds, one investor warned on Thursday, after the collapse of the $41bn takeover of Canada’s BCE telecoms group marked a low for the industry.

The BCE deal would have been the world’s largest leveraged buy-out when it was announced in June 2007. Its collapse underlines how severely conditions have turned against private equity in the past 18 months.

The credit crunch has prompted banks to stop providing loans for buy-outs -– the lifeblood of private equity -– while market turmoil has made many investors incapable or unwilling to supply the cash needed for the equity portion of buy-outs.

As long as we are considering an Armageddon type of scenario, our hands are going to be tied for new funding in private equity,” Mark Boyle, head of private equity at the $140bn investment arm of Northwestern Mutual Life Insurance, told a conference on Thursday in London. “This environment has investment professionals so rattled they are thinking the unthinkable.”

Emphasis added by me.

These are the money professionals.

They see Doom.

Catching on yet?

Bank Collapse Watch: ALL OF THEM! AGAIN!

December 12, 2008

Jim Rogers calls most big U.S. banks “bankrupt”

NEW YORK (Reuters) – Jim Rogers, one of the world’s most prominent international investors, on Thursday called most of the largest U.S. banks “totally bankrupt,” and said government efforts to fix the sector are wrongheaded.

Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government’s $700 billion rescue package for the sector doesn’t address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.

Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc. Some of the funds are being used for acquisitions.

“Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt,” said Rogers, who is now a private investor.

Emphasis added by me.

Why does this surprise anybody?

More:

“What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent,” he said. “What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics.”

Emphasis added by me.

Welcome to Too Big to Fail 101. And now with all the forced mergers, we have Even Too Bigger to Fail!

Another stat:

Goldman Sachs & Co analysts this week estimated that banks worldwide have suffered $850 billion of credit-related losses and writedowns since the global credit crisis began last year.

Emphasis added by me.

That’s not even one-percent of the quadrillion lurking out there.

Some frank talk, finally:

“Governments are making mistakes,” he said. “They’re saying to all the banks, you don’t have to tell us your situation. You can continue to use your balance sheet that is phony…. All these guys are bankrupt, they’re still worrying about their bonuses, they’re still trying to pay their dividends, and the whole system is weakened.

Emphasis added by me.

Yep, gotta keep those bonuses flowing. No matter how fucked-up a job they’ve done and continue to do and plan to do in the future.

American taxpayer, drop your pants and bend over!

Previously here:

Bank Collapse Watch: ALL OF THEM!

Bank Collapse Watch: Haven Trust

December 12, 2008

24th bank failure: Fifth in Georgia
State regulators close Duluth, Ga.-based Haven Trust Bank, marking the 24th bank failure of the year.

NEW YORK (CNNMoney.com) — State regulators closed another regional bank in Georgia Friday, bringing the total number of failed banks this year to 24.

The Federal Deposit Insurance Corp. said the four branches of Duluth, Ga.-based Haven Trust Bank will reopen as Branch Banking & Trust on Monday. It was the fifth bank in Georgia to fail this year.

Haven Trust had total assets of $572 million and total deposits of $515 million. Branch Banking & Trust, which is based in Winston-Salem, N.C., agreed to assume all of the deposits for $112,000.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $200 million.

Emphasis added by me.

Haven Trust was number sixty on the List of Future Bank FAIL.

haventrustlisting

Who will go FAIL next Friday?

Chronicles Of Depression 2.0: #470: Madoff

December 12, 2008

Prominent Trader Accused of Defrauding Clients

On Wall Street, his name is legendary. With money he had made as a lifeguard on the beaches of Long Island, he built a trading powerhouse that had prospered for more than four decades. At age 70, he had become an influential spokesman for the traders who are the hidden gears of the marketplace.

But on Thursday morning, this consummate trader, Bernard L. Madoff, was arrested at his Manhattan home by federal agents who accused him of running a multibillion-dollar fraud scheme — perhaps the largest in Wall Street’s history.

Regulators have not yet verified the scale of the fraud. But the criminal complaint filed against Mr. Madoff on Thursday in federal court in Manhattan reports that he estimated the losses at $50 billion. “We are alleging a massive fraud — both in terms of scope and duration,” said Linda Chatman Thomsen, director of the enforcement division at the Securities and Exchange Commission. “We are moving quickly and decisively to stop the fraud and protect remaining assets for investors.”

Andrew M. Calamari, an associate director for enforcement in the S.E.C.’s regional office in New York, said the case involved “a stunning fraud that appears to be of epic proportions.”

Emphasis added by me.

I was waiting for this story to pop with a write-up that would concisely summarize the point. Here it is:

But the essential drama is a personal one — one laid out in the dry language of a criminal complaint by Lev L. Dassin, the acting United States attorney in Manhattan, and a regulatory lawsuit filed by the S.E.C. According to those documents, the first alarm bells rang at the firm on Tuesday, when Mr. Madoff told a senior executive he wanted to pay his employees their annual bonuses in December, two months early.

Just days earlier, Mr. Madoff had told another senior executive he was struggling to raise cash to cover about $7 billion in requested withdrawals from his clients, and he had appeared “to have been under great stress in the prior weeks,” according to the S.E.C. complaint.

So on Wednesday, the senior executive visited Mr. Madoff’s office, maintained on a separate floor with records kept under lock and key, and asked for an explanation.

Instead, Mr. Madoff invited the two executives to his Manhattan apartment that evening. When they joined him there, he told them that his money-management business was “all just one big lie” and “basically, a giant Ponzi scheme.”

The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the cash received from other investors.

Emphasis added by me.

I don’t give a shit that he’s 70.

He wagged his dick in contempt of everybody for decades.

Flay the bastard to death in public.

How many others are out there just like him that we don’t yet know about?

Chronicles Of Depression 2.0: #469: EU $267B

December 12, 2008

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Chronicles Of Depression 2.0: #468: End Of Days

December 8, 2008

Vauxhall Insignia 2.8 V6
An adequate way to drive to hell

Yes, this is a car columnist. Yes, this is a column about cars.

It also presents the most frank assessment of our economic doom.

I have spoken to a couple of pretty senior bankers in the past couple of weeks and their story is rather different. They don’t refer to the looming problems as being like 1992 or even 1929. They talk about a total financial meltdown. They talk about the End of Days.

Emphasis added by me.

And:

It is impossible for someone who scored a U in his economics A-level to grapple with the consequences of all this but I’m told that in simple terms money will cease to function as a meaningful commodity. The binary dots and dashes that fuel the entire system will flicker and die. And without money there will be no business. No means of selling goods. No means of transporting them. No means of making them in the first place even. That’s why another friend of mine has recently sold his London house and bought somewhere in the country . . . with a kitchen garden.

These, as I see them, are the facts. Planet Earth thought it had £10. But it turns out we had only £2. Which means everyone must lose 80% of their wealth. And that’s going to be a problem if you were living on the breadline beforehand.

Eventually, of course, the system will reboot itself, but for a while there will be absolute chaos: riots, lynchings, starvation. It’ll be a world without power or fuel, and with no fuel there’s no way the modern agricultural system can be maintained. Which means there will be no food either. You might like to stop and think about that for a while.

Emphasis added by me.

Oh, you can read it again and again and wonder if his tongue is planted in his cheek. That’s what the Brits are very, very good at doing. But reading through it carefully, all to the end, and no, he’s telling the truth you won’t see on front pages.

Update: Jeremy Clarkson on car sales decline — here’s a BBC video with him on the radio briefly mentioning key points written above. You decide. I don’t see tongue-in-cheek. (Thanks to Alan Pritt for this!)

Chronicles Of Depression 2.0: #467: Slingshot

December 8, 2008

The $7 trillion question
Do expansive federal bailout plans doom Americans to an inflationary future?

NEW YORK (Fortune) — A billion dollars here, $7 trillion there: How long till Uncle Sam has to cry “uncle?”

For now, frightened investors worldwide continue to gobble up U.S. Treasury bonds, and they aren’t much concerned about the impact of all the obligations the U.S. government is taking on to try and head off economic catastrophe.

But the government printing money, lending money to shaky corporations and guaranteeing debt that may never be repaid all could have troubling consequences in the not-too-distant future.

The No. 1 concern: Even if actions taken by the Federal Reserve and the U.S. Treasury succeeds at stabilizing the global financial system, and an economic recovery takes hold, a brutal inflationary spike will be right around the corner.

“Inflation is the 8,000-pound gorilla in the room,” said Gary Hager, president of Integrated Wealth Management in New Jersey. “We’re sitting in the room with the coffee cups vibrating.”

In that environment, long-term interest rates would soar, the value of the U.S. dollar would plummet, policy makers would face a whole new set of challenges.

Emphasis added by me.

Pay attention. This is the brutal truth you will be facing:

“Everyone is going to lose something,” said Will Hepburn, president and chief investment officer of Hepburn Capital Management in Prescott, Ariz. “The winners will be those who end up losing the least.”

Emphasis added by me.

Here’s what’s already gone:

Hepburn gives federal officials “bonus points” for concocting innovative responses to the credit crunch. The ongoing collapse of U.S. stock market and real estate values, he said, has slashed U.S. household wealth by at least $10 trillion – and those paper losses could go much higher before the swoon ends.

Emphasis added by me.

How’s that 401K looking these days? What will be left of it tomorrow?

Taleb said things could happen fast. Here’s the recent history:

But Hager notes that it was only four months ago that oil cost $100 a barrel more than its recent $47, which shows how quickly market dynamics can change.

What’s more, he said, while people are still struggling to figure out the costs tied to starting up and overseeing the government bailouts, no one seems to have put much thought to an equally important endeavor – how the government withdraws the massive support it has offered the markets in the event its efforts start to bear fruit.

While efforts to thaw the credit markets are taking effect slowly, Tom Sowanick, chief investment officer at Clearbrook Financial, sees a risk that they could suddenly become much more effective, leading to a jump in prices and a selloff in the dollar.

“The economy’s in a bit of a slingshot,” said Sowanick. “We are looking at a high probability of inflation issues ahead.”

Emphasis added by me.

But this is what I want you to remember of this post:

“Everyone is going to lose something. The winners will be those who end up losing the least.”

Emphasis added by me.

If they have their way, we will lose the most. I say let’s all be losers — so we can all be winners.

Chronicles Of Depression 2.0: #466: Taleb #2

December 7, 2008

This next video is of Nassim Nicholas Taleb.

He’s a frikkin genius.

His first book, Fooled by Randomness, is one of the Immortal Works. And if you haven’t read it, you are walking around blind and intellectually malnourished. Correct that ASAP.

I’ve been screaming Doom for nearly twelve months.

And now I have to confess that this video scares the living shit out of me. Moreso than anything else I’ve posted here.

— from Great Moment in Journalism: “Thud”

Previously here:

What Thing Will Happen To Us?
Chronicles Of Depression 2.0: #346: Taleb