Wednesday, February 17, 2010

Embrace the Horror

Well put by Steve Buscemi's character in Armagaddon, who has simultaneously gone crazy and surmised the imminent destruction of earth as we know it. Yes, embrace it. Wall St. is not only paying out record bonuses again, but we found out within a few weeks that Toyota has been hiding safety flaws from us for 4 years, GS underwrote Greek debt in such as a way as to make them saleable as an EU participant 8 years ago, and our president has been bought and paid for. All of this, of course, makes the market go up.

In his most recent essay, Wall Street's Bailout Hustle, Matt Taibbi outlines the various con games Wall St. has employed since they hit rock bottom with the full backing of the U.S. government, to get the ATM rolling again. In describing PPIP, the brainchild of Timmy Boy, Taibbi writes, "Jobless dope fiends bought houses with no money down, and the big banks wrapped those mortgages into securities and then sold them off to pensions and other suckers as investment-grade deals....But what did the banks do instead, once they got wind of the PPIP? They started buying that worthless crap again, presumably to sell back to the government at inflated prices! In the third quarter of last year, Goldman, Morgan Stanley, Citigroup and Bank of America combined to add $3.36 billion of exactly this horseshit to their balance sheets."

Taibbi further references The Sting and Matchstick Men to illustrate the assorted cons being perpetrated, but I'd like to take a line from the lesser known classic Confidence. When Edward Burns is being interviewed by Dustin Hoffman, a.k.a. "The King," Hoffman says to him, "You're a good grifter man, it's hard to tell when you're lying." But that's just the thing. It's not hard to tell when these guys are lying. They're lying all the time. Greece has been lying about their national debt for 8 years! When called on it by the EU, their response was, ok, ok, we'll stop that now.

In an interview just last month, George Soros said that gold was the ultimate bubble. Apparently by that he meant the ultimate bubble you should be riding because Soros is now the
4th largest owner of GLD. Interestingly enough it came out that Soros and Paulson have also bought huge stakes in Citi, convinced as I am that downside is minimal while upside is high. These guys must be reading the BBB.

So the casino is open. While long term options (aside from C) are still too expensive, had you bought Sandisk calls last night you would have appreciated a 2500% one-day return. Whole Foods much of the same. Lazy Boy being pumped on CNBC for "top-line growth," sure. So embrace the horror, nothing has changed.

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/5

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKs0jaibTSmY

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1LiXQqHDMPk

2 comments:

Tiger Coach said...

Me thinks this pyramid scheme has no end... However, should banks begin taking moeny off the table, as I expect they will... then there will be a gurgling sounds just like water leaving the bathtub.

i like you C play... hopefully neop makes it's big move (to the upside) so I can in some way shape or form participate. As of now, D seems to be another play as they will sell off natural gas reserves... then more than likely role those monies into a a stock buy-back program. P.S. D rasied their dividend 4.6% this year already...

TC

AX said...

TC, you are correct. We are willing pawns everytime we cast a vote for this cast of clowns. So we'll keep playing the game but be positioned for black swans, for that day.