by Karl Denninger
Posted September 12th, 2011
THERE IS PERSISTENT CHATTER ABOUT A GREEK DEFAULT over the weekend, which Greece denied, but the denier refused to be named. If it’s not true, then put your damned name on the statement or be considered what you are – liars. Greece failed to place their short-term bill rollover. That’s a declaration by the market that even for short-term paper the market has utterly lost confidence in Greece and the Euro.
Germany’s DAX market relative to the United States just hit a five year low today. To add to the “liar liar pants on fire” calls Germany is now reported to be working a plan to recapitalize their banks if Greece defaults.
This in turn means three things:
• A Greek default is considered credible by Germany and they are taking official actions related to that possibility. So much for the denials.
• German banks (and presumably French banks and all the other big banks too) are insolvent as they are carrying these bonds at well above their actual value in the marketplace. If the bonds were carried at the claimed “loss” values, which is quoted as 50%, then there would be no need to recapitalize them would there? This is an official statement of proof that the banks are lying about asset values and are in fact insolvent.
• Remember that we were just told days ago that these banks were fine and needed no capital and in fact calls for more capital by the IMF were officially refused. The same claim has been made about our banks. You were just told officially by Germany that their claim of adequate capital just days ago was a lie as they are now planning to recapitalize the banks. Do you believe our banks are not similarly exposed and also insolvent? YOU’RE BETTING YOUR FUTURE ON THE BELIEF THAT THEY ARE, SO THIS QUESTION IS QUITE GERMANE AND TIMELY: ARE YOU SURE YOU’RE NOT BEING LIED TO EXACTLY AS WE WERE ABOUT GERMAN BANKS?
Coincident with this hitting the wires there was a massive flow of money into the Japanese Yen – and out of the Euro. A monstrous safety trade – people fleeing the European common currency for what they perceive as a “safe haven.” At the same time our markets are down 300 DOW points, the S&P is down 2.5% on the day and more than forty points off the early-morning top — and there’s no sign that things are stabilizing at all.
I said the Euro was going to par, and that might be too conservative. With that our stock market will get cut in half — or more — from here and once again the banks, insurance companies and everyone else will start crying poor mouth.
The problem is that this time there’s no money to bail them out with in the US and as a result if this outcome manifests they will fail. The embedded losses in those institutions on mortgages alone total trillions, which is several times the available debt ceiling and so far beyond the FDIC’s reserves that there is no way to cover you, the average person.
Nobody – and I do mean nobody – in our political establishment from either party gives a damn about the lies and outright fraud in our financial system. Neither political party, including some very specific representatives that have railed about various problems in capital markets, the IMF and similar over the last couple of years will even open their damn mouths, say much less demand structural changes and an end to the frauds. I have been making attempts to break through that “glass ceiling” now for four years with several representative and senatorial offices. How many speeches have you seen on this topic, or even questions directed at like people such as Bernanke under oath?
I’ll answer that for you: ZERO.
The opportunity to fix these problems has been there since 2007 and I have steadfastly put forward plans that will work to resolve these issues, albeit at the cost of there being no more leverage-driven asset-stripping games. I’ve written over four thousand Tickers [Market-Ticker.org] since 2007 and a couple of White Papers and distributed them to Congressional offices by postal mail and fax. In addition there are literal hundreds of staffers that access The Ticker on a regular basis along with every three-letter government agency, including the law-enforcement ones.
There can be no claim that “nobody saw this coming” because I assure you that not only did plenty of people see it coming I have repeatedly warned of the “end game” and consequences – loudly.
Nobody from either party will address this or even discuss this and the reason should be obvious – the banks own the politicians. That’s fine – they can both hang on the rope of their own construction through their willful and intentional acts of malfeasance and fraud. Absolutely none of this was a mistake.
I believe the alarm has now rung. The market calls all bluffs and that’s exactly what it’s doing right here, right now, today. The lies have been overwhelmed by the functional facts – that you cannot make payroll or pay the light bill with imaginary money – you need real money, and there isn’t any. The time has run out on the fraud pulled in 2009 by Kanjorski with his “mark to fantasy” crap game.
We are doing the same thing right here in the United States with Obama’s demands for “more stimulus” with no way to pay for it, games being run by banks suppressing price discovery and hiding losses on mortgages engendered by nine trillion in residential property value loss, the asset-stripping that was performed on the citizens of Jefferson County Alabama and more. Not one damn thing has been done to fix the underlying problems and nobody has gone to jail for these acts.
You cannot solve a debt crisis with more debt any more than you can fix a drunk with a case of whiskey. Yet that is exactly what we’ve tried to do both in the United States and internationally. The end point of that process here is exactly the same as it is there. You’re getting a preview America, and if you think that a 20% sell-off in the stock market is what we get when it happens here, you’re wrong. Try a 90% loss on for size followed by the utter failure of every pension fund and insurance company that has sold annuities – including yours.
Our economic system, and quite possibly, our government is finished if we allow this to occur.
The claims that “it will all be ok if we just help these people bridge the gap” is now being exposed as an outright and intentional fraud. That fraud has been perpetrated against you, the American taxpayer, by your government and central bank.
Three years into this since the 2008 collapse and not a damn thing has been addressed or fixed. You can see that proof in the employment statistics which, incidentally, are about to get much worse.
YOU have been seduced by the siren song of “Guns, Gays and God” (or “Obama’s gonna pay my mortgage!” if you prefer) instead of the truth – a bunch of *******s stole your future sequentially over more than 30 years by levering up on your back, knowing full well they couldn’t cover their debts. These intentional acts, which are acts of fraud — all of them — occurred in Washington DC and on Wall Street, and they were not limited to the United States. This is a worldwide phenomena.
We’re now in the endgame. Greece, if you recall, showed up in early 2010 as a problem. Did our government take this warning and act on it, stop the frauds, prosecute the wrongdoers, close the insolvent banks, and force the recognition of the nine trillion in lost value in residential housing? Did we see bankruptcy occur for those who are in fact bankrupt?
EVERY ONE OF THE POLITICIANS ON BOTH SIDES OF THE AISLE – ALL OF THEM WITHOUT EXCEPTION – HAVE LIED, CHEATED AND STOLE FROM YOU TO PROTECT A GANG THAT HAS REPEATEDLY ABUSED LEVERAGE TO ROB YOU BLIND. NOW THE PONZI SCHEME IS COLLAPSING AS WE ARE OUT OF SUCKERS – GLOBALLY – WITH WHICH TO PERPETUATE IT.
While I write this CNBC runs claims of “we’re going to show you how to protect yourself in this market.” Oh really? Why didn’t you just tell people to get the hell out in 2007 as I advised and sit back with a bunch of popcorn? You’d still have all your damn money and none of the heartburn. NOW, after the market is down nearly 20% off the recent highs, you want to talk about “protection”? NOW?
You have one final opportunity to choose America: Watch Dancing With the Stars or demand and enforce your demand that this crap stop right now.
Just be aware – if you choose “Dancing With The Stars” that it won’t be long before you have no job, no money and perhaps no electricity with which to power your TV and no “free stuff” coming from a bankrupt government either. Yes, it can happen here, and if you think not you’re dumber than a box-of-rocks and deserve exactly what is coming.
Choose now, choose here and choose wisely.