Pretend-O-Rama

Apology to readers: after being hassled by Canadian immigration officials at the Edmonton, Alberta, airport on Sunday afternoon, and in a rush to make my connecting flight to Grand Prairie, I stupidly left my Mac notebook in a plastic tub at the security gate. Luckily, they'd checked it into the security lost-and-found and gave me clear instructions for retrieving it when I called to inquire. I picked it up today (Tuesday) on my way back through Edmonton en route to Vancouver. 

Written on Sunday July 20

   The comprehensive bankruptcy of the United States, at every level, in all corners, atop each hill and mole-hill, and down not a few rat-holes, is preceding like some kind of hideous multi-media, inter-dimensional cosmic grand opera as produced and directed by the Devil. Every week, some bizarre new subplot is introduced by the stage managers, each turn and twist geared to produce maximum pain and carnage in the US economy, as if to foreclose any possibility of redemption on the way down. Well, the absence of hope is, after all, the essential nature of Hell (setting aside, for the moment, J.P. Sartre's quaint notion that Hell is other people).
     Among the many developments in the story last week was the solidifying consensus that the nation is in really serious trouble, and the noticeable slippage of legitimacy among those pretending to run financial affairs. The howler of the week was the Securities and Exchange Commission's edict that Wall Street sportsters would be prohibited from trafficking in so-called "naked short" sales against a cherry-picked bunch of 19 banks and financial companies for the next two weeks. A cute trick, naked shorting is done by pretending to borrow a bunch of stocks, pretending to sell them high just before the share-price falls, pretending to buy them back at a lower price when the share price has fallen, and then pretending to return exactly the same number of lower-priced shares to the lender, pocketing the difference. Real shorting is cute enough, and involves "clearing" the sales -- i.e. proving that real stocks were really lent and really returned. Shorting is helped along by generating rumors that a given company is in trouble, thus nudging share prices down. This works really well when a company already is known to be struggling, as many now are. In fact, it usually works best when a struggle turns into a feeding-frenzy -- as when a bleeding mullet attracts the swarming sharks. When this scam is run using odd-lots of millions and tens-of-millions of shares sharked up at many dollars each, the profits to be made in this sport is obviously huge.
     With naked shorting, however, the stocks being shorted are basically non-existent, imaginary, made-up, fictional, registered only as pixels in a program. It's a racket, pure and simple, run by both the supposed borrower of the stocks and the supposed lender and, more to the point, was wholly and absolutely against the law before the SEC declared a selective holiday from it last week. So, what the SEC action really demonstrates is the utter lawlessness reigning on Wall Street, and the SEC's singular unfitness as an enforcer of the laws, not to mention the criminal irresponsibility of the clearing authorities who only pretend to go through the motions of certifying the sales. What's more, the companies cherry-picked for immunity against shorting were some of the very companies believed to be most active in profiting off naked short sales against other companies.
     Thus, the credibility of all the authorities in American finance, including the Secretary of the Treasury, Mr. Paulson, the head of the Federal Reserve, Mr. Bernanke, the director of the SEC, Mr. Cox, takes on the aroma of week-old dead carp, while the affairs of American banking and business as a general proposition look to the rest of the world like a simple looting operation, reflecting poorly on the paper certificates that we use as "money" in the land of the free. The odor of blood and desperation around these activities must be sending a strong signal to those offshore who hold American dollars in some form or other. It must make them rather itchy to dump them while the dumping is good -- before some clever American B-School Boyz figure out a way to short their own country (if they haven't already done that). Finally, Mr. Bush presides at a remove from all this, sitting just offstage in his own special velveteen loge of Hell, watching this opera-to-end-all-operas, and waiting for his reputation to be sealed as the historical equivalent of something found in a colostomy bag.
     The sub-plot of Fannie Mae and Freddie Mac just lends a romantic edge to the show. You could spin it off as a sitcom called "The Fucked and the Feckless." This would include all the poor shlubs who signed $XXX-K mortgage contracts, for houses now worth $XXX-K-minus-XX-K (and still sinking), as well as the shareholders, who saw their share prices approach penny stock range (especially the pensioners whose fund managers gorged on Fannie and Freddie paper) and not least the sovereign wealth funds of China and Russia. Those responsible for fucking everybody, the investment bankers who engineered the tranches of securitized bundled non-performing mortgages, and pocketed huge fees for doing so, are now conniving to off-load the liability of all this worthless paper on the taxpayers, led by chief conniver, Secretary Paulson.
     Meanwhile, the runs on the banks are just beginning with Indymac last week and Whachovia warming up to catch the baton this week, with more banks waiting to enter the relay race to insolvency. It's becoming obvious that the Federal Deposit Insurance Corporation will choke and croak on this wad of losses, and its liabilities will also be fobbed onto the taxpayers. In the meantime, though, it will be obvious that the full faith backing of the United States is an empty promise. That may be the near-term endgame for all this pretending. When American depositors get screwed out of their deposits and the deposit insurance doesn't come through, the full force of the fiasco will drag the dollar underwater like the legendary Kraken of old preying on a babe thrown overboard.
      Then the forces of darkness will really be loosed.
      Things may get so chaotic that Mr. Bush and his circle may actually be removed from the scene before his term in office expires. He could go out of office much the way he came in: by means unconventional. Mrs. Pelosi will keep the seat in the oval office warm for a few months. Then the prosecutions will begin.
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My new novel of the post-oil future, World Made By Hand, is available at all booksellers.

Comments

[Saint Bif]

Actually, I think he said, "hell is other people at breakfast".

[Uncle Al]

Homeland Severity

http://www.mazepath.com/uncleal/homesec.jpg
http://www.mazepath.com/uncleal/bush1.jpg

made a mirror of your hard drive. As with USSR gulags, felons are Trustees keeping political prisoners in place. A bright, bright day approaches when TSA watch lists include 300 million names (no Muslims - that's profiling).

http://epic.org/privacy/airtravel/foia/watchlist_foia_analysis.html

[Saint Bif]

"Things may get so chaotic that Mr. Bush and his circle may actually be removed from the scene before his term in office expires."

Wooooah! I doubt it, but what the hell, lets give it a try! I smell bleeding mullet.

[MaryW]

Hi Jim

Glad you’re OK – thought for a moment that you had gone to Vegas on a camel with 20 pounds of plastique and a bad attitude.

Looks like people really will be working until they drop, if there is any work, now that some pension funds are rendered virtually worthless

[Saint Bif]

"Things may get so chaotic that Mr. Bush and his circle may actually be removed from the scene before his term in office expires."

Wooooah! I doubt it, but what the hell, let's give it a try! I smell bleeding mullet.

[Saint Bif]

Double the pleasure!

[westville_girl]

I am glad that you're ok too, JHK; I've been a faithful Monday reader for three years now, was a little concerned because you're always so punctual!

I wonder (and invite input from the gang) what chances a person like me has in this whole goat-rope: No land, no assets, no cash....Thoughts, anyone?

I don't worry about myself so much, because I'm a stealthy bitch who will survive and ensure my sons' survival and know how to live off the land - if TSHTF before I can acquire some property, I'll simply find an empty house and play squatter till someone runs me off; however, many, many poor don't have the aptitude and fortitude to do so....
What do you all think those souls will do (be able to do?)

[westville_girl]

In some ways I think I may be better off, because at least I know, unequivocally, what I do have and what I don't have....No one can pull the rug out from under me because I don't have the (false) perception that I have a rug....Hmmm....

[DanaJ]

"Those responsible for fucking everybody, the investment bankers who engineered the tranches of securitized bundled non-performing mortgages, and pocketed huge fees for doing so, are now conniving to off-load the liability of all this worthless paper on the taxpayers, led by chief conniver, Secretary Paulson."
Say, could that be why the Holy Dow has moved up so much the past week? Just a week ago it looked like it was swirling 'round the bowl, then like a Miracle on Elm St, it takes off for the Starz. Based on WHAT?! What has changed? Oil is down a few bucks vs a week ago? So what? It will be back up the next week. Gas has gone down a few pennies. BFD. NOTHING HAS CHANGED. My IRA keeps going up & down like a whores ass in bed. What is driving this? Perhaps the Boyz are setting it all up for the last putsch, then the big Fall.
As for Bush & The Gang facing the Muzak (or anything else), it aint gonna happen. They are gonna ride off into the sunset of Dubai (or where ever) and laugh at the big pile of stinking shit they have left behind for someOne else to try to clean up. Obama better have some pretty good waders, because the shit is armpit deep.
I feel sorry for him, I almost feel that McInsane should have to clean it up, but he will just make it worse.

[vogonpoet]

Dana, I think the Dow and oil will continue to shadow each other with some delay built in. If the markets go up everyone thinks "yea! the economy is improving" but that means more demand for oil, oops, now oil goes up, but that means the economy will suffer and the market will drop. This ping-pong game will continue for a long time. The long term trend will still be oil up, markets down but expect the pundits to make as much hay as they can out of every bit of noise while ignoring the signal entirely.

[garberpog]

"after being hassled by Canadian immigration officials" I assumed US authorities had put you on a watch list, designed to keep you out. Welcome back, and thank goodness you recovered your mac!

Re post... "a gaudy dream, a dream of annihilation" (Pynchon)...

I keep cackling insanely.

[Mr Dumas]

I've been wondering what exactly does an investment banker do all day to earn 7,8 and 9 figure bonus checks? I write and test software all day and, after 20 years of experience, I barely take home a 6 figure salary each year. What is the typical day of an investment banker like?

[Dr.Doom]

A bleeding mullet in shark-infested waters does sound a lot moron precarious than a stunned marmot in the mouth-grasp of a hungry wolf, although the eventual outcome is the same. Jim, you do indeed have a way with words.

Glad you are OK, just a little hassle with the security people. You must hone your Jedi knight skills upon the TSA and Border Patrol. Something to the effect: "These are not the Cuban cigars you are looking for. Let them pass. Move along."

[jim e]

I am the dotted line... southern dumbass here that is glad to see your late post. I had heard of an early Sunday post from you, no?

[Isochroma]

Hahaha! I like the devil analogy. Your writing is the inspiration for my life, so keep up the excellent work!

[Doug]

Gasoline is back to $3.99/gal. in the Midwest. What is this "peak oil" of which you speak of?

[Isochroma]

Before the peak toil comes, will come the peak oil.

[jim e]

Well said.

[Daniel J Swanson]

Jim,

Thanks for the post!
I didn't realize how much your weekly post meant to me until it did not appear.

Please take good care of yourself, see a good doctor often, and keep up the good work.

Dan

[StinkyCatsMeow]

"When American depositors get screwed out of their deposits and the deposit insurance doesn't come through, the full force of the fiasco will drag the dollar underwater like the legendary Kraken of old preying on a babe thrown overboard."

A tipping point, if that event is distributed in the MSM.

[Allen/Vancouver]

Was shown a small piece in Bloomberg the other day; Bernacke's 2007 filing of investment holdings includes Govt of Canada Treasury Bonds. Begging the question, if the guy charged with strenghtening the American dollar is buying Canadian bonds for his retiremaent plan....?

Begging the next question; just what were you doing in Alberta the past weekend...?

(full disclosure: I also hold Canadian bonds, but not US bonds.)

[Nicholas Paredes]

No. "Hell is other people!" Yes, it is... Right now I want to prod Dale, he that lacketh knowledge of physics with a cattle prod, or some spiked thingy.

http://www.theonion.com/content/node/28898

Doug, is that about $2 more than last year?

[World B. Free]

VP: "The long term trend will still be oil up, markets down but expect the pundits to make as much hay as they can out of every bit of noise while ignoring the signal entirely."

No doubt, I was watching today (as I do most days) and expecting a big market drop, but shortly after the open (and a sharp Dow drop), the oil price ticker dropped (noise) and up went the Dow. Oil -$4.50 and Dpw was booming and zooming, then oil crept up to ~-$2.00 and Dow went red.

All this against a backdrop of some 52 quarterly reports (signal) and most of em BAD NEWS, including most of the financial sector taking an elephant dump, led by Wachovia and AMEX.

Crude inventory report at 1030 this morning, that could trigger the 'dump' after today's 'pump'.

[vogonpoet]

WBF: "All this against a backdrop of some 52 quarterly reports (signal) and most of em BAD NEWS, including most of the financial sector taking an elephant dump, led by Wachovia and AMEX. "

I'm quite worried about Washington Mutual. They took a rather larger loss than the anal-ists had expected today (well it was announced today). This seems to have happened after the market close though. By the way - fucking East Coasters. They get a 3 hour jump on us just because the sun luvs them more.

[Lost Horizon]

On another blog, someone referred to Paulson as a 'human buttplug'

Well, ipso facto, does that mean that Cheney and his sock puppet Bushbaby are inhuman buttplugs?

You'd have to be inhuman to have allowed the current state of impending unraveling to develop on your watch for the last 7 years.

Cheney the Dick and Bushbaby were just practicing for this upcoming meltdown with Katrina. They both watched for days in advance that monster hurricane drive up the Gulf like a bowling ball from hell and strike New Orleans. They and their early FEMA prototype 'human buttplug', Mike Brown, basically did nothing to prepare for or even aid the situation after it had happened.

Well folks, what Jim described this week as "some kind of hideous multi-media, inter-dimensional cosmic grand opera" is going to proceed, in slow MO, to virtually mimic Katrina making land fall, but this time, it will be America's entire economy that gets destroyed. And I do mean DESTROYED.

This will be many many magnitudes larger than a hurricane destroying a major city and surrounding area and will result in many more deaths and suffering than a one-off hurricane.

I've referred to this administration as Rethuglians in the past but upon close inspection and study and reflection, it really isn't about political persuasion and wrong headed policy or lack there of, it's about criminal behavior, plain and simple. Wall St and DC are crime scenes filled to the gunnels with thieves and cheats and liars and white collar criminals masquerading as politcians and businessmen.

Where do they think they can hide themselves and their loot where as least some of the enraged masses of people they've framed and ripped off won't be able to hunt them down and find them?

Some new and improved "Green Zone" located in an "undisclosed location", like Cheney the Dick's Bunker? Do they really think any bunker will protect them from a grim fate?

Hilter, in his bunker, during the last weeks and days of the Third Reich, ordered the Berlin subway system flooded to slow down the advancing Russian troops. They were using the subway tunnels to do an end run around the last of the die hard German troops on the surface. Unfortunately, the German army was using the Berlin subway system as their field hospital, and over 10,000 wounded German soldier drown when Hilter's orders were followed. All to give the Der Furher a couple more days alive before he shot himself. Nice.

This is where we stand today with Cheney and his Bushbaby.

Bernanke and Paulson and the Bush Mafia are going to flood the 'subway system' and 'drown' God knows how many citizens, just to preserve their worthless asses for a little while longer, say, just until after the Nov elections.