Hitting The Archives

Just for fun, I though I'd hit you with a couple of archival posts this week. Going back and looking over the old "Watchtower" site can be great fun, especially with the assistance of 20/20 hindsight.

But there's also plenty to learn. Let's start with this little gem from almost a year ago. In it I discuss the circumstances that turned regular old me into The Turd. More importantly, this post contains a link to a two-segment "60 Minutes" interview of Michael Lewis, the author of "The Big Short".

First of all, if you haven't yet read "The Big Short", I strongly encourage you to do so. You should also take the time to watch both parts of the full, 23-minute video, too. Comparisons to today are valid. By 2007, 99.9% of "financial experts" thought that the status quo would continue, that AAA-rated MBS were solid investments and that selling credit default swaps was easy money. Oops. Fast forward to today. What percentage of "financial experts" think that the status quo will continue, that dollar hegemony will last forever and that the debt and deficits can be managed indefinitely? Additionally, what percentage fails or neglects to see that none of the excess from 2007 has been wrung out? The banks are still insolvent. Many are indeed worse off than they were then. Just like Michael Burry, one day soon we will all be proven prescient. Facts are facts and truth is truth. Just be patient.

Here's the link to the original but it's also c&p'd below.

http://tfmetalsreport.blogspot.com/2010/11/tipping-point.html

SUNDAY, NOVEMBER 28, 2010

The Tipping Point

 
I spent some time over the holiday weekend pondering what has brought me to this place, what prompted my "great awakening". Though there were many contributing factors, one of the salient events took place on Sunday, March 14, 2010. Not an event in the traditional sense, this one was simply me, in front of a TV.

After twenty years as a participant in the financial services "game", for some reason I began to feel unease with my profession in 2006. The feeling grew through 2008 as the entire world nearly melted down. It became a queasiness in 2009 as I watched Wall Street attempt to spin and deceive it's way back to credibility. It coalesced on 3/14/10 as I watched the following interview. If you have some time today, and if you can endure the Lipitor commercials that precede them, please take time to watch both parts. If you're near a bookstore, pick up a copy of "The Big Short", too. It's a great read.

http://www.cbsnews.com/video/watch/?id=6298082n&tag=contentBody;housing

For me, all the dots finally connected and the mental image I'd created of an "industry" that was, in the end, honest and beneficial came crashing down. The examples of corruption are nearly endless and I'll examine more in the days to come but, for now, let's just choose one, in ten simple steps.

1) Major TBTF bank insolvent due to overwhelming amount of underperforming and/or worthless debt.
2) Congress pressures FASB to change accounting standards thereby allowing said bank to reclassify worthless securities and loans as having some notional value.
3) Bank allowed to borrow unlimited/infinite amount of money at Fed discount window at 0.0025%.
4) Bank takes borrowed dollars and buys US Treasury bonds paying 3.0%.
5) Bank keeps spread from risk-less transaction and books this as profit.
6) Bank employees pay themselves huge bonuses commensurate with their brilliant minds.
7) CNBS begins non-stop parade of sell-side analysts who exclaim that the bank common shares are "undervalued" based upon cash flow and earnings.
8) Unwitting investors bid up shares of the still insolvent bank, perpetuating the illusion of financial health.
9) Bank "insiders" unload millions of personal shares and options to duped public.
10) Responsibility and wealth transferred. Bank executives, management and traders wealth is preserved at the expense (and loss) of the average, regular, hard-working investor.

Oh, and along the way, the Fed/Treasury benefited, too. The insolvent bank participated in a stealth form of quantitative easing. By using borrowed money from the Fed to buy treasuries, the TBTF banks create a synthetic demand for those bonds and notes, thereby keeping rates artificially low, consistent with stated Fed policy. Pretty slick, huh?

 
​I'm sorry to report that, in the year since I wrote that, nothing has changed. The insolvent, TBTF banks continue to borrow at 0% and use the proceeds to prop up the treasury market. They then book the risk-free spread as "profit" and celebrate their great "earnings" with lavish bonuses. Only in America...land of opportunity.
 

TF

​p.s. A friend sent along this link. It might be helpful in your "feast planning".

http://hoppedupblog.com/2011/11/thanksgiving-beer-pairings/

209 Comments

brad_pitts_betterlooking_brother's picture

for those that care

and i could be wrong but it sounds like glenn beck MIGHT be announcing he's backing ron paul this morning.

don't usually listen that often but he got me with that hook so i will keep listening today i guess.

update:  and then again, maybe not...

Drifter's picture

claw it back

9) Bank "insiders" unload millions of personal shares and options to duped public.
10) Responsibility and wealth transferred. Bank executives, management and traders wealth is preserved at the expense (and loss) of the average, regular, hard-working investor.

Pablo's picture

Thanks Mr. Ferguson, that's a good reminder

Every now and again I go look something up on the old blog, I'm so happy you've left it running for archival purposes!

Eric Original's picture

Financial Repression Update

A couple of updates to the Financial Repression data this morning.  We are in even deeper doo doo than I thought...

http://www.tfmetalsreport.com/comment/91744#comment-91744

¤'s picture

Thanks / I remember that post

I'm pretty sure I remember that post while I was still in the lurking phase on there. It was helpful back then and also helpful now to have it all consolidated in front of me.

I remember the day on ZH you  announced you had a new blog etc. and I went there from day 1 and started following the blog. Threads like that sucked me right in and made a impact on me.

I hope this thread fires up a whole new generation of Turdites to start registering, posting and donating to this FREE site for the volumes of information made available by you and the contributions of other Turdites.  (Click on a sponsor/ad banner. TFMR gets credit 4 it)

Thanks for the doing what you do TF yes

humbleprofits's picture

The Big Short

I agree with Turd, this is a fantastic book.  This gem is what opened my eyes to the BS that goes on unchecked.  It is easy to read and does a great job of going over the CDO and CDS markets and how they crashed the system.  It is in paperback now, so not to expensive.  great for  a long plane ride or rainy weekend. 

Caution, may want to have your favorite libation (medication) near by to quell the anger you may experience.

foggyroad's picture

Re normal market deflation posters yesterday

beardeus's picture

Did anyone catch THIS news?!

Taken from Silver Doctor's blog,

"Sprott Asset Management Files Prospectus With SEC for $1.5 BILLION PSLV".

From the filing:

TORONTO, November 16, 2011 — Sprott Asset Management LP announces that it has filed a preliminary short form base shelf prospectus containing information relating to units of the Trust with securities commissions or similar authorities in all provinces and territories of Canada.  Under the shelf prospectus, the Trust may offer from time to time during the 25 month period after a final receipt is received for the prospectus up to US$1.5 billion of units of the Trust.

http://silverdoctors.blogspot.com/2011/11/sprott-asset-management-files.html#more

Eric Original's picture

Great Beer List, Turd

I'll just have one of each pleeeez

foggyroad's picture

Xty Movin on up

Well deserved Your contributions are well received, Thank You," O Fleet of foot"  :)

ps how does one repost a previous comment?

arcticfox's picture

Did anyone catch THIS news?!

What has baffled me for the longest time and seems obvious and was brought up earlier is why a few well capitalized entities don't go long comex metal futures and stand for delivery(you know..sharks smelling blood and all that).  Buffet started sniffing around silver and than inexplicably backed off.  Still have yet to read or heard satisfactory answer for years......

Xeno's picture

Due Date: December

Thanks for the stroll down memory lane TF! The past is prologue.

52B of T.A.R.P. fund repayment due in December. 14B next week. This ought to be interesting to say the least.

http://www.zerohedge.com/news/525-billion-virtually-free-us-bank-debt-due-next-month

MIDDIE's picture

@ TF

Enjoyed the post and the CBS piece very much.  Thanks.

Exbroker's picture

Wow! This is boring the shit out of me.

Will somebody please knock Silver down to 28 so I can call my local coin dealer PLEASE.smiley

aurum argentum's picture

Don't forget

Samuel Smiths Oatmeal Stout. It's unique. And delicious.

ggnewmex's picture

re:did anyone catch this news??

If fact yes we did, compliments of Harvey Organ, and then ?????? posting the 6-K

But, thanks anyway, because it is my contention that the more people know about this, the better we will all be.

I remember that last year when Sprott ordered his 22M ounces, there was a delay in shipment of that with mint numbers that were made after his purchase. Which proved the point that there is a shortage.

Keep up the news flow!!!

Grigeo's picture

Beer List

Put this one on your list. 

Dogfish Head World Wide Stout - 20% stout, so not for everyone, but what a beautiful stout.

http://www.dogfish.com/brews-spirits/the-brews/occassional-rarities/world-wide-stout.htm

MisesFan's picture

Sammy Smiths are a commodity.........

I have sold many Sammy Smiths on Phish and Dead lots.......a great asset to stack.

ewc58's picture

EO: ever been to the Grand Canyon?

The hole for this much doo doo may have to be about that deep.

Checked the Beer roster to see if my favorite, Pilsner Urquell, had made the list. It's light and crisp, but with plenty of nicely balanced flavor. It's great with any kind of poultry, turkey included...

"Or second, you could choose a beer that is more of a palate cleanser to sip on between bites. There are a lot of options for this but I would suggest a pilsner or a crisp lager. What you’re looking for here is just enough of a hoppy character to wipe the palate."

Examples:
Summit Pilsner
Spaten Dunkel
Pilsner Urquell

WineGuy's picture

Articfox ...

It's not that baffling at all, do you want to be the entity that brings the whole house of cards down? 

Hackswell's picture

Liftoff

We have a FUBM in Silver right now!

Silence is Golden Speech is Silver's picture

I wouldn't get too

I wouldn't get too excited?

Gee Silver is up a buck in the last 2 hours . . .

Oh yeah, Options Expiry is not over, I forgot  :-)

ewc58's picture

More on Michael Lewis and The Big Short

He sat down with Jon Stewart in October. 2 parts, touches on lots of interesting stuff including Iceland and Greece...

http://www.thedailyshow.com/watch/tue-october-4-2011/exclusive---michael-lewis-extended-interview-pt--1

http://www.thedailyshow.com/watch/tue-october-4-2011/exclusive---michael-lewis-extended-interview-pt--2

Excerpt from The Big short audiobook:

goldenbear's picture

Strange action...

Is anyone else noticing this? There is a strange pattern. Maybe it's nothing, but it's kinda weird to my mind... Anybody have any insight? You can almost watch it move like clockwork today.

http://www.kitco.com/charts/livegold.html

http://www.kitco.com/charts/livesilver.html

thesandbox's picture

Beer List

I personally home-brew my own porters and oatmeal stouts ;)
It is really one of those things everyone should try...easy to do, just make sure you sanitize everything and follow some good recipes.

cpnscarlet's picture

About last night ...

My brain's been cooking on last night's posts between "us" and hiway117. I'm still not calling him a "troll" at all and I think he presented some interesting thoughts. I also found Stormdancer's posts rightfully "stimulating".

After thinking about it all, I want to make a simple statement that, in my mind, puts the whole debate in perspective and is the point that should be discussed. The simple statement is "If silver is NOT manipulated, why hasn't it tracked gold closer?" If you're immediate answer is "it has had a more industrial nature" over the last 40 years, than the simple follow on is "Then why isn't it MORE expensive given the production numbers?". Now that we have that one response "out of the way", let's try to answer the first question.

Some may see this as a simplistic and limited line of thought. Good - simple solutions are the best. I simply want to assert here that is silver traded freely, it would have tracked gold much closer than it has since 1980. Your thoughts?

wo's picture

GB

"glenn beck might be announcing ..."

If GB is really looking to promote change, he would make the endorsement.  Don't hold your breath, as GB is a war-monger who believes we should bomb the middle east into our values of banker fraud.

buzlightening's picture

Turd et al.

Wonderful holiday season and proper. 

Those still in the paper chase, which I'm not, hope you got the gold 1666 low buy signal yesterday; silver 30.66.  All somewhat paranoid with the EE acting as if the extend and pretend crowd lasts forever.  As if evil could where good people stand to sweep it away. 

All the EE hitting the bio bunkers for the holidays.  Hoping for gifts of Kevlar underwear.

We'll see them back thumping the metals again no doubt Monday 11/28 to rabbit out the last weak hands standing for dec deliveries in both gold & silver. 

With Sprott on the hunt for another 50 million plus ounces of silver the EE gotta be bringin in another train load of adult diapers.  May be one giant hersey squirt culmination with the bad guys.  Flush'em all.  Then hurl the cesspool of ilk beyond a galaxy far, far away.

WineGuy's picture

I know it's early but I would like to wish

all my neighbors to the south a Happy and Prosperous US Thanksgiving. 

¤'s picture

Big Short

I bought the Currency Wars book on Sunday (haven't started it yet) and the Big Short was right next to it and I picked it up and looked it over and thought of buying it also.

I've heard of it before in bits and pieces but I figured why drop another $25 or so right now. Maybe once Currency Wars is done I'll pick it up.  Possibly the library.

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