Coins dominated finance for 2,400 years, followed by currency for 150 years, and now finance is dominated by digital measures.
All 3 coexist currently as means of exchange, and throughout time all 3 have been counterfeited;
Coins: Difficult to pull off because most everything was made of silver & gold, no wonder it lasted so long.
Currency: Difficult to pull off because of the high cost of printing equipment & machinery. A lot easier than coins though, as paper has little tangible value.
Digital: Easy-peasy, just type a bunch of numbers and create money vis a vis the mouse clique.
There are no substantial costs involved in gaming the system digitally, and most importantly-unlike coins & currency...
Nobody can see the results of the counterfeiters work, the perfect crime (so far so good)
Yeah, that's why the digital currency system must paradoxically be public information, or at least be set up with as many fail-safe procedures as possible. Who's guarding the FED?
Shanghai Building Collapses, Nearly Intact
In the weekend’s bizarrest news, a nearly finished, newly constructed building in Shanghai toppled over, killing one worker. As can be seen in the photo below, it collapsed with just enough room to escape what would have been a far more destructive domino effect involving other buildings in the 11-building complex
[snip]
The disaster could reveal some uncomfortable facts about lax construction practices in China, where buildings are put up in a hurry by largely unskilled migrant workers, and developers may be tempted to take shortcuts. Shanghai Building Collapses, Nearly Intact - China Real Time Report - WSJ
Once the digital currency system is shown to be the chimera ruse that it is, it doesn't matter how many 'fail-safe' procedures are put in place, as the public's trust is shattered.
"And a comment on the last thread regarding China stimulus loans going into real estate and stock market speculation..."
Chinese can only legally gamble in Macao, and i've never seen a nationality of people that crave gambling like the Chinese do, so in lieu of the green felt jungle, they are rolling the dice elsewhere...
While this may be a minor point... i love that every time CR puts up a graph that does not start at zero, he mentions it.
To me, it is a sort of intellectual honesty...because there are plenty of blogs out there trying to prove a point that will try to slide in something under the radar.
These are not Loan to Value (LTV) calculations. These are Principal Loan to Estimated Value calculations. That said these aggregate portfolio calculations don't include the huge load of crap they took on in 2008. Who made this? Greg Swann?
Additional caution is necessary when using this analysis as a measure of the health of Freddie Mac. That 76% aggregate LTV does not do you any good when half are triple good asset securitized and the other half are toxic.
Just read the Market Ticker article linked above and I think Karl may have forgotten to take his meds this morning. He might want to slow down and actually read the chart he is referencing. It states that Option ARMs comprise 1% ($11.9B) of their total portfolio currently and Alt-A comprises 9% ($176.4B).
Thru the wizardry of Karl's math, he concludes that just the 2005 and 2006 vintages of Option ARM and Alt-A combined total $301B, which is pretty interesting considering that Freddie reports that the total amount of Option ARM and Alt-A they hold (all vintages) is $188.3B.
For someone who says the math doesn't lie, he ought to check his more carefully.
BTW, I'm in no way defending the Freddie numbers. I think they are certainly goosed.
volker the viking (profile) wrote on Mon, 6/29/2009 - 6:55 am
could be a bumpy week in equities
But not for those of us individually who are on investment strike waiting for the Bureau of Weights and Measures to fix the scales.
volker the viking (profile) wrote on Mon, 6/29/2009 - 6:57 am
"...LTV does not do you any good when half are triple good asset securitized..."
and as such who holds title is in doubt as well?
I don't think there's much worry about the "gooder" assets. They'll just run off over the next 25 years with the issue never coming up. That said the others that will require disposition are sure to be a can of worms if the rules are allowed to be exercised wrt proof of provenance.
For the last 15 years, shams have been the engines of our economy. Hence the use of the word eCONomy.
Most of the fortunes and wealth garnered since 1995 and probably since 1990 have been the result of shams. Internet. Telecom. Fannie, Freddie. Derivatives. Housing. Commercial real estate. Banking. Investment Banking. Private Equity. Health Care via gamming of medicare. Student loans. Credit cards. MEW. Option Arms. Hedge funds. All of these industries either collapsed after the sham was exposed or have become wards of the state.
All of the above shams were made possible by a beneficent Central Bank. By bailing out the layers and layers of ponzi debt, the fed has placed a huge anchor around the neck of the productive economy. The anchor grows exponentially larger. Is it any wonder the majority are broke?
The final sham, should they go too far (I we're not there yet), is the dollar and U.S. sovereign debt.
Ponzi debt must end. Any system that must bailout fraud to survive is fraudulent itself.
He (Karl) makes an interesting point in today's post that people will be able to live rent free in their homes for a long time (years?) because banks are reluctant to foreclose and be forced to write down the asset.
The metal trade isn't so efficient off Somalia, and the paper deal didn't quite work out for the 2 Japanese.
The Caviar trade got 2 boys I grew up with killed. Oil is incendiary even before you burn it.
You can't counterfeit a Van Gogh, but if you don't become the master race, the paper trail will catch up to you. But let's face it, there has been no material difference between a radio signal and a brand on your skin at least since Einstein. They're making more diamonds, so I've heard. Some day gold that will fool you.
The only way to prevent counterfeiting of a digital currency is for hundreds of millions of people to keep an independent record of hundreds of millions of trades. Back-up copies on your flash drive. A few paper records scattered. Then you settle the dispute on the record, in open court, under penalty of perjury, according to written law and rules of evidence. Subject to the power of the court to grant relief, but in principle according to a recorded public code that was ratified by the representatives of the people, like the Jay Treaty. Same as it ever was. The Constitution would remain in force even if every signed copy were destroyed. It's just code.
For as angry as Karl gets, I at least hope he's managed to make a lot of money from his convictions. It would be a shameful waste of energy to spend that much emotion on nothing.
"Any system that must bailout fraud to survive is fraudulent itself."
.......couldn't be better said. Once it is allowed, the ONLY thing that will stop it is a crash or a roll over the edge. But, we still have those among us that think, wish, hope, & pray that with enough fairy dust, fingers crossed just the right way, and with a good blurry cross-eyed glance askance, everything will be all better - because that's what we're told.
What happens when THOSE people too finally realize they're being lied to?
Karl's the blog that cried wolf a few too many times...
Crying wolf is not the sin.
Not acknowledging that you were out to lunch is the thing that REALLY makes you look out to lunch. It shows a lack of corrective process in your brain.
volker the viking (profile) wrote on Mon, 6/29/2009 - 7:04 am
RD: the gooder assets were rated such by now discredited agencies, right?
I hope you're right. It's still a can of worms inside a barrel of monkeys at a rat killing.
And as soon as the smoke clears disposing of cliches will be like shooting fish in a barrel.
Seriously, I think Freddie has a trillion in loans that need nothing more than cashing the check every month. Big deal. THey don't matter. What matters as Karl D rants is that the portfolio is leveraged such that they don't have enough retained asset value to cover even a 8% default aggregate nevermind what is quickly looking like 20%. We taxpayers are going to be on the hook again.
Sorry, wasn't fed anything on original sin. The Euro was supposed to fail. And Mozilla Firefox can't possibly work. I have never seen a cheater last long at the poker table. He can win a nice pot, but if the house doesn't catch him, the rest of the table can make certain he will lose, with no words or signals passed.
"The only way to prevent counterfeiting of a digital currency is for hundreds of millions of people to keep an independent record of hundreds of millions of trades. Back-up copies on your flash drive. A few paper records scattered. Then you settle the dispute on the record, in open court, under penalty of perjury,"
In principle, a trusted central authority could also work.
If you really wanted an all-world-currency then you'd denominate it in hours worked, which would necessitate everybody making the same amount, which I don't think is gonna fly.
That's why code Otis and I would say we should excommunicate a certain cabal of players that appear to be colluding. Don't sit at their table. Warn the tourists. Expose their chicanery:
....LOL......It's a moot point. Until Freddie, Fannie, the REAL FedGov finally open their eyes and realize "we have 3-times as many homes as is needed, we're screwed" everyone will be preening, dancing around showing off their non-existent underwear.
Black Star Ranch (profile) wrote on Mon, 6/29/2009 - 7:10 am
"Any system that must bailout fraud to survive is fraudulent itself."
.......couldn't be better said. Once it is allowed, the ONLY thing that will stop it is a crash or a roll over the edge. But, we still have those among us that think, wish, hope, & pray that with enough fairy dust, fingers crossed just the right way, and with a good blurry cross-eyed glance askance, everything will be all better - because that's what we're told.
I willingly enter into this delusion and not because of the media. Too much skin in the game. Having kids changes everything.
But having said that we should make clear that the "system rolling over" could have been limited to "the banking system." Someone, or many someones, along the way confused "collapse of the banking system" with "collapse of Western Civilization." They weren't the same until recently.
Not hours worked, value produced or existing. Tangible.
I never bought a Michael Jackson product. He sold so many multiples of Dickie Betts' output, who has trouble filling an opera house. I will never be convinced that he had anywhere near the level of talent, creativity, artistry, whatever. But I wouldn't deny him his profit, people can listen to what they want.
But he (his estate) will have trouble paying his mortgage if people decide maybe they should just "borrow" their buddy's recording.
Outsider (profile) wrote on Mon, 6/29/2009 - 7:26 am
Dawg, is Thursday still a turning point day in your estimation?
They say dawgs can sense seismic events but while I think Thursday is a dangerous moment there's just no way to predict what will trigger the capitulation downdraft. Thursday, like it was two months ago is just a guess based on end of quarter, long weekend, California budget, Treasury actions and seasonality. The Treasuries have gone remarkably well but with the Fed asterick. California is worsening and failing faster than but not resonating. I'd rather you asked me to predict earthquakes.
Obamma,s policies may not be working as well as many had hoped:
1st 100 days - There are 2.9 million more people unemployed in May than there were unemployed in January. The unemployment rate went from 7.6% to 9.4%. Since May 2008, we have lost 5.5 million jobs. The biggest losers were: Manufacturing 1.5 million lost Finance & Prof Serv 1.5 million lost Construction 1.1 million lost Retail & Leisure 1.3 million lost
(got Kevin Bacon'd...)
Coins dominated finance for 2,400 years, followed by currency for 150 years, and now finance is dominated by digital measures.
All 3 coexist currently as means of exchange, and throughout time all 3 have been counterfeited;
Coins: Difficult to pull off because most everything was made of silver & gold, no wonder it lasted so long.
Currency: Difficult to pull off because of the high cost of printing equipment & machinery. A lot easier than coins though, as paper has little tangible value.
Digital: Easy-peasy, just type a bunch of numbers and create money vis a vis the mouse clique.
There are no substantial costs involved in gaming the system digitally, and most importantly-unlike coins & currency...
Nobody can see the results of the counterfeiters work, the perfect crime (so far so good)
other blogs covering this relevant topic as well
Herr Denninger seems appropriately concerned:
Agency MBS (Mortgages)? Better Read This! - The Market Ticker
aside: appreciate the lack of hyperbole here, as well as all the anecdotal observations from around the country
piglet:
Yeah, that's why the digital currency system must paradoxically be public information, or at least be set up with as many fail-safe procedures as possible. Who's guarding the FED?
Shanghai Building Collapses, Nearly Intact
In the weekend’s bizarrest news, a nearly finished, newly constructed building in Shanghai toppled over, killing one worker. As can be seen in the photo below, it collapsed with just enough room to escape what would have been a far more destructive domino effect involving other buildings in the 11-building complex
[snip]
The disaster could reveal some uncomfortable facts about lax construction practices in China, where buildings are put up in a hurry by largely unskilled migrant workers, and developers may be tempted to take shortcuts.
Shanghai Building Collapses, Nearly Intact - China Real Time Report - WSJ
And a comment on the last thread regarding China stimulus loans going into real estate and stock market speculation...
Comment by energyecon from thread 'BIS: Toxic Assets Still a Threat'
Once the digital currency system is shown to be the chimera ruse that it is, it doesn't matter how many 'fail-safe' procedures are put in place, as the public's trust is shattered.
Calling all mortgage insurers.
"And a comment on the last thread regarding China stimulus loans going into real estate and stock market speculation..."
Chinese can only legally gamble in Macao, and i've never seen a nationality of people that crave gambling like the Chinese do, so in lieu of the green felt jungle, they are rolling the dice elsewhere...
Wonder if we can get a similar presentation from the Fed. One would really like to know just how Freddie goosed that LTV.
While this may be a minor point... i love that every time CR puts up a graph that does not start at zero, he mentions it.
To me, it is a sort of intellectual honesty...because there are plenty of blogs out there trying to prove a point that will try to slide in something under the radar.
Oops, my mistake. Was misreading the graph.
See footnotes to Freddie bar charts:
LTV ratio range "excludes any secondary financing by third parties".
This provides an unduly rosy picture of homeowner equity.
dek: yeah, but man do they look better
and remember folk, it's not how you feel that's important, it's how you look
Also, keep in mind the four functions of a bureaucracy:
1) Justify your existence
2) Duplicate your effort
3) Eyewash
4) CYOA
Not just blogs - politicians been using shady charts for a long time:
http://www.usnews.com/dbimages/master/2147/FE_PR_071101boom_threekeys2.jpg
"Shanghai Building Collapses, Nearly Intact"
Made in China....
These are not Loan to Value (LTV) calculations. These are Principal Loan to Estimated Value calculations. That said these aggregate portfolio calculations don't include the huge load of crap they took on in 2008. Who made this? Greg Swann?
Additional caution is necessary when using this analysis as a measure of the health of Freddie Mac. That 76% aggregate LTV does not do you any good when half are triple good asset securitized and the other half are toxic.
could be a bumpy week in equities
Volker,
Just read the Market Ticker article linked above and I think Karl may have forgotten to take his meds this morning. He might want to slow down and actually read the chart he is referencing. It states that Option ARMs comprise 1% ($11.9B) of their total portfolio currently and Alt-A comprises 9% ($176.4B).
Thru the wizardry of Karl's math, he concludes that just the 2005 and 2006 vintages of Option ARM and Alt-A combined total $301B, which is pretty interesting considering that Freddie reports that the total amount of Option ARM and Alt-A they hold (all vintages) is $188.3B.
For someone who says the math doesn't lie, he ought to check his more carefully.
BTW, I'm in no way defending the Freddie numbers. I think they are certainly goosed.
"...LTV does not do you any good when half are triple good asset securitized..."
and as such who holds title is in doubt as well?
Cooked numbers served up in a graph doesn't sound appetizing, but i'm hungry for information...
Another nothingburger w/lies
Karl does make for an entertaining read, huh!
yo! Karl, there's little bit of spit on your chin, no not there, the other side
Yeah, he's about as good as Nova for some apocalypto-porn.
volker the viking (profile) wrote on Mon, 6/29/2009 - 6:55 am
could be a bumpy week in equities
But not for those of us individually who are on investment strike waiting for the Bureau of Weights and Measures to fix the scales.
volker the viking (profile) wrote on Mon, 6/29/2009 - 6:57 am
"...LTV does not do you any good when half are triple good asset securitized..."
and as such who holds title is in doubt as well?
I don't think there's much worry about the "gooder" assets. They'll just run off over the next 25 years with the issue never coming up. That said the others that will require disposition are sure to be a can of worms if the rules are allowed to be exercised wrt proof of provenance.
For the last 15 years, shams have been the engines of our economy. Hence the use of the word eCONomy.
Most of the fortunes and wealth garnered since 1995 and probably since 1990 have been the result of shams. Internet. Telecom. Fannie, Freddie. Derivatives. Housing. Commercial real estate. Banking. Investment Banking. Private Equity. Health Care via gamming of medicare. Student loans. Credit cards. MEW. Option Arms. Hedge funds. All of these industries either collapsed after the sham was exposed or have become wards of the state.
All of the above shams were made possible by a beneficent Central Bank. By bailing out the layers and layers of ponzi debt, the fed has placed a huge anchor around the neck of the productive economy. The anchor grows exponentially larger. Is it any wonder the majority are broke?
The final sham, should they go too far (I we're not there yet), is the dollar and U.S. sovereign debt.
Ponzi debt must end. Any system that must bailout fraud to survive is fraudulent itself.
Karl does make for an entertaining read, huh!
After his nukular meltdown post, has there been even a shred of acknowledgment that he panicked at the very bottom.
He (Karl) makes an interesting point in today's post that people will be able to live rent free in their homes for a long time (years?) because banks are reluctant to foreclose and be forced to write down the asset.
RD: the gooder assets were rated such by now discredited agencies, right?
I hope you're right. It's still a can of worms inside a barrel of monkeys at a rat killing.
The metal trade isn't so efficient off Somalia, and the paper deal didn't quite work out for the 2 Japanese.
The Caviar trade got 2 boys I grew up with killed. Oil is incendiary even before you burn it.
You can't counterfeit a Van Gogh, but if you don't become the master race, the paper trail will catch up to you. But let's face it, there has been no material difference between a radio signal and a brand on your skin at least since Einstein. They're making more diamonds, so I've heard. Some day gold that will fool you.
The only way to prevent counterfeiting of a digital currency is for hundreds of millions of people to keep an independent record of hundreds of millions of trades. Back-up copies on your flash drive. A few paper records scattered. Then you settle the dispute on the record, in open court, under penalty of perjury, according to written law and rules of evidence. Subject to the power of the court to grant relief, but in principle according to a recorded public code that was ratified by the representatives of the people, like the Jay Treaty. Same as it ever was. The Constitution would remain in force even if every signed copy were destroyed. It's just code.
Karl's the blog that cried wolf a few too many times...
Should be lots of lifetime renters for the next few decades.
yogi,
It sounds wonderful this plan of yours...
Now what about basic human greed and chicanery?
[i love that every time CR puts up a graph that does not start at zero, he mentions it]
It's called integrity. Something that lends itself to credibility.
For as angry as Karl gets, I at least hope he's managed to make a lot of money from his convictions. It would be a shameful waste of energy to spend that much emotion on nothing.
"Any system that must bailout fraud to survive is fraudulent itself."
.......couldn't be better said. Once it is allowed, the ONLY thing that will stop it is a crash or a roll over the edge. But, we still have those among us that think, wish, hope, & pray that with enough fairy dust, fingers crossed just the right way, and with a good blurry cross-eyed glance askance, everything will be all better - because that's what we're told.
What happens when THOSE people too finally realize they're being lied to?
Karl's the blog that cried wolf a few too many times...
Crying wolf is not the sin.
Not acknowledging that you were out to lunch is the thing that REALLY makes you look out to lunch. It shows a lack of corrective process in your brain.
Good thing I don't suffer from that.
volker the viking (profile) wrote on Mon, 6/29/2009 - 7:04 am
RD: the gooder assets were rated such by now discredited agencies, right?
I hope you're right. It's still a can of worms inside a barrel of monkeys at a rat killing.
And as soon as the smoke clears disposing of cliches will be like shooting fish in a barrel.
Seriously, I think Freddie has a trillion in loans that need nothing more than cashing the check every month. Big deal. THey don't matter. What matters as Karl D rants is that the portfolio is leveraged such that they don't have enough retained asset value to cover even a 8% default aggregate nevermind what is quickly looking like 20%. We taxpayers are going to be on the hook again.
BSR: correct! The big word is 'capitulation'. Gonna be a dark day in Mudville when it happens.
Sorry, wasn't fed anything on original sin. The Euro was supposed to fail. And Mozilla Firefox can't possibly work. I have never seen a cheater last long at the poker table. He can win a nice pot, but if the house doesn't catch him, the rest of the table can make certain he will lose, with no words or signals passed.
Bearly,be careful when accusing someone of having integrity,possession is a crime in some places.
RD: and is Fannie much, much bigger?
"The only way to prevent counterfeiting of a digital currency is for hundreds of millions of people to keep an independent record of hundreds of millions of trades. Back-up copies on your flash drive. A few paper records scattered. Then you settle the dispute on the record, in open court, under penalty of perjury,"
In principle, a trusted central authority could also work.
trusted central authority
= impossible.
"In principle, a trusted central authority could also work. "
.....God doesn't take side jobs.......he gives no references either....
BSR: LOL!
If you really wanted an all-world-currency then you'd denominate it in hours worked, which would necessitate everybody making the same amount, which I don't think is gonna fly.
Here's why we've been infusing Fannie and Freddie: NYTimes graphic.
That's why code Otis and I would say we should excommunicate a certain cabal of players that appear to be colluding. Don't sit at their table. Warn the tourists. Expose their chicanery:
The Institutional Risk Analyst: AIG: Before Credit Default Swaps, There Was Reinsurance
Then there is always clawback.
....LOL......It's a moot point. Until Freddie, Fannie, the REAL FedGov finally open their eyes and realize "we have 3-times as many homes as is needed, we're screwed" everyone will be preening, dancing around showing off their non-existent underwear.
Black Star Ranch (profile) wrote on Mon, 6/29/2009 - 7:10 am
"Any system that must bailout fraud to survive is fraudulent itself."
.......couldn't be better said. Once it is allowed, the ONLY thing that will stop it is a crash or a roll over the edge. But, we still have those among us that think, wish, hope, & pray that with enough fairy dust, fingers crossed just the right way, and with a good blurry cross-eyed glance askance, everything will be all better - because that's what we're told.
I willingly enter into this delusion and not because of the media. Too much skin in the game. Having kids changes everything.
But having said that we should make clear that the "system rolling over" could have been limited to "the banking system." Someone, or many someones, along the way confused "collapse of the banking system" with "collapse of Western Civilization." They weren't the same until recently.
I wonder if the Brobdingnagians have Comprehensive Collusion in their insurance policies?
Dawg, is Thursday still a turning point day in your estimation?
"They weren't the same until recently."
not sure I buy into that
Edit: Dinsdaled.
Not hours worked, value produced or existing. Tangible.
I never bought a Michael Jackson product. He sold so many multiples of Dickie Betts' output, who has trouble filling an opera house. I will never be convinced that he had anywhere near the level of talent, creativity, artistry, whatever. But I wouldn't deny him his profit, people can listen to what they want.
But he (his estate) will have trouble paying his mortgage if people decide maybe they should just "borrow" their buddy's recording.
Outsider (profile) wrote on Mon, 6/29/2009 - 7:26 am
Dawg, is Thursday still a turning point day in your estimation?
They say dawgs can sense seismic events but while I think Thursday is a dangerous moment there's just no way to predict what will trigger the capitulation downdraft. Thursday, like it was two months ago is just a guess based on end of quarter, long weekend, California budget, Treasury actions and seasonality. The Treasuries have gone remarkably well but with the Fed asterick. California is worsening and failing faster than but not resonating. I'd rather you asked me to predict earthquakes.
We need to stop the corruption by Goldman, bank of Amerika, and Jp Morgan. Stop the Geithner and bernanke. .
Go to: Financial Opinions Updated Daily iamned.com
and read the full Rolling Stone [Taibbi] The Great American Bubble Machine article.
Obamma,s policies may not be working as well as many had hoped:
1st 100 days - There are 2.9 million more people unemployed in May than there were unemployed in January. The unemployment rate went from 7.6% to 9.4%. Since May 2008, we have lost 5.5 million jobs. The biggest losers were: Manufacturing 1.5 million lost Finance & Prof Serv 1.5 million lost Construction 1.1 million lost Retail & Leisure 1.3 million lost
good articles Financial Opinions Updated Daily iamned.com
recommended reading
Why isnt the stock market falling when the economy is sinking? Why cant we get change in Washington that we really need? Why vote?