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The Game Is About Done (Denninger)
Market Ticker ^ | 11-23-2011 | Karl Denninger

Posted on 11/25/2011 4:26:50 AM PST by blam

The Game Is About Done

Karl Denninger
November 23, 2011

It's pretty-much over at this point....

This morning Germany had a failed Bund auction. That's not particularly noteworthy; it happens from time to time.

But what's noteworthy is what happened to bond yields everywhere through Europe in response: They blew out.

The Greek and Italian "problem" is no longer about Greece and Italy. It has been creeping into Spain and more-recently France, but this morning jumped into Germany and everywhere else "all at once."

Capital has said "no more" to the lies in Europe. While this does not mean an instant implosion it does mean one important thing: The willingness of capital holders to continue to permit deficit spending is coming to an end, and with it the false "GDP" that this lie has "supported" will also come to an end.

Our lawmakers, for their part, continue to sing a happy song about how we'll get it done -- but not today, since the supercommittee was an abject failure. Covering up the failure was the fact that there were departments that had 10, 20 even 30% increases in the funding found in the appropriateions bills that were passed in the House even while the "committee" was trying to find a way to "cut" spending.

Folks, this political game of lie, lie and lie some more cannot go on forever. Eventually the waiter appears with the check and you either pay it, wash dishes, or get arrested for theft. In the political world that "arrest" comes in the form of capital holders saying that they no longer believe you will ever pay and borrowing costs go up -- way up.

The Fed cannot "print" out of this and neither can the ECB. If either try that they will engender an all-on revolt, never mind that as purchasing power falls the fixed costs of staying alive go up relative to incomes and the war is lost anyway.

Reality must eventually be faced. That day is here for Europe and it will soon be here in the US. We have permitted the lies and stealing -- both indirectly and now, as we've seen, it appears directly through MF Global -- to go on for too long.

To those Seniors (and soon-to-be-Seniors) and others who say "but we were promised!" and "I vote damnit - you better give me what you said I'd get" respond: The till is empty and your check is going to bounce.

Occupy Wall Street? Well sure, but while you're at it, why aren't the Seniors encircling the Capitol and refusing to leave? Why isn't the underlying truth being discussed and why aren't the jackals that led to this happening being forced from office and run out of town on a rail?

I'll tell you why: Because everyone thinks that they can manage to somehow "get theirs" while "someone else" will take the hit.

I'm sorry to tell ou that it isn't going to work out like that.

There's no point in continuing to play this game. MF Global showed us -- you're right, you hedge or you place your bet, you still lose your money! How many farmers, airlines, industrial producers and other legitimate entities using the market for risk management got screwed by that little game and why is it that Corzine is not in handcuffs? FINRA? What's that -- it appears Corzine didn't have a valid (and required) securities license. Self-regulation not only failed so has any resemblance of actual law enforcement.

The same game was run over in Europe with sovereign CDS. You hedge, you bet right, the ISDA declares that you were "voluntarily" exchanging your bonds and the hedges you bought were worthless. Your "exchange" was as voluntary as is handing over your wallet when there's a gun up your nose, but that doesn't matter -- the word "is" can be redefined any time the people in charge want, and they want.

Your money, that is.

It will not be long ladies and gentlemen, when the bulk of the folks running the algorithms deduce that they're exposed to the same risks - they have to post margin too, you know, and if it can be stolen then their capital isn't safe either. These deposits aren't supposed to be "at risk" when there's no position actively open -- that's a performance bond against possible failure to pay, but is supposed to be exactly as safe as a bank deposit in a checking account under FDIC limits.

Well, it wasn't. The CDS you bought on Greece wasn't. And it will only take another event like this or two before people conclude that everything is unsound as the jackals running the game will redefine the meaning of words to suit themselves and, failing that will simply steal the money.

30+ years of lawless behavior has now devolved down to blatant, in-your-face theft. They don't even bother trying to hide it any more, and Eric "Place" Holder is too busy supervising the running of guns into Mexico so the drug cartels can shoot both Mexican and American citizens.

What am I, or anyone else, supposed to do in this sort of "market" environment? Invest in.... what? Land titles are worthless as they've been corrupted by robosigning, margin deposits have been stolen, Madoff's clients had confirmations of trades that never happend and proved to worthless pieces of paper instead of valuable securities and while Madoff went to prison nobody else has and the money is still gone!

Without enforcement of the law -- swift and certain -- there is no deterrent against this behavior.

There has been no enforcement and there is no indication that this will change.

It will take just one -- or maybe two -- more events like MF Global and Greek CDS "determinations" before the entire market -- all of it -- goes "no bid" as participants simply stuff their hands in their pockets and say "screw this."

It's coming folks, and I guarantee you this: Whatever your "nightmare" scenario is for such an event, it's not bearish enough.


TOPICS: News/Current Events
KEYWORDS: bonds; debt; denniger; economy; eucrisis; germany; investing; karldenniger; ticker

1 posted on 11/25/2011 4:26:56 AM PST by blam
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To: blam

It’s going to make 1933 look like a cook out.


2 posted on 11/25/2011 4:35:25 AM PST by kjo
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To: kjo

In 1933 flash mobs were not stealing the apple carts


3 posted on 11/25/2011 4:37:23 AM PST by silverleaf (common sense is not so common- voltaire)
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To: kjo

THese major depressions seem to end in only one way, world war.


4 posted on 11/25/2011 4:37:52 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: blam
TED Spread Keeps Surging Higher As Banks Freak Out About Lending To Each Other
5 posted on 11/25/2011 4:38:14 AM PST by blam
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To: blam

Since capital markets are saying “no”, the Europeans will force their Central Bank to keep buying up the debt.

This is not over yet.


6 posted on 11/25/2011 4:46:38 AM PST by Erik Latranyi
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To: Erik Latranyi

Just got my black friday shopping done - Dicks had a great deal on a 24 Gun Safe.

You want to laugh - I was there as 5:30 am and the store was entirely empty except . . . . . . . . . . .

THE FIREARMS DEPARTMENT

Saw three people buying guns at 5 am.


7 posted on 11/25/2011 4:51:07 AM PST by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: GlockThe Vote
TROUBLE


8 posted on 11/25/2011 4:58:33 AM PST by blam
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To: blam

Until we start prosecuting these financial criminals like the murderers they are and jailing them for life, we will be forever in a state of mistrust.


9 posted on 11/25/2011 4:59:45 AM PST by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: blam

Karl’s concluding sentences-—

“”It will take just one — or maybe two — more events like MF Global and Greek CDS “determinations” before the entire market — all of it — goes “no bid” as participants simply stuff their hands in their pockets and say “screw this.”

It’s coming folks, and I guarantee you this: Whatever your “nightmare” scenario is for such an event, it’s not bearish enough.””


10 posted on 11/25/2011 5:06:36 AM PST by Presbyterian Reporter
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To: GlockThe Vote
Until we start prosecuting these financial criminals like the murderers they are and jailing them for life, we will be forever in a state of mistrust.

Start with Congress......

11 posted on 11/25/2011 5:08:54 AM PST by Thermalseeker (Wanna keep livin' with your momma? Vote for Obama. Tired of the pain? Vote CAIN!)
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To: Presbyterian Reporter

Karl is one of the few guys that say’s it straight ip.


12 posted on 11/25/2011 5:13:04 AM PST by LiveFreeOrDie2001 (Best Cook on Free Republic! ;-))
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To: LiveFreeOrDie2001

“ip” = up.


13 posted on 11/25/2011 5:14:07 AM PST by LiveFreeOrDie2001 (Best Cook on Free Republic! ;-))
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To: Thermalseeker

Its both. The financial terrorists on wall street like madoff, corzine, et al, and the congress are both equally culpable.

And even worse - the disgusting police state we live under turnms a blind eye to financial terrorism, and focuses on utter nonsense while the nation implodes.


14 posted on 11/25/2011 5:16:44 AM PST by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: kjo

Yes it will dwarf it by leaps and bounds. Dang scary.


15 posted on 11/25/2011 5:18:35 AM PST by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: silverleaf

>>In 1933 flash mobs were not stealing the apple carts<<

Great observation. The social glue of the 1930s is long gone.


16 posted on 11/25/2011 6:00:13 AM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: GlockThe Vote

” THE FIREARMS DEPARTMENT

Saw three people buying guns at 5 am.”

Now that’s funny right there!


17 posted on 11/25/2011 6:23:20 AM PST by vanilla swirl (We are the Patrick Henry we have been waiting for!)
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To: Travis McGee

“Great observation. The social glue of the 1930s is long gone.”
//////////////////////////////////////////////////////////////

Not only the social glue but the knowledge of how to survive on a shoestring is gone. I was born in 1944 five days before D-Day. We lived on forty acres in South Carolina a mile off the nearest blacktop road . My parents knew how to survive with nearly nothing because they had reached adulthood on farms during the depression. Some on FR seem to think they can just go back and live that way if they find it necessary but it is not that simple. I can still remember how to do a lot of what I learned growing up but I realize that I never learned much of what they knew. Most people now cannot even imagine how people lived back then. You could hand the average young person a fine sharp axe now and they would collapse from exhaustion before they cut through a small tree branch.

I don’t mean this to sound critical, it is simply the facts. Most people have no more understanding of how to live that way than my father had of how to use a computer. A computer was simply a word that he learned before he died and that kind of living is simply words to most people, they have no idea of the reality behind the words. There are exceptions of course but they are a small minority.


18 posted on 11/25/2011 6:23:58 AM PST by RipSawyer (This does not end well!)
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To: vanilla swirl

Was the truth. They had a big safe half off and my Dad and I went at 5am.

Sotre was EMPTY. About 40 people working there. Went straight to the gun department - about 5-6 other people.

One woman was already filling out the paperwork - should bought a shotgun and a hunting rifle. Two other guys were buying .22 rifle and a shotgun.

Was talking to the guy and he said that the firearms department does the best out of anything. This is in White Plains, NY


19 posted on 11/25/2011 6:27:55 AM PST by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: blam

What is going to give the us (the US) breathing room in the near-mid term is the perception that we are the Global safe haven. In fact, the “Smart money” has been fleeing European banks & soverign bonds for “safe” US Treasuries for some time. But eventually we will be held to account to. When UST interest rates go over 5%, look for all H@ll to break loose as they true cost of the deficit cannot be swept under the rug anymore.

The current priority of the Fed is keeping UST interest rates low so that the Government spending party can continue. Everything else is decoration. The reason is simple: the Government effectively IS the Economy. If the Government is forced to live within its means, then most of the population will see either a partial or total reduction in income. It will be a SHTF situation like we’ve never seen.


20 posted on 11/25/2011 6:32:38 AM PST by rbg81
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To: rbg81

Will amend my prev post to add:

Some people (rightly) point out that the US will never default because it can just print $$ and/or the Fed will always be able to buy UST when no one else will. True enough, but this will lead to hyperinflation which will ge a default in all but name. People will be paid in $$ that will have ever decreasing value. There will be ever-longer waiting lines for services at Government mandated prices to the point where they will be unavailable. I can see a situation where UST and bank interest rates are technically at 2% but we have hyperinflation on everything else.


21 posted on 11/25/2011 6:42:58 AM PST by rbg81
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To: rbg81

Do you trust the current administration to just let the whole house of cards come down and rebuild from the ashes? I don’t. There are a lot of potential revenue streams to keep the game going that have yet to be tapped. Extralegal, but “stroke of a pen, kinda cool” to quote another cretin from another time.

All the bellowing about law abiding citizens being armed won’t amount to a hill of beans other than the carefully managed appearance of a few stray outbreaks of crazy in isolated locales, which will be stomped into a greasy spot. We’ve seen this before, haven’t we.

We’ll have a thoroughly, openly authoritarian government with no pretense of being anything other than that. Assets will be seized, for the greater good of course. Collapse will be drawn out and camouflaged for years, and the spectre of grossly overpaid government workers lording it over their inferiors who pay for it all will continue, as will the swipe-swipe of grossly obese, irresponsible and hostile wards of the state who are protected because they aren’t of the putative majority, with which there has been a protracted cold war for practically my entire life.

And, they’re apparently about to win this war. Every asset class, every avenue of escape, every means of even remotely preserving wealth has been corrupted, degraded and therefore closed off. “Mistakes” that are consistently made to one’s disadvantage are in fact no mistake.

That’s what I see. Prove me wrong, please. I’m very open to being shown a less bleak outcome.


22 posted on 11/25/2011 6:56:22 AM PST by RegulatorCountry
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To: RipSawyer

http://www.youtube.com/watch?v=OAOrT0OcHh0

5 minutes 37 seconds


23 posted on 11/25/2011 6:59:14 AM PST by Hostage (The revolution needs a spark. The Constitution is dead.)
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To: blam

The waiter appears with the check and you either pay it or wash dishes or go to jail. Ahhhh....but there are other choices. You tell the waiter that the Republican at the next table is picking up the tab. You can tip the table over and run away. You think Democrats play by the rules?


24 posted on 11/25/2011 7:00:24 AM PST by blueunicorn6 ("A crack shot and a good dancer")
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To: Hostage

Lol, good one!


25 posted on 11/25/2011 7:24:55 AM PST by jpsb
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To: Travis McGee

I have a feeling that the time between now and the 1st of the year is going to get pretty darned exciting.


26 posted on 11/25/2011 7:29:25 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: RegulatorCountry

Concur that the Administration will pull out all the stops to prevent an outright crash before the 2012 election. However, I don’t think outright confiscation of assets is in the cards anytime soon. Its just too politically toxic; continuing to deficit sepnd and debase the currency is the [political] path of least resistance.

However, once Whites are no longer the majority (or the largest minority) all bets are off. Then you’ll see all kinds of race-based taxes & other penalities to “equalize” outcomes.


27 posted on 11/25/2011 7:39:28 AM PST by rbg81
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To: blam
goes "no bid" as participants simply stuff their hands in their pockets and say "screw this."

That won't stop Government. It won't even slow them down. The money is somewhere and they'll simply take it by force and they'll be more than happy to kill you if you resist.

Think your 401k or 403b is safe? Think again. That money is somewhere and Government can reach anywhere at all to get their paws on it. And believe me they will.

Money market funds, bond funds, index funds, ETF's, savings accounts, CD's, etc. aren't safe no matter what words are printed on those papers you have. All it'll take is one Executive Order and it'll be GONE. And there won't be a damned thing you can do about it. Nothing.

Get what you have out and get it out now, in cash. Then get yourselves ready to hunker down for a while, quite possibly a very long while. It's about to get really, really ugly out there folks.

And I've never in my entire life hoped more fervently that I'm wrong. Never.

28 posted on 11/25/2011 7:40:53 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Lurker

I’ve been waiting for the big event that brings things crashing down. Now I am beginning to realize that the economic collapse is like a slow motion train wreck. Each day things just get a little worse. Yeah there will probably be a few big events, but for us ordinary people it more like every day is a little harder then the day before and after a few years things are gonna be just plain terrible.


29 posted on 11/25/2011 7:40:55 AM PST by jpsb
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To: silverleaf

So true. It was a different world in the 30’s. People still had respect for the govt and the president. People were a lot more self sufficient and 80% lived on the farm. Its going to be a lot worse this time around. If you are not prepping its time to get started.


30 posted on 11/25/2011 7:42:00 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: Lurker
"That won't stop Government."

I can hear it now. "In these troubling times we need a law to protect middle class 401Ks. From now on all 401Ks need to be majority invested in USA Treasury Notes. The safest investment in the world". lol, dido other investment monies lying around.

31 posted on 11/25/2011 7:46:43 AM PST by jpsb
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To: Lurker

I’m visiting the bank today. One thing my elders hammered home about bank runs is you don’t want to be last in line.


32 posted on 11/25/2011 8:05:51 AM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: RegulatorCountry

Very well said. I hope majorities of people see it as clearly as you laid it out because November ‘12 we can ‘prove’ this scenario is unacceptable. In reality, it’s our only recourse.


33 posted on 11/25/2011 8:06:23 AM PST by Track9
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To: jpsb

A slow motion train wreck if there is no trigger event.

Say, a war in the ME that extends to Iran, then blocks the Hormuz Strait oil chocke point.

Or many other potential triggers. So my timeline is tomorrow to two years, outside.


34 posted on 11/25/2011 8:09:03 AM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: RipSawyer
Hello RS.

it is simply the facts. Most people have no more understanding of how to live that way

There was a great short story by George O. Smith,titled Lost Art, published in 1943, and reprinted in A Treasury of Great Science Fiction that deals with this exact subject. It matches your observations.

I strongly suggest you buy A Treasury of Great Science Fiction ( 2 volumes) online.

It is very inexpensive on Ebay or online booksellers and contains many great short Stories including The Weapon Shops of Isher which neatly sums up the moral argument for the 2nd amendment.

35 posted on 11/25/2011 8:15:05 AM PST by bill1952 (Choice is an illusion created between those with power - and those without)
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To: rbg81
Then you’ll see all kinds of race-based taxes & other penalities to “equalize” outcomes...

You will see more than that - far more.
Think Rwanda was an isolated incident?

36 posted on 11/25/2011 8:19:35 AM PST by bill1952 (Choice is an illusion created between those with power - and those without)
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To: Hostage

Very good.


37 posted on 11/25/2011 8:23:57 AM PST by John W (Natural-born US citizen since 1955)
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To: jpsb

“I’ve been waiting for the big event that brings things crashing down. Now I am beginning to realize that the economic collapse is like a slow motion train wreck. “


That’s it. Western civilization has been at war with each other for centuries. We have been at war for over a hundred years. First half last century in Europe, 2nd half in Asia. This century in NE and Africa with South American beckoning. Each war has been another nail in our coffin as it was for England.

To follow our suicide wipe-out we have swallowed the Pill and wallowed in the mall while bailing out the world and exported our manufacturing seed cord. We have a bevy of GOP candidates, save 2 without support, who advocate more of the same plus Obama as the candidates of both parties vie to be the war time President ushering Western Civilization off the stage of history. God Help Us.


38 posted on 11/25/2011 8:36:43 AM PST by ex-snook ("above all things, truth beareth away the victory")
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To: vanilla swirl
Saw three people buying guns at 5 am.

Better late than never. Welcome to the club, guys.

39 posted on 11/25/2011 9:05:10 AM PST by JoeFromSidney (New book: RESISTANCE TO TYRANNY. A primer on armed revolt. Available form Amazon.)
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To: Lurker
"Think your 401k or 403b is safe? Think again. That money is somewhere and Government can reach anywhere at all to get their paws on it. And believe me they will."

Well...the money wouldn't be there if the government hadn't allowed and even encouraged you to put it there, tax free no less.

If the government is financially stressed, it is only right, even fair, that you allow the government to use that money to help less fortunate Americans.

How greedy of you to think otherwise and only of yourself.

40 posted on 11/25/2011 9:46:26 AM PST by blam
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To: RipSawyer

Absolutely. My mom grew up in the Depression in a 2 bedroom house with a dirt floor, an outhouse, and a hand pump well (in west Texas). They did pretty good because they had chickens and a cow and grandma knew how to live off the land.

I doubt I know half of what my mom knows, and maybe 1% of what my grandmam knew.


41 posted on 11/25/2011 9:51:54 AM PST by Betis70 (Bruins!)
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