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The HedgeFund Economy


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Chief economist at the European Central Bank Otmar Issing has delivered a stinging invective against ?unsustainable? economic policies in the U.S. Issing singled out the US tactic of ?artificially stimulating the economy by large budget deficits and inflationary monetary policy? as ?no viable option?, in a speech this week at the German-British Forum in London.

 

What he really means is that the U.S. has gutted its manufacturing base, having Shanghai?d it to Asia, and has now become the HedgeFund Economy, financed by massive trade deficits from Stephen Roach?s ?Rest of the World? economies.

 

Virtually every where you look, former industrial companies have morphed into huge HedgeFunds with a measly, withering industrial businesses on the side. Other mortgage and credit card giants have become Credit Junky Accomodators. Financial pushers.

 

General Motors should be renamed DiTech Mortgage Corporation

 

General Electric should be renamed GE Capital Corporation

 

John Deere should be renamed Farm Credit Bureau Corporation

 

Fannie Mae should be renamed U.S. Mortgage HedgeFund No. 1

 

Freddie Mac should be renamed U.S. Mortgage HedgeFund No. 2

 

Countrywide should be renamed Ponzi Corporation of Calabasas, Inc.

 

New Century should be renamed Immigrant Finance, Inc.

 

Capital One should be renamed Check Cashing on Credit, USA, Inc.

 

Eventually, the Financial Pyramiding and Speculating of the HedgeFund Economy, financed by Hot Money will run into trouble, as all leveraged speculations do, resulting in the Systemic Event.

 

Issing, who strongly supports keeping the lid on government spending, expressed concerns of a ?disorderly adjustment? when the US decides to sort out its coffers. ?The crucial issue is whether the adjustment will be orderly or involve a large and disruptive change in key economic variables. ?Such a disorderly adjustment would affect not only the rest of the world but, in particular, the deficit country itself, turning this issue into a truly global one.

 

???????..

 

 

Sorry to bring this up again. But that Deutsche Bank advertisement on Crapvision is on Heavy Rotation. I can?t ignore it because I?m transfixed by the 2-second shots of the hot chicks featured in business suits.

 

Labeled ?Passion to Perform?, as if the firm was filled with ?can do? Pyramid Players able to pull off whatever trading task is necessary for their large corporate clients.

 

First Scene:

 

An supermodel quality Corporate Finance Executive, flirting on the phone, trying to close a billion dollar debt offering for a Third World Finance Minister.

 

?Yes, Hamid, I?m sure I can price those for 2 basis points over U.S. Treasuries!! We have thousands of HedgeFund clients in Bermuda clamoring for these securities. Of course, I would expect an all expense paid 7-day meeting in Sardinia to work out the details.?

 

Second Scene:

 

Two guys high fiving in the conference room. Obviously jubilant over some major deal pulled off.

 

?Yes, we just dumped $100 million of GE and MSFT stock for our insurance company client onto thousands of hapless bagholders throughout the Continent!! The exact day before those stocks tanked!!?

 

Third Scene:

 

An attractive Asian account rep throwing up her hands at her desk and cheering. Eureka! Problem Solved!

 

?Finally!!! I have discovered a way to offload default risk on Structured Breast Implant Receivable Trusts into thin air!!! Now I can get my bonus and get my own implants!!

 

Fourth Scene:

 

Some guy running up the firm?s stainless steel staircase, with the utmost urgency.

 

?AMAT?s on the move!! I?ve got to hurry up and enter that buy order for my HedgeFund client!!!?

 

Just another EuroZone institution, attempting to ?catch up? and participate in the Wildcat Finance, sponsored by U.S. banks, to participate in the ?easy profits? handed on a silver platter, thanks to the Pegged Interest Rate and Stock Market Put Regime.

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I keep seeing all these "average Halloween expenditures" in the media.

I only spent a few dollars for some trick-or-treater candy this Halloween.

I am not spending the appropriate or average amount, apparently. :(

What's my problem?

 

I'm starting to think the candy purchase was really an excuse to chow down large quantities of "fun sized" 3 Muskateers bars... please get them away from me.

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Mark,

 

Great stuff.

 

It is amazing how the entire globe is dependent upon the machinations of the FNM balance sheet.

 

6 billion people sucking at the teat of America's ability to grow debt indefintely.

 

And people wonder why the US is hated by foreigners.

 

 

I'd be bitter too if my daily sustenance depended upon an entire country's penchance for living beyond their means and a great Halloween spending season.

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I keep seeing all these "average Halloween expenditures" in the media.

I only spent a few dollars for some trick-or-treater candy this Halloween.

I am not spending the appropriate or average amount, apparently. :(

What's my problem?

 

I'm starting to think the candy purchase was really an excuse to chow down large quantities of "fun sized" 3 Muskateers bars... please get them away from me.

 

:lol: :lol:

 

it's the milky-way's that're killing ME...gaahh!

 

:P :P

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I keep seeing all these "average Halloween expenditures" in the media.

I only spent a few dollars for some trick-or-treater candy this Halloween.

I am not spending the appropriate or average amount, apparently. ?:(

What's my problem?

 

I'm starting to think the candy purchase was really an excuse to chow down large quantities of "fun sized" 3 Muskateers bars... please get them away from me.

 

:lol: :lol:

 

it's the milky-way's that're killing ME...gaahh!

 

:P :P

What I really want figures on are egg and toilet paper (not the USD) expenditures for last night (aka mischief night, gate night, etc.).

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Countrywide should be renamed Ponzi Corporation of Calabasas, Inc.

 

New Century should be renamed Immigrant Finance, Inc.

 

 

:lol: :lol: :lol:

I like those two the best.

 

There is a surreal feel to all of this stuff thats going down. Fugg the fact that stock prices are acting like mexican jumping beans again. The stink thats gonna come out of the back end of the credit markets is gonna make the Naz drop from 5000 seem like a cakewalk.

 

The most popular word coming out of the fed in a few years will be "monetize". There is no going back now.

 

On another note, I saw New Hampshire, Rhode Island and New York State Pensions dropped Putnut.

 

Many are sloughing this off as no big deal that I speak with but this fund has a boat load of J6p non pension fund money and fundies in genreal are carrying Landislike cash levels of near zero. I can't even fathom what a run on mutual funds would look like if the list of crooks start growing.

 

Something to keep an eye on.

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SMegH Recrap:

 

Well that was that. A week that was. I ended up having my best day in 3 weeks and Mr. Mechano had a light day in the red shorting in the am then getting stopped out 8 cents higher hours later. Of course, Mr. Mechano doesn't understand about the market not being allowed to go down or Friday nonsense or any of that. He just thinks that it's an auction that can go either way.

 

For my part having decided not to take the early short, the only real play was long with a tight stop. I ended up with 2 of these. A long from 41.40 caught just before the run up to 41.59 on the noon short raid (exit 41.53). Later, I looked away for the screen for a second and missed the start of the 2:30 follies eventually jumping in at 41.65 and 41.58 on a pullback, although 41.50 was there if one was attentive. The action was wholly unconvincing and a pull-out at 41.76 preserved the gains as the market got hosed off and closed back at 41.60, down 18 cents.

The SMegH is pointed lower but for how long?

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Guest Icky Twerp

Mark,

FAR be it from me to tell YOU anything about the criminal behavior you write about so well, but may I suggest, "check kiting" rather than "ponzi scheme"?

 

Thanks for giving us something to contemplate while we wait for the Reckoning. I wish I'd been on this side of the equation in 1999, so I'd have more experience in being wrong when I know I'm right.

 

regards,

IT

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add PA to the list...of state pension funds bailing on Putnam... :P

 

altho i'm aware that news isn't what's driving this mkt....like ag, i can't help but wonder what a real 'run' on a big MF might look like...

This is just the tip of the iceberg. B)

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