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Wednesday, April 08, 2009

d'Anconia, the Sage Source, Says Social Fabric Wearing Thin

My sage source has kindly developed a suitable name for his appearances on this august publication: meet Francisco d'Anconia. You know, because he's my friend, and I'm John Galt (if you don't know what all that's about, get busy on your Ayn Rand homework).

Cisco says, as he muses on the fact that the IMF has just upped its estimate of the losses in "toxic debt" incurred by banks and insurers, for at least the fourth time, "maybe, just possibly, $4 trillion will not be the final answer." This is because he knows certain disturbing facts: "the total notional value of CDS [credit default swaps] alone is something like $60 trillion (though the ISDA [Int'l Swaps and Derivatives Assoc.] can only guess, because "Over The Counter" means no market, no regulation, no oversight) and there are hundreds of trillions in interest rate swaps and other contracts without any adult supervision ... Taking William Black's fraud assessment at face value, we should probably start with a figure closer to $25 trillion, and conclude that the world's financial system is a hollow shell."

[Nota bene: Wm. Black appears to be a liberal (I take this from the fact that he says nothing about the role of the Community Reinvestment Act at points where it is obviously relevant in the above interview), but he's being brutally honest about the failure of Obama's financial/fiscal policy to date; do enjoy the video interview, because it's good stuff, and it's encouraging to see an apparent liberal be so straightforward.]

He has recently pointed me to a story about the collapse of the condo lifestyle in Miami:
http://www.reuters.com/article/newsOne/idUSTRE53200O20090403

And another on impending big losses for Wells Fargo (plus more for Fannie and Freddie) due to the bust up of another insurer, Triad Guaranty Inc.:
http://www.housingwire.com/2009/04/02/mortgage-insurance-woes-grow-for-fannie-freddie/
(Says Cisco, "Some of my most reliable sources are saying that the insurance industry is being sucked down with the banks, that big groups like Hartford have used poor risk management and invested heavily in stocks, and now are increasingly capital-impaired. Wait until people figure out that they've been wasting their money on car insurance and life insurance because the insurance co. doesn't have the wherewithal to pay the full claim.")

And another on people abandoning their boats (why not bilk the insurance company, after it has bilked the taxpayer? No, just kidding):
http://www.nytimes.com/2009/04/01/business/01boats.html?_r=1&ref=us

And another on banks abandoning their mortgage notes. Or something like that. Things are getting really, really confusing:
http://crooksandliars.com/susie-madrak/ny-times-now-banks-are-skipping-forec

Senor d'Anconia concludes as a sage should:
" "A jobless recovery"--yep, it will be that. And a profitless recovery, a growthless recovery, and ultimately, a recovery-less recovery. The U.S. is a nation of liars, in a world of liars. The social fabric is wearing very thin."

We should all join Senor d'Anconia in buying out-of-the-way agricultural property in South America, and disappear ... Starve the Beast.

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