The writings of Reinko Venema. 

 Click the pic for the history of this main page... (The archives)


Just some WarArt files
The (short) Story index
Index to the BigStory

 The most important deed done by me lately is a second activation of the NigthmareOnWallStreet. Goal is to guide down the DOW Jones to the 7000 level (the previous time I almost made it and now so many years later I have plenty of ammo).
Latest updates:
13 Dec 2008: But is it fraud at the US FED level?
30 Nov 2008 US financial sector: Prognoses of future debt growth for the next four years
11 Nov 2008  US financial sector: Debt growth through the decades
29 Oct 2008: For the first time in history: S&P down in a 10 year period 
10 Oct 2008: Derivates for dummies (with video's!)

Title: From the Iraqis, with love.

Arty: So now the mujahedin want to hear your opinion upon why you suddenly do all that financial stuff! Have you abandoned us? 

-Reinko: Oh no, but putting emphasizes on the financial stuff will bring down the entire US military far more efficiently in the long run. 

Look arty, the Americans have over 50 trillion or over 50,000 thousand billion of debt on her own economy.

At a reasonable interest level of just 5% they need 2500 billion a year just to pay the interest. That is about 13 times as much as the yearly costs of the wars in Iraq and Afghanistan. 

Also Arty, at the moment of writing the entire American banking system has only 200 million in reserves left. When I started this website again on 10 Nov they had over 40 billion of that reserve stuff... 

So trust me Arty with my repeated advice: Keep attacks on such a level that the Americans are forced to drive around in convoys so in the future you can be free.

And in the long future: When the Americans and NATO forces have left, the Afghanis and Iraqis can trust each other again. So they can settle their differences via the way things work over there.

Arty (looking happy): So we only have to wait...?

-Reinko: Yes, but never forget to pick up military might. But for the time being the policy is bring more security for the civilians, build the military might by using your brain and lots of practice and every now and then some good attacks on the invaders.

 Arty (smiling): Ok ok, I have to go back to Afghanistan so bye bye 


recent      links


(27 May 2009) Two items:

Item 1) The problem with Moody's and the Aaa rating of US government debt.
Item 2) Bloomberg and the openness of information.

 Item 1) The problem with Moody's and the Aaa rating of US government debt.

The problem with rating companies like Moody's, S&P or Fitch is they are all American companies. There is no reliable international rating agency, there are only profit driven rating companies.

The conduct of these companies in the present crisis is also well known; in fact if you were a large enough institution you could buy all the AAA ratings you needed on your products. (An internal email once said "If they structure it with cows, we can rate it".)
Far more worrisome is the fact the rating companies need computer software to 'rate' the stuff involved, this means the rating employees cannot give a rating using only paper, pencil and a hand held calculator.
To put it simple: Just like bankers selling options or using the 'value at risk' models, these employees simply have no clue about what they are doing.

Last week S&P put the United Kingdom on a 'negative watch list', that gave some turmoil in the markets. Strangely enough people started wondering if what goes for the UK will also go for the USA... 

Ok ok, the UK runs a 12 to 13% deficit of GDP, have no explanation why this borrowed money will 'do the trick' (bring in more future taxes and give GDP growth that will last a long time) and has no savings of any significance.

In short: With or without S&P any idiot can see this cannot have the highest rating.
Same goes for the USA; 50% of all Federal spending is borrowed and printed money and there are zero economists who can explain if all the borrowed money will be paid back (or represent similar kinds of wealth).

In the past short sighted idiots at Moody's defended the USA as follows:

The USA has tremendous taxing capabilities, if they raise taxes only 1% of GDP in just a decade you look at over one trillion in extra taxes.

The Moody's defense is nonsense in many ways; just try to raise taxes 1% of GDP and see what happens... Beside this the rating companies only comment on 'public traded debt' and neglect all internal debt in the US government; that is why the rating companies are utterly irrelevant. Just as in the past when they rubber stamped AAA on every product that came along, their analysis of the US financial situation is a joke too. 

Lets look at some nonsense Moody's came up with today (from Bloomberg), source:

U.S.’s Aaa Credit Rating Is Stable, Moody’s Says  

And one of those quotes that usually go without proof:

The U.S. rating is supported by “a diverse and resilient economy, strong government institutions, high per-capita income, and a central position in the global economy,” New York-based Moody’s said in a statement. At the same time, the firm warned that any “reassessment” of long-term growth prospects could put pressure on the rating. 

Today’s announcement may help soothe concern among investors who sold U.S. assets in the aftermath of Standard & Poor’s cutting Britain’s rating outlook, spurring concern about a similar fate for the U.S. The Obama administration has committed to reining in the budget deficit once a recovery is under way.  

Comment: This is just stupid talk, just looking at what is always table number one in the Federal Reserve Z1 release (debt growth by sector, source) simply says: GDP, profit or tax growth is always a tiny part of debt growth.
One thing is clear with today's statement from Moody's: Just like the rest in the US financial sector they don't have a clue. 

Item 2) Bloomberg and the openness of information. 

Many months ago Bloomberg started a judicial case against the US Federal Reserve; they wanted more insight in where all that tax payer money went in all those programs to support the financials.

After some time the FED gave in and now we have monthly updates like the last one:  

Doesn't it clearly say:

Collateral pledged = 1226 billion US$ while
Credit extended = 503 billion?   

Doesn't this mean the FED gives only 41 cents for every dollar collateral pledged? 

So the courthouse stuff from Bloomberg did pay off; how could we ever know the FDE pays only 41 cents for every pledged collateral dollar? 

Now how about splitting up the statistics along printed money yes or no?

There are persistent rumors that the FED buys more and more US government debt directly at the auctions of that debt. I think that is of interest because Central Banks buying government debt directly when it's auctioned is one of the most pure forms of printing money.

You have to read a bit between the lines, but even in dumb headed Yahoo files there is nothing found to the contrary:  

Slumping Treasury bond prices send stocks lower 

Here in Europe it is pretty simple: the European Central Bank is not allowed to buy government debt so a failed auction is a failed auction as the UK folks might have observed. But those USA folks, you simply cannot trust them; you don't know how much government debt goes to the FED. You just don't know...

Till updates.  

(25 May 2009) Finally another green shoot, it's a perfect one: a green shoot about the relation between unemployment and rising foreclosures in the USA.

Barry's source file:

Rising Job Losses = Rising Foreclosures  

The article does not quantify it but as a rule of thumb you can say about one third in unemployment numbers 'relates' to foreclosures, quote:

Over the period when BLS was reporting 500k plus job losses a month, from November’08 to February ‘09, the numbers of distressed properties “increased more than 473,000, exceeding 1.5 million.” Total loan value = more than $224 billion. (Sources: The Times, First American CoreLogic).  

Further reading:   

A case of shaky statistics was found yesterday at Bloomberg, it is one of those slap happy stories where dumb journo's that know nothing of statistics 'proof' the situation get 'better'. Quote:

Combined sales of new and existing homes likely advanced to a 5.02 million annual rate from a 4.93 million pace in March, other figures may show.  

Comment: This is stupid in many ways, in the first place the US housing market has strong seasonal components where prices & volumes usually climb until deep in the Summer. In the second place, it is only 1% more and as such the reported number falls within all confidence intervals around the five million number.

Nuke stuff. 

North Korea tested today another nuke, according to the Vienna-based Comprehensive Nuclear Test Ban Treaty Organisation the Richter scale numbers were (source):

Russia, which called the test a threat to regional security, said the blast was about equal in power to the U.S. atom bomb dropped on the Japanese city of Nagasaki in World War Two, or about 20 times larger than the North's one kiloton test in 2006.

But the Vienna-based Comprehensive Nuclear Test Ban Treaty Organisation contested that, saying the magnitude of the latest test was "slightly higher than in 2006, measuring 4.52 on the Richter scale, while in 2006 it was 4.1." 

Comment: If the Vienna based organization is correct with the Richter numbers, in that case since 4.52 - 4.1 = 0.42 the second blast has 10^0.42 = 2.6 more shaking amplitude and if this wikipedia file is correct you need 2.6^1.5 = 4.3 more energy released in the second nuke.
On the other hand the Russians are in the right if the next info is correct (source): 

"The magnitude of the quake, measured at 4.5 on the Richter Scale, was more powerful than the past one which was measured at 3.6," Yoo Yong-Gyu, a senior researcher at the Korea Meteorological Administration, told AFP. 

Comment: This looks more like the Russian version of the numbers and if I dig in my own memory I am not sure but the number '3.6' rings a bell. So lets stick to the Russian projection of reality for the time being.

Political ramifications. 

I don't know what to think of this, may be the words of a Chinese analyst came most close to the truth: May be after all they want to become a nuclear power.  

Last year we observed the destruction of a cooling tower and now this. 

The only conclusion can be that indeed North Korea tries to become a nuclear power, there is no evidence found for other explanations of their behavior. 

So there will be some political ramifications needed, going on as in the past is not reasonable any longer.  

Till updates, as an antidote you can read boring stuff like a brief history of money

(21 May 2009) Financial markets were just so boring all of the last 7 days, I did not feel commenting on all idiot things going round.

You know one of the things standing between a real economical recovery and all that fake stuff from lately is the fact there is still much too much money into the system. In the USA alone rumors say about 4 trillion $ is sitting on the sidelines and most of that is still borrowed money, these are not savings looking for long term investments, it's mostly borrowed stuff going for the fast buck.

All that money needs to get destroyed & what is better then new fresh investment opportunities in US banks? Just like Goldman Sucks did; stating they never needed the 10 billion in TARP bailout money but ha ha ha they offered 5 billion in new stock to pay it back... Of course the sucker investors coughed up the five billion...

As long as there are sucker investors out who are willing to invest in magic I think it is best to let run God's water over God's acres.

By the way, not from God but from the FED, today the expected came out (Yahoo AP source), quote: 

Under the Fed's new projections, the economy will shrink this year between 1.3 and 2 percent. The old forecast said the economy could contract between 0.5 and 1.3 percent.

The unemployment rate may rise as high as 9.6 percent, higher than the old forecast of 8.8 percent. The jobless rate bolted to 8.9 percent in April, the highest in a quarter-century. 

Comment: On unemployment I still can't say much because I still don't know if folks without government unemployment aid still count in the official unemployment figures. But GDP estimations are a joke, now about half of the Federal 3.6 trillion budget is borrowed printed money, most prudent folks don't believe the US GDP statistics. 


In another development Barry posted some very stupid graphs about the US Federal deficits or surpluses. In the graphs all borrowing from the US government to herself is missing; all US Federal Funds, let it be the FDIC bank insurance fund or the social security funds are so called 'pay as you go' funds.
Trillions in social security surplus taxes are spend already, this is not found back in the graphs as Barry posts it (it has to be remarked that Barry's post is around comparing Democrats to Republicans, but even then it is a stupid post):  

Better writing from Barry is found in US housing starts (only 50% from a year ago while unsold house inventory is still large):  

You can argue that housing starts are a lagging statistic in the present economical environment, but ha ha ha why were they a leading statistic in the past? 

Lets leave it with that, till updates. 

(14 May 2009) Five completely and utterly boring items:

Item 1) Willem on inflection points, turning points, first & second derivates.
Item 2) US government jobs on the decline also.
Item 3) US Social Security underfunding fun.
Item 4) US foreclosures hit new high in April.
Item 5) The empty item with empty head Karl Rove. 

Item 1) Willem on inflection points, turning points, first & second derivates.

Yesterday Willem Buiter posted some basic math on turning points and inflection points. (For the Dutch: inflection points are buig punten, or bow points.)

On the one hand it is good such very basic stuff gets repeated, on the other hand it is utter poverty that lots of US CEO's from investment companies simply have no clue about basic math like that. Those folks simply don't understand the difference between first and second derivate behavior but they control billions and billions in investment money... 

The human universe is often a strange universe, sometimes far more strange compared to the real universe. Link: 

Inflection points and turning points - since you asked 

Item 2) US government jobs on the decline also.

At News N Economics is a good graph comparing job levels in the last 4 to 5 recessions, as you see on inspection: In previous recessions government jobs did not decline but, ha ha ha, as a green shoot now they do. Link: 

Don't expect government jobs to hold on 

Item 3) US Social Security underfunding fun.

Via the rather worthless Yahoo finance website I found this nice article sponsored by Fidelity Investments (likely one of those investment firms lacking knowledge of basic math):

What Social Security's Underfunding Means for Your Retirement  

Funny quote:

The Social Security Board of Trustees report found that program costs will exceed tax revenues in 2016, a year sooner than predicted in last year's report.  

Comment: Most people don't know that all tax surpluses in the SS funds are not saved but spend as soon as these taxes are in and the entire SS 'fund' is filled with US government bonds.
You might think it is a little bit strange that taxes collected on behalf of the SS funds are used for other things, but for USA folks this is 'very logical'.
The logic from the debt huggers must go a bit like this:
Debt and access to credit is good for economical growth, thus more debt = more economical growth. Savings are the opposite of debt, hence savings kill all economical growth. 

From an old New York Times file from July 2006, link:

Surprising Jump in Tax Revenues Is Curbing Deficit 

we can quote (from the idiot Dubya): 

"The tax relief we delivered has helped unleash the entrepreneurial spirit of America and kept our economy the envy of the world," President Bush said in his weekly radio address on Saturday.

Comment: Unleashing entrepreneurial spirits... Never found any proof for that in the last 3 years. In fact obese people waggled from their house to their car (car = paid with debt = good for the economy), drove to the stores, waggled from their cars to the stores and bought lots of consumables paid with debt like HELOC debt or credit card debt.
Waggled from the store to the car, drove back home, waggled to their house and started eating.....
Welcome to the land of the entrepreneurs!

Item 4) US foreclosures hit new high in April.

Zero Hedge has another green shoot for me; a good graph on foreclosures.
Another record high and another 'green shoot' that validates my theory that US house prices will bottom out at the end of 2011.

(The Zero Hedge author uses the pseudonym Tyler Durden), link:  

Foreclosures Hit Record High In April 

Item 5) The empty item with empty head Karl Rove.  

Remember Karl Rove? This guy was the grand strategist for the US Republican party. 

Rather likely at present date Karl Rove still does not know that I moved heaven & earth to get Dubya reelected over 4 years ago. All details 'clicked', Dubya had his second term and the USA could continue her path to financial and military suicide.

These days Rush Limbaugh is the grand strategist, so Karl what do you think? I think this a is giant leap forward, Rush is better yes far better than you Karl.

Anyway, Karl is accusing the US Democrat Nancy Pelosi an accomplice to 'torture'.

I, Reinko Venema, accuse Karl an accomplice to the one million+ dead Iraqis, a guy with the brains of Karl should have known better. He should have hit the emergency brakes by stating it might be unhandy to use Iraqis to kill Iraqis.
Well Karl, if you believe in a God; have fun with it. Link:

Congress and Waterboarding (From the Wall Street Journal)

Till updates. 

(13 May 2009) One item:

Item 1) OTC derivates? The FED cannot account for 9 trillion in off balance items. 

Of course at some point in time it had to pop up: Derivatives and the fun they give! 

Via the lady Yves & zero hedge there is a must see video, so ok ok this old man will embed a YouTube video for the second time in his dull life: 


Nine trillion in off balance transactions?

Nine trillion US$ looks like a lot of money, it is about 60 to 70% of the yearly US gross domestic product but it is only 1.5% of derivative positions outstanding.

Given the market swings of lately you can also argue that a ripple of 1.5% is only a modest ripple. My estimated guess is that beside 'off balance items' there is also an 'off balance money printing press' and as such the Federal Reserve simply took in some derivatives as 'investment grade' collateral in exchange for these trillions.

Now we know a bit more about the 'on and off' balance items of the FED, what's the problem? The Chinese still hang upon their AAA rated US government bonds, they won't sell, so what is the problem in a potential 9 trillion US bucks of printed money for only 1.5% in outstanding derivative positions? 

Later to be updated.

Update (about 20 hours later) I could not find nothing on Bloomberg validating the 9 trillion number in off balance transactions. That does not proof it did not happen, after all 'off balance' is 'off balance' but for the time being we have to close the subject and simply wait for a 1 or 2% ripple in the derivative positions.

Till updates.  

(12 May 2009) Five items:

Item 1) I draw a line in the sand: this math is mine & I was the first.
Item 2) Taliban should stop attacking girls schools or meet my anger.
Item 3) It looks confirmed: the USAF bombed 140+ civilians to death.
Item 4) US government borrows almost 50 cent for every dollar spend.
Item 5) The empty item. 

 Item 1) I draw a line in the sand: this math is mine & I was the first.

You know that when I was a student in math at the local university and some professors used the results as I found them very literally in their own publications, I did not have a problem with that. 

It only meant my math musings were good and from the social point of view it is logical a professor cannot refer to some student who did not publish one item.  

Two days ago I came across the next method of derivation on wikepedia, this time I draw a line in the sand. The right hand side of this equation is from my mind and as far as I know math history I was the first.

Skilled colleagues in math will understand it is 'strange' to jump from the left hand side to the right hand side and suddenly throw in 1/ln(k):


I claim the right hand side to be my discovery, if memory serves I found it in 1987 or 1988. So I hope some skilled colleagues in math agree with me it is a big jump to go from 1/(k - 1) to 1/ln(k) without justification. (I remember one of the professors asking very surprised 'Why the logarithm?')

After reading further I found a beautiful limit dating back to 1901, the notation of the limit is a bit strange compared to math in these years. Now, isn't this a cutie?
Taking the limit over the base number of the log, I think that's cute.
But what do you think my dear reader? Cute or not cute?


Tip for bankers: Buy two kilo of headache pain killers and try to solve the 1901 limit for the most simple parabola f(x) = x^2. 

Lets leave it with that. 

Item 2) Taliban should stop attacking girls schools or meet my anger. 

In another development we take a look at the Taliban fighters, without doubt a lot of Taliban simply are part of the best fighters of the entire planet. 

Back in 2001 I also observed the Afghanis are very good and now in 2009 this is still confirmed. My compliments! 

Yet the war is far from over and in the next decades the war will continue and may be it is time to call once more for the next:

The girls need school too!

My dear Taliban, I perfectly understand the enemy is constantly drawing attention to attacking girls and there is a lot of Media hype around this detail.

My advice is turning to al Qaida in general and Osama bin Laden in particular; rather likely Osama too thinks females need schools and we are not talking about baking cookies.  

So Taliban it is up to you; if I read too many of the next Media files I will grow angry and violent. If stuff stays the same you will have my continuing support. 


Dozens injured in Afghan girls' school poisoning  

Item 3) It looks confirmed: the USAF bombed 140+ civilians to death.

It was on the television so I cannot link or so, but on CNN there was a report from the Afghan village where many dozens were killed by the US Air Force.

Contrary to the pipe dreams the USAF is feeding us:

Evidence shows Taliban killed some civilians: US military    

interviewed were the local Mullah of the village and some surviving villagers.

All footage as shown by CNN was pretty obvious; Taliban were miles away and the village people crowed in one house because of the fighting and the bombing.  

I simply believe the villagers and not the shitty recount from the US military; for the last 8 years every time such a thing happens the US military always comes with utter bizarre stuff. This time it is no exception:  

--There were no Taliban fighters around.
--US Sec Def robert Gates stating some villagers died from hand grenades by the Taliban is utter crap, completely idiot and totally unworthy for a US Sec Def.
-- The US military gave no proof whatsoever about Taliban firing from roof tops while civilians were 'forced inside'. Only the usual 'bla bla bla' stuff. 

It makes me wonder every time again: The US military considers herself a professional force; why always and every time we get these weird weird pipe dreams of reality? 

Item 4) US government borrows almost 50 cent for every dollar spend.

When you ask the rating agencies as why the USA still deserves her AAA rating on her Federal debt the answer is always more or less like this:

The USA has a tremendous taxing power, if taxes are raised only 1% of GDP in a decade you have over one trillion dollars.   

After that the (American) journalists never dive a bit deeper, never ask questions like 'Can the USA raise taxes with a few percent over a whole decade'. 

Of course taxes can't be raised, already one sixth of the population is without healthcare and a few % of GDP going to taxes gives easily one fourth of the population without healthcare.

It is a nice statistic; how much of present day spending is borrowed & printed money. The whole fact that the USA cannot deserve the AAA status is reflected by the fact that the Federal Reserve is buying more and more Federal debt. 

Sometimes I wonder what US bond yields would be without printing money; all of economical history tells us it should go over 10%. And by printing money to make the yield artificially low you only raise the likelihood of 15%+ yields in the future.

50 cent source: 

Item 5) The empty item.  

Empty empty empty, please use your own brain. 

Not enough pain killers because independent thinking gives you a headache?
Try this:

Taliban storm strategic Afghan city  

Till updates & to the rating agencies: Why not create a special AAAAAAAAAA status for all USA debt, not only government debt but also car debt and credit card debt?
Ask not what your country can do for you but what you can do for your country! 

Till updates. 

(10 May 2009) Two items:

Item 1) The marginal productivity of debt.
Item 2) A few links. 

Item 1) The marginal productivity of debt.  

The marginal productivity of debt is a (macro) measurement of how much the gross domestic product rises when the government takes on one more dollar of debt.

In theory this is an easy to understand concept, but I have no clue about how to derive this number in practice.
In practice debt needs to be paid off, so every dollar of stimulus money should at least pay for itself via future tax income; you must have some confidence that every borrowed dollar today will generate enough tax income in the future.

Another practical problem with the concept of the marginal productivity of debt is very simple: how long does it last? If the government borrows one dollar or one € and via a stimulus program the gross domestic product rises by 3 dollars or 3 €; does this rise in GDP last only one year, or 10 years, or 30 years?
Of course a practical answer is found via:

Total GDP / Total taxes  

Suppose a government takes in 20% of the GDP in taxes every year, in that case the extra debt pays for itself in five years time.

The Google thing for marginal productivity of debt gives 179 thousand answers (found in 0.17 seconds) and on position number one we find the next link:  

The author (Antal E. Fekete) argues that in 2006 for the USA the marginal productivity has gone negative. (Yes you read this right, it is not that it fell below 1 but turned negative!)

Since I know this concept of marginal productivity for about 60 to 70 minutes, I cannot validate the claim it has gone negative. But there are other statistics that support this claim:

In both my home country and the USA it is extremely expensive to get one unemployed into a job. As far as memory serves, here it is about 400 thousand € and in the USA under team Dubya with the Paulson clown similar numbers were observed.

If it costs the government 400 thousand € to land somebody in a 40 thousand € a year job, it is obvious it will take a long long time before the 400 thousand € have paid for themselves via taxes.    

A 'food for thought' quote from the article:

The year 2006 was the watershed. Late in that year the marginal productivity of debt dropped to zero and went negative for the first time ever, switching on the red alert sign to warn of an imminent economic catastrophe. Indeed, in February, 2007, the risk of debt default as measured by the skyrocketing cost of CDS (credit default swaps) exploded and, as the saying goes, the rest is history.  

Comment: It is well known and well documented USA debt always grows faster year on year than profits do. And what can the Federal Reserve do? Suddenly print 14 trillion fresh dollars to take away some of the debt?

Item 2) A few links.  

Zerohedge has some nice breakdown in the latest USA employment figures, since most of the mainstream media are into the 'road to recovery' it might be a good read against all these dumbo's who want to recover, link:

Green Shoots Or Rose-Colored Glasses  

Math as I created it in the first 3 years when I was a math student at the local university. That must have been the year 1986 through 1988 or so, I never published it because 'students don't publish'.

But it is all here in the link below (I am especially proud of the 'Bigeometric calculus', with that beauty baby you can do much more fun; I named it 'true multiplicative derivation' but 'bigeometric' is also allowed although that is not from my pen).
Let the good & old times roll in the next link:  

Lately the US Air Force succeeded once more in killing large numbers of civilians in Afghanistan. As usual they are highly efficient in putting the blame on the Taliban. Even the present US Secretary of Defense threw in some coins: 'Some people died from hand grenades'. 

So we are supposed to believe that after the USAF bombs, the Taliban killed the rest...

Lets quote a bit:

Doctors at Farah hospital said they had treated 16 patients for flash burns and small lacerations. "Afghan doctors said injuries could have resulted from hand grenades or exploding propane tanks," the statement said.

"Local doctors also confirmed that the Taliban were fighting from the roof tops while forcing the locals to remain in their compounds. Locals receiving medical treatment repeated this information to the doctors several times." 

Comment: I think the facts are clear; with or without so called 'human shield' the USAF bombs anyway. Lets leave it with that.

Here is the link:

Evidence shows Taliban killed some civilians: US military  

Till updates.

(07 May 2009) Two items:

Item 1) Ok the results of the fake US bank stress tests are out.
Item 2) ECB dives down to 1% today. 

Item 1) Ok the results of the fake US bank stress tests are out.

Ok the stuff is out, like said before it is all a fake show because for example we miss stressing against derivative positions. Furthermore it is only Alice in Wonderland because the mark to market rule is replaced by mark to model, or if you want the mark to Wonderland rule. 

Also lacking in the stress test is the 17+ trillion of debt the US financial sector has upon herself and ha ha ha, how did Lehman Brothers die?
Was that customers running away or was there some tiny tiny problem on the debt side of that bank? No stressing against a Lehman scenario observed...

To understand why this all is only fake stuff, let me quote from the latest Bloomberg file where they speak of only 6% in Tier one ratio's and a Tier one 'common risk-based' ratio of just 4% at the end of 2010 (Bloomberg source) quote:

The capital buffer for each bank “is sized to achieve a Tier 1 risk‐based ratio of at least 6 percent and a Tier 1 common risk‐based ratio of at least 4 percent at the end of 2010, under a more adverse macroeconomic scenario than is currently anticipated,” the regulators said.  

Comment: No comment because whatever reserve ratio we are talking about, when you talk of 6 or 4% you are only discussing the quality of toilet paper. As we all know, a high standard in toilet paper gives no protection against bankruptcies. 

Like said before: From now on only the money printing press rules.

Item 2) ECB dives down to 1% today.  

Ok ok the European Central Bank lowered the stuff with another 25 basis points to 1%. If  I would be a member of the ECB I would not vote for such things and as a free citizen I would hope for a raise of 25 to 50 basis points.

On the other hand I bow for the principle of democracy and if some nations like Spain (who are looking at a 15%+ rate of unemployment in the labor force) vote in favor of such a cut, I bow. 

That's it for today but one day I will have my way and most pensions are derived from government debt because this debt pays well decade in decade out.
In the meantime weird Spanish economists will worship the 'boom and bust' theories from the USA, when these idiots are slaughtered we could live free & happily. 

Till updates. 

(06 May 2009) Tomorrow results of the (fake) US bank stress tests. It is fake in many ways; banks could deliver information themselves & for example there is zero stressing against derivative positions observed...

So today no financial news but only a bit of pornography.

Pornography? Yes pornography.

The Israeli leadership lately compared pictures of killed and wounded civilians & children to pornography. To refresh your mind: Lately the Israeli Defense Forces bombed away about 350 kids, left unknown numbers crippled and handicapped for life and just as easy published photo's were equated to 'pornography'.   

The picture below is from a surviving kid from Afghanistan in the latest round of bombed civilians by amateur Western armies like the USA army.

Lets make a small part of a movie script from it:

(Father and mother return to their USAF bombed house and start collecting the diverse pieces of their children):

Father: Here I have Fatima's arm.
Mother: I found her other leg too, but where is her head?
(Father and mother looking around for the head of 3 year old Fatima, suddenly father gestures)
Father: Look it is all over the wall! That is her hair everywhere!


Nice picture isn't it? May be you don't think it is nice but I just cannot get enough of these. The more the better; our political leaders constantly tell us that 'We are there to help the Afghanis so they can have a better life'.

On the Israeli 'pornography equation' I can be short:

In this Dutch country every year around 04 May you always have those pictures from the holocaust and the concentration camps from world war II. Here in the Dutch landscape it sometimes evolves around Anne Frank, at other times it is more general but you always get the full load:

How the Jews were singled out, how they got transported, the ovens, the zyclon B & all the rest. Also included are survivor stories so the public can look with 'empathy' at the survivors.

You never hear the Israelis complain about pornography when it comes to the holocaust, on the contrary: stuff like that is always used to justify the sole existence of the state of Israel.  

Thus 350 killed Palestine children = pornography (when you publish it) &
Holocaust dead corpses = the right to exists.

Why the European leaders still don't say to Israel 'enough is enough' is unknown to me. Ok ok Germany can't do that, but don't forget we the Dutch live quite some decades with peace with our German neighbor while the Israelis only bomb neighbors every few years...

The Israeli experiment has failed, if only one concentration camp survivor agrees with me may be in a lost moment I will shed a few tears too.

In the meantime I want more stuff of the true face of war and not these slimy political statements from people who do not understand war, so once more:  


Further reading: 

Red Cross confirms dozens dead in Afghan air strikes (Washington Post) (Five pictures from the BBC)

Afghans Say U.S. Raids Killed 30 Civilians (NY Times) 

Till updates. 

(05 May 2009) Two items:

Item 1) Is the Chinese military build up really focused on the US military?
Item 2) Does Bernanke understand the US economy? 

Item 1) Is the Chinese military build up really focused on the US military?

This is a very funny military item, please read the source file first:

China military build-up seems U.S.-focused: Mullen  

And a funny quote:

Mullen acknowledged that "every country in the world has got a right to develop their military as they see fit to provide for their own security."

But he said the build-up propelled by fast economic growth required the United States and allies or partners like South Korea, Japan, Australia and New Zealand to work together to "figure out a way to work with (China)" to avoid miscalculations.

Mullen's comments followed remarks by President Barack Obama's top adviser on Asia on Friday calling for high-level talks with the Chinese military to reduce mistrust.  

Comment: Ahem, just a small slice of history: When Russia invaded Afghanistan, weren't the Americans the first to use the mujahedin in a proxy war against Russia? When there was war between Iraq & Iran, did the USA support Saddam yes or no?

In both cases the USA flipflopped 180 degrees.

If you add up all the death from before & after the flipflop you arrive at multi million numbers of filled coffins. In the meantime the Americans always take great pride because they can 'take the fight to the enemy' and at home nobody dies.

And now, from the military doctrine point of view, the Americans want to reduce misplaced 'distrust' while China accounts for something like 7% of global defense spending?    

Please admiral Mullen, can you take your head out of your ass? Does the Mullen thing truly believe there is 'mistrust' on behalf of China? May be China perfectly understands that foreign wars with huge damage always benefit the USA in the long run. (As long as there is no damage to the home land, for the USA anything goes.)

Item 2) Does Bernanke understand the US economy?  

Today the chairman of the US Federal Reserve appeared before the US Congress, I seriously doubt if the guy understands the US economy.

I will not comment on the source file but give only an example as why I think Bernanke does not understands how the US economy works.

Source file:

Bernanke: Economy should grow again later in 2009  

Again I will not comment but give only an example:

---Begin example.  

In the year 2005 Americans stripped out about 750 billion more debt in so called HELOC loans. (HELOC = home equity line of credit, the credit card on your house).

In those years 750 billion was over 5% of the US gross domestic product but of course not all of the 750 billion ended in the GDP.

If you buy stocks or bonds, it does not count for the GDP.
If you buy illegal whore services or illegal drugs from Mexico, again it does not count for the legal GDP.   

Lets say the 750 borrowed only accounted for 3% of GDP while entering the legal side of the economy.  

Lets take into account the speed of money (how often does it change hands) & lets say it is only 2 times (a year).

In that case HELOC fun attributes to about 6% of the US gross domestic product.  

Now in the year of 2009 we are supposed to look at a 'credit crisis' and as such it is 'pay back time'.

Oops, no fresh HELOC gives minus 6% on US GDP.
Oops, you really need to pay it back and why can't I have a refi at lower rates?

Can the idiot named as Ben Bernanke answer these 1 + 1 = 2 questions please?

---End example.    

Till updates. 

(04 May 2009) Two items:

Item 1) More and more US government debt bought by the Federal Reserve.
Item 2) US bank stress test & the GDP projections. 

 Item 1) More and more US government debt bought by the Federal Reserve. 

I have said it more then just a few times; from now on the Federal Reserve printing press will be the main source of financing. And believe me, it will only get worse. 

Source file:

China has 'canceled US credit card': lawmaker 

Quoting the fun:

Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors.

"There will come a time where the lack of Chinese participation may have a significant impact," Kirk said.

"We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."  

Comment: No idea if the above is actually true, but if the stupid Chinese stopped all that lending to the USA that would be a good step forward. I sincerely hope the Chinese Central Bank will make large losses on the USA investments they hold; after talking to deaf ears so many years, why not wish the stupid Chinese some bad luck?
They fully deserve it after five years of talking to deaf ears; have a nice crisis China or try to get one! 

Beside this, the US Quarterly offerings of government bonds are so huge; with or without China it is clear the printing press rules. Team Obama thinks that more debt will save them from old debt, let stupidity rule... 

Item 2) US bank stress test & the GDP projections.

Later this weak team Obama will release the results of the so called stress tests.
Because nobody else is doing this, I took a few minutes time to calculate the future gross domestic product projections team Obama is using.  

I used the red graph from below and the usual bea source


Very elementary calculations give the next projections: 

Annualized USA GDP growth in %
2009 Q2 2009 Q3 2009 Q4 2010 Q1
-4.7 -0.1 -0.3 1.1

You see in Q3 this year the miracle happen: a more or less flat reading on the US gross domestic product. The miracle could even come true; US government deficit could rise to two trillion for this year only and indeed you can prop up your GDP with borrowed money. 

Will it work? 

It can only work if every borrowed dollar generates at least one dollar in future taxes (this beside the cost of borrowing and inflation). 

You can answer that question for yourself: Will the stimulus packages pay for themselves in the future?

I don't think so, simply look at the Debt growth by sector file from the FED. You observe debt growth is always a multiple of gross domestic product growth.
As such it will hit the wall; nothing can save an economy if outstanding debt grows faster than the income derived from this debt does.
(The economy is 'debt obese' just like the average American is 'food obese': for every calorie of food, the output is always less than one calorie.)   

In a country like China stimuli could actually work because they have savings, savings are 'potential energy' in the economical sense. In the USA there are no savings and as such more debt cannot repay itself. It simply lacks the potential to do so...

Till updates.

(03 May 2009) Only two items and some links for today:

Item 1) Car bombs the Dutch way: without explosives.
Item 2) US foreclosures will rise faster this year. 

Item 1) Car bombs the Dutch way: without explosives.

The car attack against the Dutch royal family shook a lot of folks in this country, on the television they are already making jokes of it so the 'healing has begun'. 

Everything points to a lone wolf action; the guy K. T. decided to go out with a bang and he was amazingly good at that. 

Giant breaches in security of the Dutch royal family have been observed, with only a few kilo of RDX up to 3 generations of the royal family could have been wiped out...

How much RDX would be needed? 
With 2.5 kilo K. T. could have come a long way, but 4.5 to 5 kilo of RDX would ensure the wipe out of the Dutch royal family. 

Why RDX and not some other high explosive?
RDX also stands for Royal Demolition Explosives, as such the RDX simply would do what it name says...;) 

Further reading:
Snipers Set For Dutch Queen's Royal Visits (Sky news)
Assassination attempt on Dutch royal family shocks nobody apart (The spoof, satire)
Dutch royal plot killer inspired by Taxi Driver character (Sundaymail)
Man who attacked Dutch royals shaved his hair like Robert de Niro in Taxi Driver (The Telegraph) (RDX is good stuff although the Russians lately succeeded in making far better stuff but those techno details are not in the public domain.) 

The Dutch royalty watchers will have fodder for years to come. 

Item 2) US foreclosures will rise faster this year.  

More and more people are telling that indeed one third of all US family houses have no mortgage on the house. (Very likely those with no mortgage are mostly pre baby boom people & a few baby boomers who understand personnel finance.)

Like said before: since all mortgage debt is concentrated on two third of all US houses, this will give extra upward pressure on the foreclosure rates. The high foreclosure rates keep the unsold inventory high & hence prices will decline further. 

Source (Barry):  

HomeOwner’s Equity: Less than 15% 

The calculation is so simple, even Wall Street traders could understand it with only two or three pain killers:
The FED reports still 43% of home equity in the system so this implies that there is only at most 15% of equity in the collection of houses with a mortgage.  

I have said it so often; the second leg of US house price declines will be much more painful but all the dumb, lazy, stupid and fat Wall Street traders do is run sucker rallies. Why they do this I don't know, it has to do with a refusal to accept a reality that is obvious for those who understand basic math.


As to the Fed’s claim that the equity of homeowners as a group stands at 43%, she points out that what the Fed neglects to tell you is that roughly a third of them have their houses free and clear. Lo and behold, some basic arithmetic reveals that 67% of homeowners with mortgages have equity of less than 15%. That, Stephanie comments drily, suggests the “destruction priced into the credit markets hardly seems out of whack with potential reality.” 

Comment: Present house price decline speed is in the order of 18% year on year, so in about one year most equity in houses with a mortgage will be vaporized.
The biggest pain still has to come...
Oh oh the poor Americans; they even spin the ever climbing obesity rates as good news while in fact it only proofs the entire workforce gets more lazy year in year out.

Oh oh Americans and their social attitudes to debt... What do you see in the picture below?

Is it US consumers grabbing out more debt or
Is it the US banks trying to grab more customers?   


Just a few links on the ECB & after that it is goodbye:

ECB's Trichet: Lowering rates not always best path (Reuters, from April 27)

ECB Options to Fight Recession Include Rate Floor, Wellink Says (Bloomberg, from April 26) 

What's your take on the US$ strength? Given the fact that month in month out US imports decline much faster compared to US exports it is logical to say the dollar is far to strong. Here is what the Wall Street Journal makes of it:
Dollar May See Rebound Next Week  

At FXSolutions a very pro USA guy named Joseph Trevisani writes an article with the title Credibility and the ECB. It is very funny to read the pro American stuff; one of the negatives of the European Central Banks is they did not understand the fall out of the US sub prime, quote from this idiot named Joseph:

How could the central bank not have known the extent of the asset-backed infection of the continental banking system? The only conclusion possible is that the national central banks who should have known did not tell them.  

Comment: Hey fuckhead Joseph, why don't you try to get your head out of your smelly asshole and for example write some stuff with the title 'Credibility and the FED'?
Who created all this shit in the first place Joseph? The FED or the ECB?

Till updates.  

(28 April 2009) One item only & only one item:

Item 1) Finally it is there: second derivate in US house prices is flat. 

Item 1) Finally it is there: second derivate in US house prices is flat.  

After waiting a few months longer then expected; it looks like US family house prices are now halfway the decline.

Of course a lot of mental dwarfs instantly see a 'bottoming in prices' but what do these Donald Ducks of finance know about negative logistic price declines?

If the logistic model prevails, we will see about 25 months of actual declines and about 31 months before the Case Shiller housing index starts to rise again.

Click on the picture for the first source:


At the Ass Press there is a 'real estate writer' named J.W. Elphinstone who thinks that the bottom is in sight (the mental dwarf likely thinks a zero on the second derivate is about the same as a zero on the first derivate, the latter is estimated years into the future...) Quote (source):

NEW YORK (AP) -- In another sign the housing crisis could be reaching the bottom, home prices dropped sharply in February but for the first time in 25 months the decline was not a record.

The Standard & Poor's/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008. That was slightly better than January's 19 percent and the first time since January 2007 the index didn't set a record.

But the good news was mixed. All 20 cities in the report showed monthly and annual price declines, but half recorded annual records. Prices fell by more than 10 percent in 15 cities, including Las Vegas, San Francisco and Phoenix. In fact, Phoenix home prices have lost more than half their value since peaking in July 2006.

Yet, nine of the metros -- including Dallas, Denver and Boston -- showed improvement in their yearly losses compared to the month before.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David M. Blitzer, chairman of the S&P index committee.  

Comment: Do you understand what this nuthead David M. Blitzer is talking about? It is trivial that we have to wait 25 to 31 months before US house prices start to 'turn around'. Does this chairman of the S&P index committee understand elementary math? Very likely he has a degree from the Princeton or Harvard university, otherwise I cannot explain such stupid talk... 

On Barry's hangout you can find the usual graphs on the CS index:   

Barry says that US house prices are down 31.6% from their peak, if that is true my calculations say at the end of 2011 they will be (just over) 25% lower compared to the present price levels. 

Please remark that wild swings in inflation or deflation and/or sudden ruptures in foreclosure numbers can destroy the 25% decline estimation, but all in all another 25% is the best estimate I can give. 

Remark 2: Only lately it came to my knowledge that about 30% of all US houses have non or little mortgage on them, I don't know if that is true but this roughly says all mortgages outstanding are mainly on 70% of the other houses.
This could give upward pressure on the foreclosing numbers and instead of 25% it could be about 28% price decline at the end of 2011.
We'll see how that one pans out...

Very likely you are bored by now, so lets look at a beer chick that is drinking green beer:  


Green beer? Green???

Give me a break, why not pink beer for dumb ladies?

Till updates.   

(27 April 2009) Just a few links & no items.

Tomorrow the latest Case Shiller US house price index will be out, I expected a flat reading on that baby months ago but every time the news gets better and better. Present house price decline implies a nice 3.5+ US$ trillion loss of home value on a year to year basis (that is five years of Pentagon spending by the way & what is lost cannot be taxed).

Obama was on the television today stating the USA kids ranked 50 or so on a list of nations comparing math skills; oh oh poor USA, is your education system just like your health care system? Rather likely!
And they still want to lead the world... 

The Obama thing also thinks he has a 'gift' for making speeches, link:

Reid says Obama told him, 'I have a gift' 

Little problem: The Obama thing does not write his own speeches & always needs that teleprompter: 

Obama gets ahead of prompter  

Ok, swine flu. Since this is a very new flu virus I was interested in how new viruses emerge anyway. On wikipedia they have a summary article on the swine stuff, here is the link (I think it's a temporary link):     

And the answer is pretty simple: new viruses are created when humans or animals have more then one viral infections at the same time. After reading the pretty straightforward 'superinfection' link I only wondered why I could not add up one and one for myself, link:    


By the way, did you know the mammoth species suddenly died out a few thousands of years back & at present day elephants are still afraid of mice?
If you add one and one it could be that mice killed the mammoths...
(This particular Reinko theory could not be found back in the next link: 

If you need a good laugh: Wall Street pay is back on track to pre crisis levels! I love the Americans, so much they worship the Golden Calf. Link: 

Peter Schiff thinks the USA future will be inflation combined with GDP decline, a stark version of the stagflation scenario so to speak.
It could be true but if the Federal Reserve inflates those parts of the economy that have no influence on consumer prices, the outcome could be different. For example: If the FED buys more and more level 3 assets, consumer prices won't suffer very much.

And last but not least, Barry scored a nice graphic of 8 (yes eight!) stock market rallies in the Great Depression. Check it out at:

Great Depression Rallies 

Till updates, have a nice crisis or try to get one.  

(26 April 2009) Wow the brand new so called swine flu does shake up an otherwise boring weekend: Is this the long expected hammer on humanity that will kill in the billions? For the time being it does not look like it, for the time being death rates are far below 10% so although this is a very weird kind of flu (swine, bird & human flu combined) I don't think this is the hammer of the century. 

One day it will come: a virus highly contagious all the time but waiting 3 to 6 months before it kills the carrier within a few days. One day it will come... But likely it will be another day.

Luckily I have more good news:

--I found a perfect crack of my graphics program and this one works on my new computer (it is in the French language, but better French than Spanish or the Greek & Italian ramblings that are 'official languages')
--The bank stress test is indeed not a stress test but a 'business as usual' test.   

The last is the only item for today:

Item 1) A look at the US bank stress test.

 Item 1) A look at the US bank stress test.

As expected the bank tests were about the US gross domestic product, unemployment and US house prices. (So nothing on the 17 trillion in debt the US financial sector has or vulnerability to derivatives.)

Please remark that the latest known GDP annualized figure for 2008 Q4 stands at minus 6.3%, there is zero information out as why it should improve so fast.  

Click on the picture to get the two sources:   


Lets discuss the 3 things (of course we can only look at the 'more adverse' case since, ha ha ha, this is supposed to be a stress test).

Real GDP: Look at the graph below: you see 2008 Q4 GDP is standing at -0.8%
This is simple to understand (look at the top of the above picture)

(0.9 + 2.8 - 0.5 - 6.3) / 4 = -0.8% 

In the graph below you see USA GDP climb again after the second Quarter of this year, this means the USA government 'thinks' that in Q3 the annualized GDP growth will be above 2.8%.  

There is nothing that validates this, may be the US government has some inside information but why would the US economy make a swing from minus 6.3% to above plus 2.8% in such a short timespan?

This looks like toilet paper, it is rubbish at least.   


Unemployment growth: To be honest I cannot comment on that because I don't know how the unemployment statistics work in the USA. The 8.9% and 10.3% for 2009 and 2010 look & smell like the U3 measurement. 

But even for the U3 statistic I don't know that if unemployed people lost their rights to unemployment benefits; do they still count for the unemployment numbers? 

In a lot of nations they don't, there is no reason why the USA should include homeless folks inside unemployment statistics so, I just don't know. 

USA house prices: This part looks ok, we miss a few percent but I expect US home prices to bottom out at the end of 2011 so these few percent could be allocated in that year.

Weighing all in all: GDP forecasts look too rosy, on USA unemployment I cannot comment very much while the housing prices look realistic. 

(Remark, by the way, the Federal Reserve uses the 10 city Case Shiller housing index and not the Federal Housing Agency fantasies.) 

That's it, kill a few Americans if you feel like it & otherwise study a bit of math.


(23 April 2009) Two boring items & that's it:

Item 1) A lovely idiot at Yahoo finance: Jack Guttentag on desecurization.
Item 2) One more lovely picture from the economist dot com: rays of light. 

Item 1) A lovely idiot at Yahoo finance: Jack Guttentag on desecurization.

I suppose most of my readers eat meat. If you go out and buy a pound or a kilo of chopped meat and back at home you look at it; can you trace back the original animals that went into your chopped meat? 

No you cannot, you simply have to trust the meat won't poison you and it will take a tremendous afford to pinpoint the meat down to the original animals or even the farms it comes from.

The securization of mortgages & other loans worked always the same: you cannot trace it back to it's roots. You can only trust the AAA rated stamp on it. 

At Yahoo finance they have a whole lot of idiots like Ben Stein and Jack Guttentag that are paraded as 'experts'. Monsieur Guttentag is also known as the 'mortgage professor' and it is high time we throw him into a meat grinder.

Jackass Guttentag thinks that you can 'desecure' the securities and your profit will even be bigger compared to the losses on the wonderful securizations...

He is a true Jackass, quote 1:

Desecuritization means reversing the securitization process. Securitization converts large numbers of individual loans into security issues. Descuritization converts the securities back into individual loans. The objective of both is the same: to enhance value. The first works during normal periods, the second can work during a crisis period such as the one we are in now. 

Quote 2:

Appealing to Many

Where investor demand for 30-year fixed-rate mortgages was limited, the diverse securities fashioned from a pool of such mortgages could appeal to a wide range of investors. With securitization, the whole was worth more than the sum of its parts. 

And quote 3: 

Desecuritization is a positive-sum game because the gains for successful investors will be substantially larger than any losses suffered by other investors.  

Comment: This all is so stupid it is hard to comment upon, securization can only work if there is some fundamental trust in the AAA rated stuff you buy & desecurization can only work if there is some fundamental trust in the AAA rated stuff you buy.    

Tiny problem: AAA rated stuff was contaminated in the first place, so reversing the process is not an option; there is no way this can work but for a small elite. 

It is so stupid, I stop commenting!


Item 2) One more lovely picture from the economist dot com: rays of light.  

Since I now have a wonderful new computer using the new 64-bit technology my old graphic program does not work any longer. So temporary I cannot make the graphic stuff I want, how to fill the void?

Well in the short term I can buy a Pentium 4 computer for lets say 100 € but 10 or 20 years down the line I need a serious 32 bit simulator and that is completely new for me. How to lay your hands on stuff like that within a small budget?  

In the meantime the economist dot com folks still make perfect stuff so lets repost one of their works (it is about 'rays of light' or 'glimmers of hope' or whatever economical recovery fantasy is out there):


Ok ok, the graphic art is a bit over the top because the DOW down from 14 to 7 thousand and flat after that still is the prevailing scenario. But it's a nice picture from the economist dot com.


Above link found via Barry:   

And if we don't have had enough of pictures, why not compare stupid European pension funds to the US banking system?

You may judge for yourself who is who in the next picture from the lady Yves: 


The poor European pension funds, oh oh how poor they are. neglecting my words from the Spring of 2004 has been proven to be so costly...
But I have little sympathy for those that support the US military, as far as I am concerned the European pension funds eat the shit they deserve so much.

Till updates. 

(22 April 2009) I am sorry but there was almost no financial news of significance, therefore only a two and not as planned a five item update.

Item 1) Brewer Heineken & who has the worst economy contest?
Item 2) Rice wine also for the mujahedin? 

Item 1) Brewer Heineken & who has the worst economy contest?

Home based brewer Heineken came out with profits today. Heineken beer is considered a luxury product worldwide, except here in the Dutch landscape where Grolsch is considered the luxury brand by consumers.

(Actually Heineken does not make beer but lager pilsner, beside this both Heineken & Grolsch should use at least 10 to 20% more hops to give a better drinkable product.) 

What are the facts?

Sold volumes worldwide declined 6% but because the brand has so called 'pricing power' Heineken could raise prices & total money turnover was only down 1%.  

Since Heineken is considered a luxury product all over the world, you can use Heineken as a proxy statistic in comparing Europe and the USA.

In Europe sold volumes were down 10%, while in the USA it was down 16%.  

That would imply that on the consumer level, the economic situation in the USA is worse compared to the one in Europe. You can argue it is only beer but beer drinking is widespread throughout the entire economies on all household income levels. 

So I thought it is a good proxy statistic & also a good antidote against the IMF projections of GDP growth and the likes.

The USA has won the contest; cheers!   

Item 2) Rice wine also for the mujahedin?  

Over 15 years ago I tried to make rice wine for the first time, as far as memory serves I threw it away after a few weeks because the smell was just awful.

Just over a year ago when I started brewing beer I decided to give it a second try, but again the smell from the fermentation bottle was not what I wanted. I simply left it standing not wanting to smell that again.

A few days ago I needed the fermentation bottle, removed the waterlock and put all my bravery together, hang my nose over it and tried to smell evil.
And again a deep smell, and another...
Some parts in my brain started fighting other parts and the end result of that inner brain fight was not to throw it away.

So I siphoned off the above 5 liter & threw away the rice drab.   

How does it taste? The taste is very neutral, it is the smell that makes this stuff perfect stuff.  

Here is how I made it:

1.5 kilo of peeled rice, boil it in 10 liters for about one hour.
Throw in 1.5 kilo of sugar, best is to boil it all along.
Use Steinberg wine yeast! (Very likely Champagne yeast gives similar results, try other yeasts for your own risk and don't blame me please.)
After cooling down put it in a fermentation bottle, wait at least one year before consumption.  

Of course the next time I will siphon it over after the main fermentation is done in order to avoid the 'dead yeast smell'. 

In case the mujahedin want to make some rice drink; use less sugar (but less sugar gives less fermentation products so may be it is better to add water to the end product so you still have the smell and not the drunk behavior...) 

Till updates. 

(21 April 2009) Next Friday the US Federal Reserve will reveal her 'stress test' for the US banks... (Source) Lets wait what the sizzies will come up with, for the time being I propose a very easy scenario as a partial test:

--US house prices bottoming out at the end of 2011, median price down 50% from the mid 2006 top level.
--US GDP shrinking 5% a year for at least two years.
--US unemployment (as it is measured today) above 10% for also at least two years.  

The items for today:

Item 1) New IMF estimates for write downs; USA only 2.7 trillion US$???
Item 2) Bizarre beers and perfect bread.  

Item 1) New IMF estimates for write downs; USA only 2.7 trillion US$???

On the one hand the 2.7 trillion in estimated losses look like some kind of advanced joke given the fact that US family house values will decline all in all in the order of 10 trillion in a five year span. (That's about 2 trillion a year in cold family shower.) 

On the other hand now the 'mark to market' rule is replaced by 'mark to model' this gives the US banks a wind in the back of a few trillion. This wind is highly artificial and only forces the banks to hold every thing until 'maturity day', but hey I am not against zombie US banks or so...;) 

This is what the IMF had to say (source), I did not feel the need to dive down into the raw data from the IMF because I don't hold them in a very high esteem. Quote: 

The financial stability report said the estimate of $2.7 trillion in losses in the U.S. included $1.07 trillion in loan losses and $1.6 trillion in losses on securities backed by mortgages, consumer and business debt. The losses for the 16 nations using the euro currency and Britain were estimated at $1.2 trillion. The losses in Japan were put at $149 billion. 

Comment: Again this looks like a far to rosy picture; only 1.6 trillion in losses for mortgage, consumer and business debt combined? And these are losses in the asset side of the balances of the banks, on the liability side there is still 17+ trillion of debt the banks have themselves...
And the 17+ trillion debt is still growing over 7% a year, of course the IMF neglects stupid details like that. They only respond to what is in the main stream news.  

So there is nothing new: the IMF still serving the USA and not humanity. 

Item 2) Bizarre beers and perfect bread. 

A female named Esther took the time to collect a few hundreds of world wide receipts from world wide food. If you live in the Dutch landscape or for some other reason you can read our difficult language, here is her entire list:    

From this amazing list you can find for example banana beer:   

In Dutch this gives: (This Dutch receipt is better for Western kitchens, but like I said you need the Dutch language.)

And there is also maisbier: (I would go for the latter because I don't like banana taste in beer.)  

In another development I found a kind of bread at a local store that is known as 'Arabic bread'. These are flat breads, like a pancake or a tortilla. This kind of bread is very important to know because it solves the puzzle of how to bake bread when you don't have yeast. 

May be you think this is not much of a deal, but for me a perfect kind of bread without the use of yeast is like finding the number e in math. Do you think that's strange? All bread with yeast still contain alcohol so beside being practical this kind of bread is also a limit of religion. 

I could not find a good receipt on the internet, sorry!

Lets end this update, till updates. 

(20 April 2009) Today only a link and one item.

Link 1) Barry has a 'must see' chart: S&P earnings down 82.5%
Item 1) More on the UN conference on racism; only fools found. 

Link 1) Barry has a 'must see' chart: S&P earnings down 82.5%

I cannot validate the figures in the graph (I do not have large databases with all that information) but the graph says S&P earnings are down 82.5%. 

Of course that does not mean they are down 82.5% exactly, it is only a 'point estimation' as it is known in the land of the statistic loving people.
Please click on the picture to get a more readable version. 


The Fortune 500 list seems to have a similar reading (minus 85%).

If there is anyone out there who still thinks we are not in a sucker rally, let these suckers buy & hold more stocks please!


Item 1) More on the UN conference on racism; only fools found.  

Today a horrible load of United Nations 'value' went down the toilet pot. 

Most guilty are the nations that boycotted the conference; countries like the USA, Germany and my home base the Dutch folks.

Why these boycott nations support the Israeli apartheid regime is unknown to me. The boycotting nations are also those who decade in decade out say they are against racism and apartheid.  

Ok ok , Germany is excused because after all they did all the Jew killing...

But for my home country and the USA there simply is no excuse; slime is what they are with their support of the Israeli apartheid regime. You can argue that Christian religion might have something to do with it but hey:

Aren't the boycotting nations not also those who preach the separation of state & church? Now aren't they?

According to the UN protocol the Iranian prez was the first to speak; he too was a fool when relating the killings of the Palestines to genocide.

This was dumb in many ways; the latest Israeli military adventures left 1300 to 1400 Palestines dead compared to 13 Israelis. This is no genocide my dear Iranians...    

Ok ok, back in the nineties of the previous century the Israeli Defense Forces had a habit of kicking the shit out of the oldest male in Palestine families. In front of the family the Israelis kicked some fun, again; this is no genocide because those folks were left alive without medical care.

Please check your files; that is no genocide...

The present UN chairman Ban Ki-moon also proved to be a fool; he condemned the speech of the Iranian prez yet the idiot forgets to mention that Israel is just another apartheid regime.    

Only losers here; Nobody simply observing that the Israeli experiment simply has failed and as such should be shut down. Stupid nations that boycott a UN conference on anti racism & stupid walkouts by the nations that did attend.

Like I said so often in the past: Do you want to understand international diplomacy? Take the mindset of a 3 or 4 year old in kindergarten & that is all you need to know:
Countries mostly interact on the level of 3 to 4 year olds. 

There is a lot of emotion going round, see for example the Vatican defending their choice to attend the UN conference:

Vatican in new rift with Jews on racism conference 

This all does not take away the Israeli experiment has failed and as such normal people with normal functioning brains should put an end to that nation. For 5 or 6 USA governments we are looking at so called 'two state solutions', after so long we simply cannot wait for 5 or 6 future US governments pumping up this nonsense. 

My advice: Kill Israel.

Till updates.   

(19 April 2009) Lazy as I am only two items:

Item 1) The USA & Nigger prez Obama not on the UN conference on anti racism.
Item 2) Will the new Danish NATO leadership give terror attacks in Denmark?   

Item 1) The USA & Nigger prez Obama not on the UN conference on anti racism.

It is very ironic and also very funny that the USA will not attend the United Nations conference on anti racism. Do you want to know why?
Well it is not all that obvious but the USA is afraid this will be some 'anti Semitism' agenda stuff. 

Why is this funny?

Compared to all other 'normal democracies' Israel is only another apartheid regime; the facts are well known: no Arab political parties allowed, minimum wage difficulties do no apply to Arabs. When in prison there is a large difference in medical care when it comes to if you are a Jew or an Arab.

The list is endless, so why does the new Nigger USA prez Obama not attend the United Nations conference? While the Obama guy has all those wonderful speeches, why not deliver one of those speeches at this United Nations conference?
Isn't the guy a nigger??? Does he not understand the problems of the black skin or the 'Arab skin' inside Israel? Where are your morals you piece of shit???

Just a quote from the Boston Globe (source): 

MARLENE NADLE argues that the United States should attend the upcoming UN conference even though it promises to be another hate-fest. Human rights paragons such as Libya, Cuba, and Algeria will issue statements criticizing the human rights records of Israel and America - 

Comment: Didn't I say it was funny? A nigger prez playing mea culpa on all those secret CIA prisons around the world (because those CIA employees only did 'their job') and now giving the green light to more apartheid inside Israel? 

Boring boring boring, but like I say for so many years it is better to kill Americans and all that shit of 'dialogue' is for the teenagers. 

Item 2) Will the new Danish NATO leadership give terror attacks in Denmark?   

Some time ago I advised the mujahedin in Europe to strike at the Netherlands, Belgium and/or France.

Now political NATO leadership has gone to Denmark, does this change the advice given?

Not very much, when it comes to 'non military reasons' the Danish have their famous cartoons while here in the Dutch landscape we have Geert Wilders.

From the military point of view it makes no sense to place bombings inside Holland to the Danish landscape.

It was not for nothing I came up with the list of Holland, Belgium and may be France.      

The last five years of Dutch political NATO leadership were easy to understand: Only after 3+ years the NATO decided to use smaller bombs inside Afghanistan in order to avoid all that shit from Media files stating too much kids were killed.

That's just too much for me & I think a nice Dutch blast will still ring home the message we need.

Of course Belgium climbs in the ranks as she is the geographical host of NATO, if blasting in Belgium is there it should be big (that means above the Spanish election fun.) A reliable list of NATO leaders is found at:

That is what I had to say today:
Item 1 = Why support apartheid my dear USA &
Item 2 = No terror blasts in Denmark because..... 

Till updates. 

(17 April 2009) Two items, only two items.

Item 1) Fun with the USA consumer price index; house prices are flat.
Item 2) The US music industry versus Susan Boyle 

Item 1) Fun with the USA consumer price index; house prices are flat.

At the United States department of labor they have the Bureau of Labor Statistics!
The BLS always posts the latest consumer price index figures and the Federal Reserve always acts on that by lowering the rates. 

By now I hope we all know that keeping actual house prices and actual housing costs outside the official inflation numbers is asking for a disaster.  

So not at the BLS, may be it is time to rename them to DDS (Donald Duck Statistics) and if you don't believe me why not check it out yourselve? 

Scroll down to you find

Table A. Percent changes in CPI for All Urban Consumers (CPI-U) 

and under 'housing' you find flat stuff like -0.1% or a lot of zero percent all month on month.

The BLS eggheads even find that annual composition of the last three months gives only -0.5% for the average consumer for an entire year...  

So the average US consumer is 0.5% cheaper on the home for the last 12 months...


Item 2) The US music industry versus Susan Boyle  

How is the present state of the music industry?

That is very simple: they are constantly looking for the new Britney Spears or the new Pussycat dolls. When it comes to so called 'illegal downloads' the music industry complains that 'You might have one Britney compared to 20 failures'.  

So the dolls the industry finds has to sing the new hit over fifty times may be even over a 100 times. Song composers select the best stuff and all kinds of computer stuff is used to make the song sound better. Just like the movie industry does with the visual outlook of for example Harry Potter movies.

As a consequence we are left with 'stars' that cannot sing properly during live concerts, it is all fake. Fake stuff is what you get. 

By now a lot of my readers have seen the Youtube of Susan:  

The chick even makes it to the files of business insider:  

Susan Boyle's First U.S. Performance (CLIP) (CBS) 

After you have had your emotional run with the Susan song, why not download the next mp3? (Take enemy combatant Dubya in your mind and sing along.)

- Idiot Son of An Asshole.mp3

Till updates. 

(15 April 2009) Only a few links that I found of interest:

In a commentary on Bloomberg Robert Shiller is arguing that the US economy needs much more stimulus to avoid a depression. His reasoning does not convince me; the USA lived above her means for many years, trying to pay that bill with printed money will not help very much... After all there is still the law of 'Conservation of misery' that says you can transform misery but it will not fade away... Source:

Depression Lurks Unless There’s More Stimulus 

We had USA inflation figures out today: headline year on year was minus 0.40% while so called core inflation (without food and energy) was 1.80%.
All talking heads on the television tell us the difference between headline and core inflation, none of these eggheads observes that now housing prices decline almost 20% year on year the reported numbers are far too high. (In fact if people spend 25% on the house, this should give a 5% downward pressure in the consumer CPI.) Source:

Eco Data 4/15/09 

Although China (and Russia & a few other countries) lately came up with some plans to get rid of the US dollar as a reserve currency, today China proved they have not left the path of the weasels. Ok ok they have swapped a lot of long term US government debt for short term debt, all in all they are still a bunch of weasels in my opinion.
Still buying more US government debt...
It feels like I am talking to a heroin junkie talking about the benefits of a non addictive life. Bloomberg source:

China Bought More U.S. Securities Even as Its Concerns Grew  

The Goldman Sucks boys did a marvelous job once more: They did not need the 10 billion bailout money but they have to raise money via selling new stock to pay it off...
Yesterday they managed to sell five billion in new stocks, my compliments by the way, and that proofs in the USA there are still plenty of sucker investors.
Now the serious part, quote: GS’ tangible leverage ratio was 22x at the end of Q1. (920 / 42 = 22) That marks a slight deterioration from last quarter, when the ratio was 21x. 

Via very easy to understand calculations I have shown in the past how horribly expensive it is to bring ratio's like this down from, lets say, 20 to 19. This also shows it might be Goldman but it still sucks: If they truly had 925 billion in 'assets', why not sell a few percent of these in order to pay for the government bailout money? (Bank 'assets' are always gross assets; if you withdraw the borrowed money from it the result is often pretty bleak or even negative.) Source: 

Goldman Sachs One-Upped Wells Fargo in Accounting Shenanigans 

If you need a good laugh you can read that the latest US FED beige book sees 'faint signs of hope'. Man oh man, I am almost fainting right now.
But serious; if you have never read a beige book or one of the minutes from the FED, you truly must do that. They always zoom in on details that are not that relevant very much (under Greenspan this was even worse). Source: 

Fed survey finds faint signs of hope 

On the so called 'stress test' for the US banks (it has nothing to do with stress, the most bleak scenario's tested against are only standard future scenario's, no stress only day to day business), plans are to relieve the results out early May.
So in a week or four we get the results... In the meantime the FED can print more shitty dollars to bring 'real strength' to the weak banks. Source:

U.S. to release bank stress data in May   

The lady Yves has thundering fun on the Goldman Sucks CFO Viniar: This idiot stated last year that they were seeing "25 sigma events, several days in a row." 
The lady Yves observes the universe is not old enough for that.
It makes you wonder if at Goldman Sucks they understand the normal distribution on a high school level or on an academic level... Source:

Goldman CFO Viniar "Mystified" by Probes into Relationship with AIG 

So far the links, till updates. 

(15 April 2009) Boring boring boring, that is the only way I can describe the financial news of yesterday. Ok Willem had some good stuff on derivates but all in all there is only one item for today:

Item 1) Wells Fargo stress test only 120 billion in potential losses? Pipe dream! 

 Item 1) Wells Fargo stress test only 120 billion in potential losses? Pipe dream!

The honorable lady Yves from naked capitalism once more proofs she is worth her weight in platinum.

Of course when you would ask a country to 'stress test' their banks, in the present circumstances it is very likely all their banks can stand stress very good.
So what are the scenario's that drive this fake test?

You can judge for yourself, it is a bit like this (source1, source2):

Tests a baseline and an adverse case looking two years into the future.
Uses three metrics: GDP, Unemployment and Housing Prices.

-->Baseline case 2009: -2.0% GDP, 8.4% unemployment and a 14% decline in housing prices.
-->Adverse case 2009: -3.3% GDP, 8.9% unemployment and a 22% decline in housing prices.
-->Baseline case 2010: +2.1% GDP, 8.8% unemployment and a 4% decline in housing prices.
-->Adverse case 2010: +0.5% GDP, 10.3% unemployment and a 7% decline in housing prices.   

Comment: You vuking don't believe this, but this is the USA 'stress test'.
Remark there is a 'baseline case', an 'adverse case' but not a 'worst case'.
After my humble opinion there is no reason why GDP should run this high, unemployment would be this low & most of all: why this silly decline in house prices?
House prices will likely bottom out at the end of 2011, on the back of that GDP and employment will only shrink...  

I think, now I know the 'public domain' stuff of the stress test, I refrain from more comment. Better hit the 'publish website' button and do something else to relieve my stress from this idiot stuff.

On the other hand it is a good thing the Americans still refuse to understand the future, that will keep military spending at the wrong pockets and that is good stuff... 

Till updates. 

(14 April 2009) My life is boring, so five boring items for today:

Item 1) Let it be official: PPIP ceiling at best 40% of book value.
Item 2) More FED fun: US mortgages above one GDP & climbing fast.
Item 3) Funny graph from Jesse on S&P price/earnings ratio's.
Item 4) If only more US soldiers got killed this way.
Item 5) The empty item. 

Item 1) Let it be official: PPIP ceiling at best 40% of book value.

Dear reader, the PPIP or the Public Private Investment Program (better known as the 'pee pee i pee' program) is designed to relieve the US banks from toxic assets. 

It is NOT designed to relieve them from toxic liabilities but from present toxic assets. That toxic liabilities is some future fun (until now only AIG is delivering on that detail).

Lets take a fresh look at the latest FED link found:  

From that you can easily extract that:
Garbage collateral sucked in = 1262 billion US$ while
Credit extended = 513 billion. 

That is 40.65% fresh loans for 1262 billion of collateral.

How the USA accountants muzzle away the 1262 - 513 = 749 billion is not the scope of this item...

From 17 Dec 2008 a similar page was found:  

From that archive page you can easily extract that:
Garbage collateral sucked in = 1332 billion US$ while
Credit extended = 538 billion.  

Giving 40.40% of fresh loans for the garbage collateral offered. 

Again leaving accountancy troubles behind, the FED archive gives a clear indication for the PPIP program:

The FED chairman Ben Bernanke has stated more than once that all collateral was of 'investment grade', their own files say it is 40 cents on the dollar.

Hence the PPIP program, that is not done by the FED but by the US Treasury, tries to suck in the toxic assets will have a hard time to climb over the 40% of book value...   

Item 2) More FED fun: US mortgages above one GDP & climbing fast.

The folks from have a nice look at the expansion of the balances of the US Federal Reserve, you can view the fun in graphic one in the next link:   

The second graph they have is far more important; please remark the graph was made by some amateur because it looks like it ends in 2006 or 2007.

Scroll down about half way to page 51 or 56 (51 is the actual page while 56 is the pdf page of the file). It is the L.2 table know as 'Credit Market Debt Owed by Non Financial Sectors'.     

Look at line 10 to observe the fun has climbed over on US gross domestic product:
Total US mortgages = 14475.4 billions of US bucks. 

This also includes commercial mortgages (about 2.5 trillion) but, by definition, it will exclude the mortgage debt from finance companies...

Why is this item nr 2 important?

It once more proofs complete sectors of the US economy need to borrow more in order to fulfill the interest obligations they have.

In line 15 you observe consumer credit is still on the rise so from consumers to entire sectors: Debt will always rise faster compared to income growth.
Have a nice black hole my dear debt huggers!  

Item 3) Funny graph from Jesse on S&P price/earnings ratio's.

This is more of a joke item because if the next graph is true it is utterly clear that the DOW will decline over 85% from her top of 14 thousand.


Please remark this graph is likely some good propaganda, I have seen zero reports in S&P earnings validating this. So it's a 'funny graph'. 

Source file: 

Item 4) If only more US soldiers got killed this way.

If only we could killed more US soldiers... 

There are many ways to get extra killed US soldiers, most ways I studied also give rise to large numbers of killed civilians.

But the next way was just so beautiful, it exposes the true kernel of how Americans are (msnbc source), quote:  

FORT STEWART, Ga. - An Army sergeant charged with murder shouted "My career's over, just kill me," as soldiers pinned him to the ground after he shot and killed two fellow U.S. soldiers in Iraq, members of their unit told a military judge Monday. 

Comment: It is not the first time and it is not the last time I ask the rest of NATO this: Why do we have the USA as the military leader in NATO?
Floss your brain, kick them out and if a decade later they have come to their senses leave them in again.
The rest of NATO simply do not understand how the Americans are, they have some weird 'killing desire' and their murder rates inside society are always five fold compared to normal democracies.
My dear NATO members, do you want a five fold increase in civilian murder rates in your home countries? Yes or no?

Please kick that shit out of NATO, we are better off without them...  

Item 5) The empty item.  

Empty empty empty; please use your own brain! 

Till updates.

(10 April 2009, updated 11 April) Today it is the Christian Good Friday but is it a good Friday?

Item 1) Iraqi good Friday: Five US military slime killed.
Item 2) US currency backed by crap? 

Item 1) Iraqi good Friday: Five US military slime killed.

Nice stuff from Iraq: in Mosul five US slime got killed (Reuters source), quote. 

MOSUL, Iraq (Reuters) - A suicide bomber detonated a truck packed with explosives outside an Iraqi base in the northern city of Mosul on Friday, killing five U.S. soldiers and two Iraqi policemen, the U.S. military said.

The attack was the deadliest for U.S. soldiers in Iraq for months. An insurgency led by al Qaeda and other militants has proven stubborn in Mosul, 390 km (240 miles) north of Baghdad, even as the violence set off by the U.S.-led invasion of 2003 has waned elsewhere in Iraq. 

Comment: My compliments go to the Mosul operatives! Great job!
I am very sorry I never write that much about Iraq, but every time I do that visiting numbers to this website decline and now the enemy is on a course of financial self destruction too low visiting numbers are unhandy. 

But the Iraqis will be in my mind forever; when daily killed US slime was on her top on the entire war (March, April and May 2007) the Iraqis honored me during the Zero-One project:

Like a light switch daily killed averages was maximized (the 'one' days) or minimized, how can I forget?  

Again I want to thank the local commanders for following my advice on that very important detail (until now the US military still does not have a clue, for me still a source of joy!) 

Lets poke some fun at the US military slime & how they explained the killed averages:

---Begin 2007: killed slime numbers rising. It is the surge!
---End 2007: killed slime numbers declining. It is the surge!  

When a professional army uses the same argument to explain opposite results, it is clear they do not have a clue...

Proposal to the US military: I think I have found your next commander that looks fit to lead you in future wars. Here he is:


Item 2) US currency backed by crap?  

For a long time I have been arguing that all these Federal Reserve programs to 'provide liquidity' or 'restore lending' can only be done if they accept garbage as collateral for the 'help' involved.

At present date about 1.6 trillion of garbage is sucked in.

On many occasions I have also argued that there was no 'mark to market' rule when this garbage was on the balances of the US Federal Reserve. (There is only a haircut in the 'acceptance phase' after that only silence & no mark to market applied.)  

Lately the honorable Willem Buiter opened my eyes about how this works: There are all kinds of  so called SPV's (special purpose vehicles) that take the risk and so the FED is 'risk free'. Ok Ok there will be some printed money flowing to the SPV's but it is not the task of CNN or CNBC to check stuff like that...

The next link is about the FED balance sheet (take your time to read the four comments made by other readers; they contain lots of historical information!), link: 

You should probably know that the U.S. currency is now backed by risky assets

From the above link we do not find only the 1600 billion US$ of garbage sucked in but also the next link:   

Now scroll up only a tidy bit to observe, quote:

Valuations and Haircuts: The ABS must have been purchased by a third party and valued at a market price. Haircuts are designed to exceed four times the estimate of stressed losses.  

Comment: With a 'third party' we are likely looking at some SPV sucking in the risk. The quote comes from the latest 'loan restoring' action from the FED, that is the TALF program. You can store it in your long term memory by remembering LF = Loan Facility.

As far as I see reality, the Federal Reserve tries to prop up the value of the so called 'toxic assets' on the balances of the US commercial & investment banks. But if these toxic assets are used in the Loan Facility you only get (source), quote:

TALF loan requests sink 64% to $1.7 bln, NY Fed says 
SAN FRANCISCO (MarketWatch) -- Investors applied for $1.7 billion in loans to buy asset-backed securities under a new government program designed to jumpstart consumer lending, the New York Federal Reserve Bank said in an update to its Web site late Tuesday.  

Comment: TALF is an utter failure and (mark my words) the new PPIP program for lifting toxic assets from bank balances will also not work.

Lets leave it with that so I can hit the button 'publish website'.

Title: TALF & PPIP are only SPV's to destroy US military funding.

Till updates, have a nice War on Terror or try to get one.



Again look at the next link:    

Scroll down a bit until you see 'All Lending Programs: Collateral Pledged' and observe that for 'Lending to depository institutions' (these are the commercial banks) we have:

Collateral pledged = 1262 billion while
Credit extended = 513 billion.  

To put it simple: The depository institutions got only 40.65 cents in lending for every dollar pledged...

Since until now pledged stuff was of the 'best quality' the commercial banks had, this means that prices in the PPIP program will be lower. 

End of this update. 


(09 April 2009) Lazy lazy lazy, only two items for today:

Item 1) Musings on the US trade deficit.
Item 2) Is there a genetic component so that you cannot speak in public?  

Item 1) Musings on the US trade deficit.

Markets soared today on positive banking news: US based bank Wells Fargo had a 3 billion profit in the first Quarter of this year! (Ok if we withdraw the government aid the picture might be different, but why do negative?)

So lets look at more super positive news (source):

The US trade deficit for Feb declined to minus 26 billion US$!

In the past this was often 2 billion a day or 60 billion a month. Do you think the decline is good news for the US economy? Lets see, the deficit is defined as follows: 

US trade deficit := US exports minus US imports. 

Both the size of exports and imports are declining year on year, the decline in trade deficit is mostly because imports fall much faster compared to exports. 

If we use the size of US imports as a measure of health for the US economy and the size of US exports as a measure of health for 'the rest of the world', what do you see? 

You can choose for yourself:

1) Negative view: Holy shit, US imports decline so fast compared to exports that it is inevitable that the US economy shrinks much faster compared to the rest of the world.   

2) Positive view: Large trade deficits are bad, small deficits are good. Together with the positive housing and banking news the DOW is ready to boom to the 9000 and/or 10 thousand level.

I think you only need 3 or 4 brain cells to observe this is in fact negative news, but the lack of brain cells is just the main problem at the other side of the Atlantic ocean.
Most investors over there simply don't understand their own economy and always loose themselves in irrelevant details.

(Update 10 April: Yesterday I did not mention that US imports also decline because of lower oil prices, yet also the month on month trend still is the same:
Imports declining further, exports a tiny bit up. So in the US the economical situation simply is worse compared to the rest of the world.

Lets quote some fun (source)

WASHINGTON (AP) -- The U.S. trade deficit plunged unexpectedly in February as the recession pushed imports down for a seventh straight month while exports rebounded a bit. Analysts said the smaller trade gap is fresh evidence the economy's downward spiral may be easing. 

Comment: Again an elementary lack of 3 or 4 brain cells observed.
End of the update.) 

Item 2) Is there a genetic component so that you cannot speak in public? 

Genetics is a branch of science I know almost nothing about, on a website under the name 'freewill' I came across this weird info (source):

Social Anxiety and Selective Mutism

Social anxiety is not a free choice. It’s estimated that 7 in 1,000 children have "selective mutism" (SM), one type of social anxiety that renders children absolutely silent in public (e.g. they never speak up in class), even when they are normally talkative at home. 

The website has lots of surprising info that makes you think about yourself in strange ways. It's not a holy grail but this website places some dots on the i & stuff like that. 

What about 'presidential genes'? (Source):

The article includes a quote from Ted Sorensen, the former counselor to President John F. Kennedy: “You have to not only have a sense of confidence but a pretty big ego — you have to almost be a fanatic.” Other qualities mentioned include "ambition and drive" and "believing you have special gifts” and being attracted to the "elixir of adulation" and the "opportunity for immortality".  

Comment: Former prez enemy combatant Dubya was definitely preoccupied with the 'opportunity for immortality' why on that detail I don't give a shit.
I want to implement policies and let others do the work, if the other is the baker around the corner or the prez of 50% of world military budget, again I don't give a shit.  

Also funny reading:   


Lets leave it with that. 

Till updates, have a nice crisis or try to get one! 

(08 April 2009) Two items:

Item 1) More confirmation that US house prices will drop 50% from their top.
Item 2) Ph D Jeremy Siegel trying to prop up markets with logic again.

Item 1) More confirmation that US house prices will drop 50% from their top. 

In the USA a female named Meredith Whitney seems to be rather famous, some name her red hot & stuff like that. Indeed she is much much better than a lot of male colleagues who, as usual, are without balls. 

Now how long am I saying that US house prices will decline 50% from their mid 2006 top? That is since 12 Nov 2007 or about 15 months long.
Furthermore, contrary to Meredith, I never changed my estimation on that detail. 

Also since 12 Nov 2007, just a few weeks after the latest DOW top of over 14 thousand, I informed you the DOW would be cut in half. I admit it took a long time of about 14 months but did I ever need to adjust my prediction?

In the CNBC video below, look at about 5.30 minutes for Meredith new estimates on US house prices. (By the way; this is the very first time I embed a video for myself, it is very very difficult; you must cut & paste a few lines of html embedding code...;)  


Item 2) Ph D Jeremy Siegel trying to prop up markets with logic again. 

Jeremy Siegel is somehow a dangerous man because most Americans are far dumber then he is, the dumb Americans are easy persuaded to follow Jeremy's logic.

Jeremy is always looking for fresh insights as why stock markets should be higher, I think the guy is a snake in a rather pure form.

Lets look at the latest fruits from his brain, the source file is:

How Cheap Is the Market? 

Jeremy has created a brand new way of estimating the earnings of the S&P 500.
In short it goes like this, quote:

A Challenge to Standard & Poor's

I proposed an alternative methodology for computing aggregate earnings: Weight the earnings of each company by its current market value, in a fashion identical to the way the return on the S&P 500 Index is computed. This alternative methodology leads to substantially higher earnings for the index than does the S&P methodology. 

According to Standard & Poor's, total reported earnings on the S&P 500 index for calendar year 2008 was a mere $14.97, the lowest in many decades, primarily because of the huge losses of a few financial firms. S&P reports that, at the index's level on March 31 of 798, the S&P was selling at an extraordinarily expensive 53.3 times last year's earnings.  

Comment: Of course simply adding up all earnings without market cap remains the prevailing statistic. Lets give a simple counter example as why the Jeremy method is pure nonsense:

Take two companies A and B from the S&P 500 list, suppose that over the last decades their price to earnings ratio's are very similar, lets say for simplicity P/E = 10.
Market cap of A is 10 times the market cap of B, hence earnings from A are 10 times that of B.
If you give the total earnings of  A and extra weight of the market cap, company A weighs 100 times as heavy as company B in the Jeremy method.

The Jeremy method makes only sense when you use market cap as a weight for the earnings per share, that could give some kind of average earnings... 

So is the market cheap? For that you have estimate future earnings and given the present economical chaos these future earnings are expected to be bleak bleak and bleak again. 

Till updates. 

(07 April 2009) Five items again:

Item 1) Barry on overstating the US gross domestic product.
Item 2) Will Dutch house prices decline 40%?
Item 3) Soros on the US dollar strength.
Item 4) A finance lecture from Robert Shiller.
Item 5) The empty item. 

Item 1) Barry on overstating the US gross domestic product.

With head and shoulders standing above all other items of today, this is the most important one because as I have written more than once: Often the USA GDP growth is overstated!

Mark my words: I am not saying this is evil fraud done by evil Americans. All I say the real GDP growth was overstated (and as such should be down graded but that's another chapter).  

Here is the source file:

From Bubble to Depression via Bad CPI Data 

The next quote is only about consumer inflation but for the deflator that is needed to calculate the real GDP there is similar stuff. Quote:

With home price increases out of the CPI and the price-to-rent ratio rapidly increasing, an important component of inflation remained outside the index. In 2004 alone, the price-rent ratio increased 12.3%. Inflation for that year was underestimated by 2.9 percentage points (since “owners’ equivalent rent” is about 23% of the CPI). If home-ownership costs were included in the CPI, inflation would have been 6.2% instead of 3.3%.   

Comment: Seldom you see stuff like this, I have no proof but if in the deflator we have similar stuff this spells no good. Beside this, all that building of new homes was of course nicely locked in the GDP growth. Yet at present day these new homes are on average also of less worth.

Don't get fooled my dear reader: the present day of real GDP level is still inflated from funny things done in the past. Lets go to the next item.  

Item 2) Will Dutch house prices decline 40%?

Lets start with a nice anecdote:

Many months ago the OECD came out with a report stating that home prices in my home country and another small country could fall by 30%.

I retaliated against the OECD; why attack small countries you bunch of vukheads?
If there is some country where home prices will fly against the wall it will very likely be the United Kingdom.

After about two weeks the first media reports of declining prices in the UK became main stream news... (For me that was funny because it proved the OECD is indeed a collection of vukheads neglecting the UK and only destroying small countries.)    

End of the anecdote.

I don't know much of the local housing market, for example I never followed the local 'income to house prices' statistics. All I know is that the local housing market has indeed high prices, but a decline of 40% as the next graph is showing?

Who knows? Is the graphic correct? If it is correct, why did nobody sound the alarm bell sooner? Who knows?   


The sources are in Dutch:

Woningprijzen in Nederland zullen scherp dalen: -42%?  

Een ding is zeker: woningprijzen in Nederland zullen scherp dalen 

Item 3) Soros on the US dollar strength.

There are a lot of strange theories out there explaining the present US dollar strength. Lately on Bloomberg tv I found a very nice one:

Most debt on the planet is written in US dollars, a lot of that debt is defaulting leaving the remaining dollars stronger... 

That is a strange theory, if for example in food there is an explosion in rotten eggs would the price of eggs go up? Because the remaining non rotten eggs represent the same value only with less eggs? I doubt this, a reasonable person cannot trust eggs any longer and will not pay more for these AAA rated eggs. 

George Soros has the next to say in the Tech Ticker (video): 

Soros: Dollar's Strength a Measure of System's "Sickness"; Euro Will Remain Viable 

Item 4) A finance lecture from Robert Shiller.

From Yale university I enjoyed a very elementary course in financial math from Robert Shiller. And I too learned a thing: now I know what the alpha and the beta like we have in the names of websites like
These are only the regression coefficients of the relative performance of a company (or a sector) compared to the market using the least square minimizing stuff.  

All in all the lecture is good, it has a few technical errors (and strangely the class does not correct the prof) but all in all it is ok. 

Links (the video is 69 minutes):  


Or choose lecture 2 from this list:

ECON 252: Financial Markets  

Item 5) The empty item.  

Empty empty empty; will the US dollar go down the path she deserves or will China prop up the thing forever? Use your own brain please! 

Till updates. 

(06 April 2009) Ha ha ha, the IMF came in funny today: All those East European countries should fall inside the € zone as soon as possible.
Here in the Dutch landscape a lot of commentators were against stuff like that because this would weaken the €. I agree for the full 100%: the € is supposed to be a strong currency and we have plenty of weakness already; just look at the ECB rates:
Do they reflect the fundamentals of a strong currency? They don't.

On the other hand we simply cannot leave these countries to their fate, the only reasonable help is making their local currencies stronger & the ECB could do miracles in that. If these future members of the Euro zone promise they won't print money, then very may be the ECB could prop up their currencies in case they are clearly undervalued.
In such a case these countries could still afford some imports at reasonable prices...
Deal or no deal?  

For the rest I only post a few links I found interesting for some kind of reason:


Guest Post: FDIC's Insurance Commitments 34% Higher Than Reported 

I just cannot withstand quoting from it:

But how good is his? Already, the federal government has committed $12.8 trillion to fight this financial fire (a figure that doesn't include FDIC's $6 trillion worth of insurance commitments). Then there's the trillions of unfunded liabilities for private and public pension schemes that Uncle Sam may be forced to absorb. Also there's Obama's budget deficits, which will commit us to borrowing trillions more over the next decade. Finally and most importantly, our unfunded liabilities for Medicare and Social Security surpass $50 trillion.

At the end of the day, after borrowing and money printing have been maxed out, the federal government's credit is limited by the taxes it can collect from the American people. No way no how can Americans pay for all of the above. It would cost every one of us hundreds of thousands of dollars today. Yet society still feeds the collective delusion that government liabilities are "risk-free" because it has a printing press. But printing is just default by another name: inflation. And the more we come to rely on government guarantees, the more unstable they become... 

Comment: Indeed it would costs every US citizen hundreds of thousands dollars for the present fairy tale world to evolve into the future. It all gets hilarious when you compare this to the 'assets' and the 'liabilities' of the entire USA as reported by the US Federal Reserve... You just can't stop laughing if you place them together.


Of course it's no secret I am only attacking the US military budget via this website in the last years... Let that be no secret: the Pentagon perfumed princes will feel my fist and as usual pretend they don't know where the fun comes from.

In order to understand that the funding of the US military is just as ineffective as the health care system over there you have to check out this fun (it's from the Ass Press):

Pentagon to end F-22 jets, presidential chopper      

Please use your brain if you read the next quote:

Plans to buy a new fleet of White House helicopters also were among the programs terminated by Gates. With a price tag of $13 billion and a six-year delay, the helicopters were considered at risk to be cut in the 2010 budget. 

Comment: The poor creatures; only 13 billion and a six year delay for only some helicopters? Almost all of the Pentagon future plans have stuff like that: horribly over priced and many many years too late.


In order to understand how deeply rooted corruption is inside the US society, check out the Tech Ticker with the next video: 

Mortgage Fraud Epidemic: How the FBI Blew It and Why There's No 'Perp Walks' 

Of course European pension funds will keep on investing in the USA because the European pension funds act like a flock of sheep.  

And sheep are there to deliver wool and to get slaughtered, these are facts of life.

So my dear sheep; keep on buying those highly valued USA government bonds, if this is your way to behave just do it!


I finally know what 'Planck length' is, I don't understand it at all but it is the very first math formulae in the next file:     

Man oh man, I am far to old to pick up new ideas like quantum space.
Luckily I haven't lost my grasp of reality for a full 100%; George Soros just like me thinks the US$ will be the reserve currency for only a few more years...

Come on George, the dollar is at best one Planck length of worth... 

Till updates. 

(05 April 2009) No items, just a few links posted for today.

The best graphic in relation to the US non farm payroll numbers is (strangely enough!) found at CNBC: Jobs Numbers: Breakdown by Sector   

Jesse has a highly interesting graphic about the month to month development of the NFP numbers (so without seasonal adjustment). It is the third graph you have to see: it says there are two sharp bottoms in UN non farm employment every year.
Please remark I cannot stand for the correctness of the graph but you must see the third graph in:
Non-Farm Payrolls: Revisio ad Absurdum  

The third graph says seasonal swing is about 3 million or 2.2% of the entire US workforce of about 140 million: Monthly non SA USA non farm employment

Barry makes chopped meat of all those arguing that we can neglect the non farm pay rolls since these are only a lagging indictor. So he makes some afford as to separate the lagging fun from the present direction of the US labor market: Temporary Help Services Employment Down 27%

On the mark to market rule there is still a lot of confusion out: will they prop up the zombie banks a little bit longer (that's very likely) or will other stuff happen?
Willem also has a few words to say on this detail:
How the FASB aids and abets obfuscation by wonky zombie banks   

In the category of 'stupid games you can never win from your children' I thought the next game fits:      

And last but now least an old local link about option pricing, I love to quote first this funny stuff (scroll down to page 7):

By now, the mathematical theory of financial markets is highly developed

and well understood. Without wanting to make a link to

econophysics, many compare the present state of the theory with

the power of Newtonian mechanics used for describing nature in

a first approximation. I personally think that we are not there

yet; too many really fundamental practical issues remain too little

understood. We may understand markets in a ‘normal’ state,

however we have little to go by with that same theory when the

very important ‘abnormal/extreme’ situations occur. The whole

field of international market regulation, through globally accepted

principles for quantitative risk management, is precisely interested

in these ‘bad case scenarios’.

Comment: This dates back to March 2003 and the writer thinks that international regulators truly were looking for 'bad case scenario's'. Talking about fooling yourself... 

The Wizards of Wall Street: did mathematics change finance? 

So we have seven boring links posted, till updates! 

(02 April 2009) Today I don't feel much need to comment upon the present stock rallies since there is no viable mechanism observed that explains future earnings of non financial companies will rise.

Before we go to the main items of today I would like to place a link of some dumb folks giving 5 reasons as why the DOW climbed over 8000:

Dow 8000: 5 Reasons Driving the Rally 

These folks name themselves the 'Smartmoney staff' but on page six in the fifth reason as why the DOW rallies they write, quote (page six source):

Take roughly $14 trillion in cash sitting on the sidelines. Add in the reality that the market trades on perception as much as reality.  

Comment: The dummies from smartmoney think there is 14 trillion or a complete USA GDP sitting on the sidelines while for many months there is only an estimated 4 trillion figure hanging out.
This reveals at smartmoney they don't have a solid mental representation of what exactly one trillion is. Lets leave dummyland behind & go to:  

Item 1) The relaxing of the mark to market rule (the 157 rule).
Item 2) The IMF comes back strong, now if only they...

Item 1) The relaxing of the mark to market rule (the 157 rule).

The 157 rule was meant to create more transparency in large institutions and has some of it's largest roots in the Enron debacle. At present times some folks think the mark to market value rule (or the fair value rule) is the cause of the write downs at the banks.
This is not correct, it is not the cause but the mechanism of write downs, the stuff on the bank balances was crappy in the first place and that is the cause of the present down writings.
Once more we observe a very elementary fault in understanding the troubles.

Today the 157 rule seems to be a bit relaxed, but the Financial Accounting Standards Board voted 3 in favor and 2 against the changes.

Today there is no serious information out, more or less all I have is the next (source), quote:

The changes, which apply to the second quarter that began this month, will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale.

The new guidelines also will allow banks to avoid reporting some losses on securities by splitting them among factors like fluctuating interest rates that won't have to be counted toward net income or loss.   

Comment: I have zero problems with marking the stuff for 'orderly' sale prices, we all know that if you must sell your house or your car within 24 hours you simply don't get the best deal. The reason that there is no market for this garbage is again: it was garbage from the beginning. And despite the 'ruthless' 157 rule banks don't trade the stuff because banks know the price is far too high... It's as simple as it is; banks themselves do not trade it because it is garbage

With the second part I have serious problems, if costs or profits from fluctuating interest rates are taken from the market books to the banking books I don't think that is wise. How to prevent all losses going to the banking books & all interest profits staying on the market books?
Should the accountant decide what goes where and make or break the bank he or she has to check? This drives the accountants in an impossible situation and may be that explains why the vote was 2 to 3... 

Beside this, most interest rates are highly predictable. If a bank goes belly up details like that they simply deserve this. 

Item 2) The IMF comes back strong, now if only they... 

Jesse from the café Americain was on some kind of holiday leave for one week, so I was very eager to read his first update after a week because stuff like that is often 'very good'.

And indeed it was very good, it was even so good that may be Jesse should take one holiday week every month...;)  

Before we quote & link, today at the G-20 summit in London there was news that the IMF reserves will be pumped up to something like 750 billion US bucks. That is good news but because it comes from the G-20 it might also take 125 years to get such an amount of money in the vaults of the IMF.  

By the way; it was funny to observe Obama giving an iPod with all his speeches as a gift to the UK queen. This sheds a light on Obama: he thinks he can change the world with speeches. After my humble opinion Hitler is still king in that realm.

Now serious, here is the Jesse file:

How the Financial Industry Holds America Captive   

And the quote he selected:

"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."  

The source file is a MUST READ and is from a former IMF employee named Simon Johnson while a guy named James Kwak also made some contributions.  

Source file:   

Of course I have to do some cherry picking too, from the 'How to become a banana republic' section quote:

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. 

Comment: It is not only lending that stopped, the usual trade of garbage also suddenly stopped once the banks realized what they were trading every day... 

Luckily the IMF has a giant vault of 250 billion US$ so at an instance they can save America...;)


Lately the IMF is coming out with all kinds of weird statistics about US economical recovery and strange estimates about USA future unemployment rates.

It is well known institutions like the IMF use highly advanced models to calculate the future. The models might be right but if they use weird inputs based on fairy tales the outcome is not that perfect.

Now if only the IMF could feed info into their models that US housing bottoms out at the end of 2011...

If only that, if only that... 

That's it, till updates.

(01 April 2009) Today the stock markets rallied on completely unexpected good news:

Throughout the USA now it is Spring, trees and bushes started to sprout new leaves!
Economists expected the depressed climate on the stock markets could spill over to real nature but now we see new green leaves this could mean the worst is over...
And if nature grows, soon the company earnings will follow and stock markets are ready to boom, boom & boom. 

My dear reader, would you not think it is utterly strange to hear the above words from television business & finance channels?
Today they did this; it were not green leaves but 'unexpected rising of the pending home sales statistic', of course it was a 'month on month' statistic.   

Once more: Housing has strong seasonal components, families with children try to avoid disruption of the school year and try to sell in the Summer holidays. Farmers with crops try to sell in the Winter & so on & so on. 

All those business & finance television channels have zero learning curve after my humble opinion... 

Today I only have one serious item, I have never ever published only one item and I hope this will hammer down some wisdom at for example European pension funds who still don't have a clue where we are heading. 

Item 1) US financial sector debt 121% of GDP and climbing fast...

Item 1) US financial sector debt 121% of GDP and climbing fast...  

Ok, here we go:

Total debt of the USA financial sector (according to the Federal Reserve) is standing at:

17216.5 billions of US$ (present day $ of course, source)   

Present day (that is Q4 of 2008) USA GDP stands at:

14,200.3 billions of US$ (scroll down a bit in the next bea source)  

So financial sector debt is 121% of the US gross domestic product, it is well known the US government always takes over bad debt from the financial sector.  

It is also well known that GDP is shrinking over 6% a year right now and financial sector debt is growing over 7% a year...   

The Obama thingeling can think he can do a nice 'surgical bankruptcy' of General Motors but how to pipe dream away this ever expanding ratio of 121% of the GDP? 

Since the USA runs a deficit there is no taxpayer money to stabilize the ever expanding ratio, so only if the Federal Reserve prints money in the order of 13% of GDP (6 + 7 = 13) this can be stabilized.  

My dear European pension funds: do you understand the dimensions of this game & will you finally take some action or proceed with you dumb day to day activities? 

Here in the Dutch landscape we have a very large pension fund ABP, I call for the execution of the chairman of the ABP. The chairman is Eelco Brinkman.

People should cut of his head and his dick, put his head on a pole and place the dick in his mouth.  

As usual the European pension funds will not act on that what is the obvious future & as usual we will have many more months of 'surprising and unexpected good news' in the USA housing market...

That is what I had to say today, till updates.  

(31 March 2009) The five items of today:

Item 1) Surprising Case Shiller house index figures out.
Item 2) USA financial rescue nears GDP as pledges climb to $12.8 trillion.
Item 3) Today it was Afghanistan day in The Hague.
Item 4) Russia on a new standard for a better world currency.
Item 5) The empty item. 

Item 1) Surprising Case Shiller house index figures out.

Today the Case Shiller house index for Jan was out, I expected a more or less flat reading compared to Dec (of course you have to look at year to year comparisons) but strangely enough it was as next:

10 city composite index down 19.4% Y on Y &
20 city composite index down 19% Y on Y.  

So the second derivate still isn't zero, this seems counter intuitive compared to other information. Price declines still accelerate. How come this? 

The best explanation found until now is that banks are unloading their unsold volumes of foreclosed houses, I cannot validate this since I have no detailed access to sold volumes of houses but this bank rumor could be true.

CNBC has a relatively good video on this detail

In a related development I came across that very strange story on Reuters:

Most housing indexes overstate downturn -analysts 

Lets cut & paste some bizarre quote from the Reuters file:

While the S&P/Case-Shiller regional indexes show a 26 percent slide in prices since the peak in mid-2006 and the S&P national index shows a more than 18 percent in the 2008 fourth quarter from a year earlier, Miller said a more realistic estimated drop is in the 12 percent to 15 percent range for the typical homeowner.

"What we find is that on the way down, Case-Shiller overestimates the decline by about 10 percentage points or so, and on the way up will do the same thing," said Miller, who is a professor at the University of San Diego's Burnham-Moores Center for Real Estate as well as a co-founder of Collateral Intelligence.

The typical homeowner's price change probably is about 50 to 60 percent of the downturn shown by the index, he said.  

Comment: These are very strange words, as far as I know reality the only way Case Shiller could overshoot during climbs and undershoot via declining prices is if they would be based on actually sold homes. But I follow the CS index because it is based on a sample of houses regardless if they are sold or not.
The whole problem with this article is that it simply does not explain why the CS index would be wrong, all in all this article is only an advertisement for that 'Collateral Intelligence' business they run.

So the information that the CS index has structural flaws can be neglected; however there is one detail that could support this:

Until now I have never understood why, on the top of the market, total housing value was 23+ trillion. Mortgages plus heloc was only 14+ trillion, leaving a healthy 9+ trillion US$ in home equity there sitting untapped...
I mean we are talking about debt hugging Americans and not about Chinese who would hug a lower debt ratio on the house! 


Weighing all in all; the 19% came in as a positive surprise (in actual dollars this means the declining speed is in the order of 3 trillion dollars a year or, as I often measure it, over four times the US military budget).
The idea it could be banks unloading foreclosed houses could be true but needs more investigation.
The idea that CS over-or-undershoots is thrown into the garbage can.
(In case you want some graphics, check it out at Barry's hangout.)  

Item 2) USA financial rescue nears GDP as pledges climb to $12.8 trillion.  

Bloomberg reports that the USA financial rescue nears one gross domestic product and although it will be very funny when it crosses one USA GDP we simply cannot add grapes and oranges and conclude we have this kind of fruit in numbers. 

Source file:  


March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s. 

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.

Comment: My own Dutch government does similar stuff and the whole problem simply is in the 'guaranteeing part'. If my government guarantees some 20 billion in new sold bank bonds, how the vuk can I estimate the cost to the local taxpayer?  

The good thing is, when we withdraw all those commitments from the 12.8 trillion it is obvious that the reminder cannot be taxpayer money and voila the FED prints more and more money. (Of course these days they don't print in a real sense but open one more branch of the balance where the money is 'created'.)

Item 3) Today it was Afghanistan day in The Hague.  

Today dozens and dozens of representatives converged in The Hague and my dear reader this has nothing to do with serious help for Afghanistan but this is only some weird 'psychological process' the diplomats need and use for showing they are the 'good ones' while Taliban are 'evil'.

Military facts are that in seven years there is about zero point zero progress, the only good thing is that until now there still is no aerial spreading of poison to kill the poppy fields... And that's about the only good thing; poor Afghan children still do not eat vegetables contaminated with anti heroin pesticides... 

Other military facts are also easy to understand; applied Western forces are so low they can only operate under the cover of large amounts of air power and long distance artillery fun. That does not make much friends either.

I could write upon Afghanistan for hours but I will not do that, I will only wish the Afghanis good luck and quote a very stupid quote (source):

March 31 (Bloomberg) -- Secretary of State Hillary Clinton said Iran offered “promising” ideas at an international meeting today on helping Afghanistan. 

“The questions of border security and in particular the transit of narcotics across the border from Iran to Afghanistan is a worry that the Iranians have that we share,” Clinton said. 

Comment: I cannot validate via other sources if power slut Hillary Clinton actually said this, but the Hillary power slut is talking about a problem from over 10 years ago:
In those long lost years harvested puppy stuff went to Iran to turn into heroin, sometimes this heroin got back into Afghanistan and may be that caused some problems... 

It is well known that at present day much of the refinery takes place inside Afghanistan and if memory serves it was me, Reinko Venema, that spelled out the rules for taxes and distribution of the profits from the heroin trade... 

My dear power slut Hillary, if in the present year 2009 the Taliban are winning, it could be they have listened to my words and you are only looking into the barrel of your own USA created War on Drugs.

By the way my dear power slut Hillary, on the Mexican drug trade I never enforced a moral code, how is that one going my dear power slut???   

Item 4) Russia on a new standard for a better world currency.

Just a quote from just a source:

Arkady Dvorkevich, the Kremlin's chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund. 

Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.  

Comment: Of course it is obvious we need a real backbone as reserve currency and not the US dollar. Again my compliments go to the ones who baked in the special drawing rights of the IMF.
How could the IMF resist to logic that helps a better international reserve currency? 

Lets leave this item with that. 

Item 5) The empty item.  

Wow wow wow, it has been a long time since we had an empty item! 

For readers who are new: 

The empty item is empty so you can use your own brain! 

It's in between your ears and behind your eyes; good luck with using it... 

Till updates.

(30 March 2009) And again, lazy as I am, only two small items.

Item 1) More on Bayes statistics & long term stock volatility.
Item 2) Financial humor: The FED is stating it's independence is 'critical'.  

Item 1) More on Bayes statistics & long term stock volatility.

Today I updated the second item from yesterday where Bayes calculating rules are a little bit abused. (See 'The old envelope problem' below in item 2 of 29 March, if you cannot crack the problem instantly please store it in your memory and solve it in the future; it will be very rewarding and give a better understanding of Bayes stats.) 

Via the Tech Ticker I found a lovely quote on long term behavior of stock markets, I link to the businessinsider dot com article:   

And from that source quote (actually the quote is from the NYT):

It is one thing to acknowledge the existence of uncertainty, but quite another to measure its influence on long-term market volatility. To do that, Professors Pastor and Stambaugh rely on a statistical approach pioneered by the Rev. Thomas Bayes, an 18th-century English mathematician. Bayesian analysis is often used to assess the uncertainty of future outcomes, based on a formula for updating the probabilities of given events in light of new evidence. This approach is quite different from traditional statistical measurements of probabilities based on historical data.

Applying Bayesian techniques, the professors found that reversion to the mean isn’t powerful enough to overcome the growing uncertainty caused by other factors as the holding period grows. Specifically, they estimated that the volatility of stock market returns at the 30-year horizon is nearly one and a half times the volatility at the one-year horizon.  

Comment: I did not read the article from Pastor & Stambaugh so I can only say it looks plausible. If the findings hold up for a longer period, lets say another 2 centuries, all present models for pricing options or bank risk (the VAR model) are cake. 

In this it also has to be remarked that price to earnings ratio's in the USA were far to high for a too long period, we can put the blame for this detail squarely on Alan Greenspan; if pension funds cannot live on the returns of government debt, this money will drive up the P/E ratio's leading to nowhere but the desert.

Item 2) Financial humor: The FED is stating it's independence is 'critical'.   

The poor US Federal Reserve; lately she unfolded plans to buy a few hundreds of billions in US Treasuries (government bonds) via printing more money. 

The theory is, as we are told, the FED is fighting deflation. There really is 'no problem' because later when inflation could be a problem, the FED simply sells these AAA rated assets again (to mop up the excess in liquidity). 

Nice theory, but when inflation strikes the US government might need some perfectly printed money herself and under such conditions the FED cannot sell another batch of Treasury stuff.

So now the FED has taken over the role of the US taxpayer via buying government debt, she thinks she is 'independent'? That is funny for sure...;) 

Lets quote the Bloomberg fun (source): 

March 30 (Bloomberg) -- At 4:30 p.m. on March 23, on a day dominated by release of the Obama administration’s plan to save the banking system and the fourth-best day in postwar Wall Street history, the U.S. Treasury and Federal Reserve released a one-page joint statement on the division of economic responsibilities between the two agencies. 

Amid the flurry of news, the statement passed with little public attention; neither the New York Times nor Wall Street Journal printed articles about it the next day. The release said that while the Fed collaborates with other agencies to preserve financial stability, it alone is in charge of keeping consumer prices stable, its independence “critical.” 

Comment: Now with all the shit already inside the balances of the FED, stuff like car loans and student loans, we are supposed to believe the FED is 'independent'?
Beside CBS (car backed securities) there will also be more AAA rated US government debt while in the past this kind of debt was pumped to the primary dealers? 

Please get real, put the money press on and don't hide any longer...

Till updates.  

(29 March 2009) Two items:

Item 1) A new world reserve currency?
Item 2) Fun with the new Public-Private Investment Program (PPIP). 

Item 1) A new world reserve currency?

Ok, regular readers of this website might have noticed that lately I do not have the highest of esteem for China because they keep on buying US debt.  

Today I would like to give a compliment to Zhou Xiaochuan (the governor of the people's Bank of China).

Before we zoom in on the details emerging from China lets take a look at what I want for a number of years:

Given the observation that the labor force of humanity is the true gold pot, currencies should be backed by labor. So countries or currencies (like the Euro) can enter a union as some kind of insurance against eroding the local currency too much.
To some extreme you could introduce the 'standard unity coin' and that is the value of one hour of unskilled labor. Inside the unity this coin buys you the same amount of bread or vital things to live upon, for example one kilo of bread or grains.
So if someone in China mails the standard unity coin to someone in my own country, the Chinese coin could be used to buy the necessities of life.
For luxury items no such 'equality' in price is needed.

If a country faces economical havoc, let it be natural disaster, civil war or nice bankers, their currency value would have a rigid bottom.

If for example Zimbabwe would have been a member of such a union, they would think twice before doing all kinds of weird stuff because if you get spit out of the union genocide and other forms of mass killing will rule the day.  

I have not looked at the present proposals in much deep, but why Zhou Xiaochuan deserves a big compliment is easy: He wants to include the Special Drawing Rights of the IMF...;) 

Beside a lot of currencies in their present form, also include the Drawing Rights...

Why did I not think on that? I am scratching my head and the answer is that I consider the IMF folks as a bunch of non performers living inside weird economical models that will not stand the test of time.  

The economist John Keynes also thought out some international currency a long time ago (source), quote:

The bancor was an international currency that was proposed by John Maynard Keynes, as leader of the British delegation and chairman of the World Bank commission, in the negotiations that established the Bretton Woods system, but was never implemented.[1]

It was to be initially fixed in terms of 30 commodities, of which one would be gold. It would stabilise the average prices of commodities, and with them the international medium of exchange and a store of value.  

Comment: This is also very charming and inside my 'labor standard' this also plays a role: countries with large amounts of commodities will have a higher value of the local currency. And for example countries like Japan where they like to labor 12 hours a day also fits in nicely: the lack of commodities drives down the value of the local currency. 

The last word isn't spoken on this, most countries understand there is not much benefit in the USA 'boom and bust' theories and long term stable prices bring much more economical growth in the long run.

I only hope the next world 'reserve currency' is not my local currency the €...  

Item 2) Fun with the new Public-Private Investment Program (PPIP).  

Both Barry and Willem have something to say on the latest robbery of the US tax payer, the latest alphabet soup is PPIP (pee pee I pee). 

For me, since I want to destroy the funding of the US military, this pee pee program is a 'high quality program'. Now there are some who do not agree with me and these can be found at:

1) Barry's hangout: On Barry's hangout a guy named David Kotok says this new 1+ trillion plan is a bad idea. Link:     

2) Willem has more info, link:

More on robbing the US tax payer and debauching the FDIC and the Fed  

I cannot comment very much on this kind of content, we observe all kinds of 'expectation calculations' from the scientific field of statistics.

In order to make sure 'future expectations' always need to be looked upon carefully, I would like to bring forward that old old envelope problem once more:

The old envelope problem:

You are into the final of a television quiz, millions are watching while you are nervous and try to win the big prize of the evening.

The end game is very simple:

You can choose between two envelopes, or boxes or whatever what.

All you know is that the one box, or envelope, contains twice or half the amount of the other.

Your game host invites you to choose one of the envelopes, you select one and the host opens it and wow wow wow there is a full 10 thousand of local currency in the envelope.

In order to make it more exiting for the local public, the game host asks you if you want to take the other envelope instead of your 10 thousand in local currency...

Since you are not stupid, you know the rules of the game, you observe that under the rules the other envelope must contain 5 thousand or 20 thousand of the local currency.  

On average the other envelope will contain (5 + 20)/2 = 12.50 thousand of the local currency... 

Since this is higher compared to the present offer of 10 thousand you decide to choose the other envelope... After all it's expected payouts are 12.50 thousand...


One week later, since you won the final in the previous show, you are allowed to play in the show again.

This time you have done your homework and now you know that if you make it to the finals and can choose from those two envelopes again, it doesn't matter how much is in it.

If the first envelope contains X the other must have 0.5X or 2X so on average it will contain 1.25X.

Miracle miracle you make it to the finals again and you can choose an envelope, this time you don't open it and when the show master asks you if you want to change you change to the other envelope.

You look in the second envelope, it contains 800 Frutzbies (that's the local currency over there). So you know the first envelope has to have 1000 Frutzbies (on average) and you decide to swap again...


It might have occurred to you there is a little problem here:
No matter what you choose and no matter what is inside the envelope, you will always change for the other.
When you change 10 times before opening the envelope, you will also 'calculate' the other envelope will have more 'expected value'.

What exactly is the flaw here?

So far the funny gambling with the 'pee pee I pee' rescue fund, till updates. 

(26 March 2009) Finally after about 12 trading days the DOW clocked in about 20% of gain in the latest sucker rally.

I lacked the time for it but it would be funny to collect a lot of quotes from so called 'chief analysts' from investment houses explaining why this is not a sucker rally.

Can anyone explain to me why the correlation between declining house values and S&P earnings suddenly has broken? I have seen zero serious analysis of this & so the down path as in the next picture is still the prevailing scenario. This is regardless of what pipe dreams they have at CNN or CNBC: 


Barry reported lately that the speed in housing decline prices has bottomed out, he said something like 'the second derivate is zero' and although I haven't checked the details for myself we can argue we are now in the second leg of house price decline.

US house prices started to decline in mid 2006, lets say the length of the first leg was 2.5 years. If my logistic model prevails, the second leg will also be 2.5 years implicating USA median house prices will bottom out at the end of 2011.  

Very often I have stated the next (but for some reason I still do not understand the Americans are to stupid to understand it):
The second leg will bring far worse economical conditions compared to the first leg of house price decline.
Why the Americans simply are too stupid to understand this is unknown to me; all I perfectly understand is that the Americans think they are 'too smart' to understand this.    

Lets end this short update with a few links:

Soros has a 'very good crisis', I had to laugh on that but all in all Soros is far better compared to Warren Buffet who might loose his AAA rating. Link:
'I'm having a very good crisis,' says Soros as hedge fund managers make billions off recession  

A guy named Andrew Butter has a very funny graphic, check it out at seeking alpha dot com:
Shopping for Toxic Assets at the Zombie Bank: Final Chapter of the Credit Crunch? 

And I lost the link but it seems the market for toxic US bank assets is not entirely dead: Banks like Citibank use the bailout money to buy toxic debt at above market prices. I am sorry I lost the link, but I had great fun because stuff like that falls within my 'logistic model' of falling house prices... 

Till updates, have a nice crisis or try to get one! 

(25 March 2009) Today the US stock markets rallied on the news that new home sales were at the second worst level since my year of birth 1963.
To be honest I felt a pity for these poor stock traders and I wondered: How must it be to work in an environment you do not understand at all?
It has to be remarked that a lot of main stream media contribute to these nonsense rallies too; for example on CNN they have something called 'The path to recovery' and even local business channels like the Dutch RTL7 dream about bottoming out.

This all is one big pile of rubbish; I will explain that in item number one:  

Item 1) The black hole theory on debt from Reinko Venema.
Item 2) Can the FED fight deflation via buying government debt? 

Item 1) The black hole theory on debt from Reinko Venema.

We start with the observation that in healthy economies the price of money, or the interest rates, are often in the 5% range. It is well known the USA economy has over 350% of the local GDP of debt on herself. 

Lets assume the average interest rate is 5%, in that case there would be about 17.5% of GDP needed just for interest obligations only (5% of 350 = 17.5%). 

If a country routinely pays the interest with only more (internal or external) debt, debt levels will rise until the 'black hole limit' is passed. This limit is the maximum % of GDP that can be used for paying the interest.

You really need only 3 or 4 brain cells to observe the USA does not pay 17.5% of her GDP for debt related costs only. That is not 'The American way' of the refi...  

If the USA would be a healthy economy having interest rates at 5% or so, in that case they would go bankrupt as a nation on a relatively short notice.

Hence they find wisdom in lowering the rates because otherwise the nation would go bankrupt. They will think it is wise policy to print money because otherwise the nation would go bankrupt.

In the meantime debt levels only rise and the black hole increases in size.

Definition of a black hole: Total debt + printed money levels.    

The process simply continues until the nation is bankrupt. 
The stuff feeds on itself: If printed money is used to lower the rates, debt to income ratio's will rise. If there is more debt more printed money is needed to service the interest obligation if there would be some return to a healthy economy again...

Finally after a lot of of years the debt huggers will understand you must never hug your own economy to death. It is all pretty simple: Can the USA pay 17.5% of her GDP or will she do other things?  

Item 2) Can the FED fight deflation via buying government debt?  

In the USA they are pretty crazy; on the one hand they think that deflation is a bad thing but on the other hand increase in labor productivity is a good thing.

After my humble opinion increases in labor productivity = deflation in prices.

So not in the USA, over there they like 'boom and bust' theories much more and now they have a little of 'bust' they complain prices are declining.

Therefore the Federal Reserve comes to the rescue and plans are that they will buy about 300 billion US$ of long term government bonds via printing money. 

This is something like just below 5% of public outstanding debt; just 5% of public outstanding debt is now replaced by printed money

The FED does this to fight deflation and we the public are constantly told that later when inflation gets a problem, the FED simply sells these AAA rated assets again... 

Little problem:

If the FED buys 300 billion in outstanding taxpayer debt, there are some who will make a big profit from this.  

If later the FED sells these wonderful assets, the buyers will likely not match the sellers. 

Can anyone explain to me why the later selling will tame inflation? If in these future years no one wants to buy that crap, how can you tame future inflation?


Ok ok, at the end of the update I simply have to make a fool of that Nobel prize winner named Paul Krugman. He has the mental stuff to understand the above black hole but he will never say so in public... Here are Krugman's stupid words on printed money, vid link (look at 08.38 for the Paul crap):    

Till updates. 

(24 March 2009) Lazy again: only two items.

Item 1) What the vuk happened to & on the H3 release???
Item 2) Some podcast links on evolutionary game theory & Bayes rule. 

Item 1) What the vuk happened to & on the H3 release???

Somewhere last year I observed in the US Federal Reserve H3 release that 'non borrowed reserves' were climbing and stupid as I was I only thought that the money lending program was going to an end.

The 'non borrowed reserves' are important because they represent the real reserves in the total US banking system and since they were negative by a few hundred billions you could argue there might be a tiny bit of insolvency in the banking system.

In case you have never seen that file (look in the non borrowed column for the real reserves):    

Yesterday the honorable lady from naked capitalism comes up with this file:

Fed Rescue Programs: No Exit?  

And when I clicked on her first link it was obvious that the TAF lending program has not stopped at all!  

Term Auction Facility 

At the end of 2008 there was about 900 billion US$ outstanding, of course this is not tax payer money but 'printed money' or 'created money' (source).  

As you could see for yourself in the H3 release, there are very strange things going on. In the press releases it was nowhere to be found what the vuk was going in relation to the real reserves of the commercial banks.

Let me make a simple to understand table with the non understandable stuff:

Weird behavior of non borrowed reserves (FED source)
Date Total non borrowed reserves.
(In millions of US bucks.)
End of Oct 2008 -332803
End of Nov 2008 -88849
Jan 14 2009 341637
March 11 2009 48513 

You see the real reserves of the combined US commercial banks swing from over minus 300 billion to over plus 300 billion on Jan 14 2009. And now it stands at 49 billion again (a number nicely in line with the reports of lets say the last five years). 

You can argue that this wild swing of almost 700 billion must be related to one of the other bank rescue programs, but what program injects almost 700 billion US$ of printed money into the non borrowed reserves?

Remark that when the government buys preferred stock to improve the reserves or tier one ratio's, this only affects the borrowed reserves

I have to admit: I do not have a clue... 

And it is strange no press releases can be found, may be I have to dig deeper on this detail but for the time being I have no clue what kind of (accountancy) tricks were are looking at.

Also very interesting: The first column named 'total' stands at 678689 million, that is about 15 times compared to non crisis times. And that is only an 'excess' of 621 billion compared to the 57 billion that are 'required reserves'.

Total is now 678689 / 1535273 = 44% of the monetary base where this used to be in the order of lets say 5%.

A last link in this item; a graph named BOGNONBR, Non-Borrowed Reserves of Depository Institutions. 

Like I said before: Printed money is the best kind of money, why do such weird stuff as collecting taxes from a hard working population when you can simply print it and only have the 'costs of printing' compared to the damage taxes do?  

Item 2) Some podcast links on evolutionary game theory & Bayes rule.  

The next link contains 23 video's of game theory, I have only seen lecture 23 so I cannot judge if the other 22 lectures are important or interesting. 

Game theory is of relative important because the Pentagon uses basic game theory in her war games. Never forget: The first step towards victory in war is understanding your enemy. If you neglect this basic rule, you can never win a war... 

Here are the 23 lectures:

Game Theory 2007, All entries (it says they are on an 'introductionary level')  

Two of these entries are about Bayes theorem: what happens if you have additional information? How does this affect the probability that certain events have occurred? 

Bayes theorem is very easy to understand, example:

Suppose behind a screen I throw one cube of dice and I tell you: the outcome is an even number. In that case you can eliminate the numbers 1, 3 and 5 since they are odd.
And with the new information you know that the event that a 4 has popped up is now one third.   

Here are the Bayes video's:

Selected Entries : Bayes theorem 

That's it for today, till updates & have a nice crisis or try to get one & don't forget to kill, wound, damage or hinder that American slime!!! 

(23 March 2009) A lazy two items today.

Item 1) That weird Tim Geithner plan will never work.
Item 2) More on biological traits versus successful traders. 

Item 1) That weird Tim Geithner plan will never work. 

Today the DOW is rallying about 5% on good news like the new US Treasury plan to buy toxic assets from the bank and some idiot 'good housing news'.

Today's market reaction proofs that a lot of Wall Street investors have the wrong job; they should apply for a job at the AIG derivatives desk...
The poor bastards think that only 500 to at most 1000 billion US$ will bring any kind of significant change in the balances of the commercial banks. After my humble opinion they need at least such an amount every year just to stabilize the toxic debt levels.

In case you need a good laugh, the idiots from CNBC strike again:

For Stocks, Treasury Plan 'May Be a Game-Changer'   

The above file is so stupid, I cannot quote from it.

Paul Krugman agrees that this plan won't work see his column: Financial Policy Despair

All in all it is very easy to understand why this will not work:

In the USA you have plenty of hedge funds (and also desks at banks) that specialize in so called distressed debt. If these folks don't buy the toxic assets this only means the prizes for toxic assets are still far too high.
The banks also don't buy it from each other, another clear indication it is still valued far too high.  

We also had 'positive housing news', as usual it was some month-to-month climb, let it be prices or sold volumes; that is all indifferent. (You must monthly numbers always compare to those of one year ago because housing has large seasonal components.)
As Barry writes, (source) quote:  

Home prices dropped 15% from the same period one year ago; Despite the price drop, sales fell 4.6%. How anyone can try to spin this as a positive is beyond my mathematical comprehension. 

Comment: I have nothing to add to that.

A last link: The idiots from CNBC have some interview with the Geithner idiot, please look at the video and observe the CNBC slime ask zero serious questions like:

But Mr. Secretary, every one can see one trillion is by far not enough. Can you explain why this would be enough?

Of course at CNBC they almost never ask serious questions, here is the vid.    

Item 2) More on biological traits versus successful traders.  

At the UK university Cambridge they have a nice podcast:

The credit crunch: history, hormones and trust  

In the middle part you hear Dr. John Coates on some nice research on hormone levels in stock traders.

In short it goes like this:

When stocks rise over longer periods of time, testosterone levels in stock traders climb and climb. When stocks decline cortisone levels start to rise.    

Remark: This seems to be for the average trader, since we last observed that my ring finger is longer compared to the index finger the Media files say I belong to some kind of class that makes better decision faster. 


Of course it is nice to know I belong to the new Herrenvolk, but there is a small yet significant contradiction in the findings until now:

1) People with a relatively long ring finger are more sensitive to testosterone.
2) High levels of testosterone leads to reckless behavior.
3) People with a relatively long ring finger are on average better traders.  

So how can you be a better trader (or platoon commander or a general) if you are more sensitive to stuff that invites reckless behavior? 

Dr. John Coates did not mention it, but we are 'pre baked' in testosterone...


The findings of Dr. John Coates make a lot of sense; just two examples from my own boring life:

Example 1) Every time I have a true near death experience, let it be a bullet just a few centimeters from your head or a near dead traffic situation, the rest of that day I am so relaxed and so tranquil I can finally master that extra difficult math theorem.  

Example 2) In the years 2001 - 2003 I executed the dream project (on skeelers over the highways surrounding Groningen). My family members were mad at me when I told them so I had to hide it.
Here is the old dreamweb to validate my words.
You know: Most people get scared to hell when they need to skeeler in 70 km/h traffic, I like it, to be true: I like it still a lot but my left knee is now too weak for this. 


Lets end this update with a funny note:

Research proposal for Dr. John Coates:

Beside looking at ring/index finger ratio's, you can also look at the testicle size.
Without photographic proof; mine are almost six centimeters long...;)   

(Oops: Aren't male balls the main production center of testosterone??? Yeah yeah my dear Pentagon perfumed princes: Only a man with real balls can understand your defeat in the zero-one project. You cannot understand so hence: the entire Pentagon is without any real balls. That's a fact of life my dear perfumed princes...)  


Till updates. 

(21 March 2009) Risk taking behavior versus biological traits...

You can easily write ten books on that detail; why do animal species like or avoid risk and within some animal species; why do some individuals take much more risk compared to others?

Why do lots of human risk seekers end at best in the footnotes of history while others taking up far bigger amounts of risk simply thrive and look forward to another day of fun?

According to a Barry 'food for thought' update, source:   

it is something from before your birth. It seems that when before you were born and you were exposed to relatively high levels of the hormone known as testosterone, your appetite upon risk is different... Lets quote a bit from the above source:

“Traders are succeeding not so much because they are rational, but because they have certain biological traits, including confidence, an appetite for risk, search persistence, and speed of reactions,” all of which are derived from prenatal exposure to testosterone.”
-John Coates, University of Cambridge neuroscientist and former trader. 

Comment: Testosterone is the 'fighting hormone' in many ways and may be it is true that you can produce better fighters if you expose embryo's to a higher level of this stuff. The embryo 'needs to fight' but cannot leave the womb so later in life higher risk is also bound to feelings of safety.

Now what has this all to do with the length of your ring finger? 

In the picture below I made a photo of my right hand, as you see on inspection my ring finger is about one nail longer compared to my index finger: 


Quoting on:

“Coates examined the digit ratio of 44 male “high frequency” traders in London who buy and sell securities, sometimes in amounts greater than $1 billion, but hold their positions for minutes, sometimes only seconds. He found that traders with a longer ring finger than index finger made more money.

“We were on the trading floor taking samples for another experiment, and I read an article about digit ratio and sports,” says Coates. “I didn’t put too much stock in the measure, but we thought, ‘Why not look at fingers?’ We were shocked by the results.” 

Comment: Of course in sports you will find similar results; guys like me we use risk as food. Where all you folks bounce back we, masters of the universe, take a bite & we love the taste.

Let me give you only two examples:

Example 1) I started the NightmareOnWallStreet for a second activation on 12 Nov 2007.  Just a few weeks after the DOW hit her top I told this DOW chick she would be cut in half to 7000. After my humble opinion we have gone below the 7000 mark just lately & where is the risk to my personal safety?
There was zero risk to me...
I told you: we like risk, we use this as food!

Example 2) The zero-one project ensured the record killing of US soldiers inside Iraq for over one 100 days. The zero-one project is very easy to understand: On the 'one' days Iraqis were expected to kill above average in US military slime while on the 'zero days' it was supposed to be less than average.
If you add it all up and use for example a 'two way independent T-test' you arrive in the end at significance thresholds of 1:400, far exceeding the 1:20 or alpha = 5% as is used in common day statistical testing.  

Was there any risk to my personal safety?
No, most US military men have a short ring finger and they just 'do not understand'. 


Lets look into another source file (source), quote:

“At first blush, these findings seem fanciful,” Romeo says. “The stronger point, however, is that digit ratio predicts an individual’s hormonal history and hormonal changes as they get older. Hormones can indeed affect behavior, and sometimes quite substantially.” 

Comment: No comment, but if you can help me with my hobby of destroying the military might of the USA; you are a very welcome reader...
I cannot break all the US military metal with my own bare hands; but together we can kill the beast. Are you in or are you out?  

Till updates. 

(19 March 2009) We had a lot of interesting news today, what to comment upon?

Since I asked so called 'international terrorism' only two day ago to blast five car bombs inside this country that carries NATO political leadership in case I was arrested once more, and given the fact we had a new Osama bin Laden message out, do I need to comment upon that?
It is very tempting, but I know nothing about Somalia so I won't do that.

Today the €/$ pair shot up something in the order of 7 cents in just about 30 hours. That is history in the writing because finally international investors understand that all the USA has left is the money printing press. (It is also a good good lesson for the fucking Chinese that never ever bought cheap credit default swaps while they were cheap, oh oh you fucking Chinese you will get a nice lesson in the future & you fuckheads deserve this lesson very much!)
Very tempting, but not for today...

Today is about a show trial in a very pure form.

What is the case?

Today the so called 'monster of Anstetten' had his final in Austria, the guy locked up his daughter for a few decades in a cellar, raped her about 3000 times, fathered seven children with her and so on and so on.  

The courthouse trial was done in only 3 days and only two witnesses were heard. Some observes say this is a 'very fast' trial because when you bind down 24 years of rape to only 3 days of trial you are 'very fast'.

To my surprise: The guy had a lawyer! 

(Needless to say; the details of the Fritzl are easy to understand and there is only little need to spin this out over a multiple of years.)

My dear reader; Was the Fritzl courthouse trial a show trial yes or no?

Make up your own mind.   


My dear reader, a few years back I found wisdom in smashing some windows at the local courthouse. Costs were about 10 thousand € in smashed windows (bulletproof or not, all windows were equal under my smashing law).

For the police idiots there was not much honor because I walked to them and simply stated 'I did this and my axe in in my right pocket'.

I was arrested and for a day or five I was able to observe how these idiots treat arrested folks like me.    

Anyway to make a long story short: I also got a 'lawyer', I obliged to all the stuff he needed but I never heard from that idiot again.

After that 'showtime came' and I had my day in court when it came to smashing in 10 thousand of € inside that same courthouse.

I remember very sharp the minutes before; I met an acquaintance about 10 minutes before the start of the trial. I looked around and did see my own appointed but fucking lawyer standing about ten to twelve meters away looking at me. (Very likely he cashed in the money for his duties.)   

Trial started, but I had no fucking lawyer to help me. 

Trial ended at most 10 to 15 minutes later, of course the judge did not ask 'Where is your lawyer'. So in fact this was only a show trial in the deepest of it's meanings...  

Lets leave it with that, I only hope that in a future arrest by these idiots we will see some car bombs loaded with high explosives explode.

My dear reader you can choose for yourself:

Fritzl had a show trial but strangely had a lawyer, compared to 

Reinko had a show trial without a lawyer

In the meantime I understand you think it is strange to compare yourself to this Fritzl rapist; but why does he get a lawyer while my lawyer draws back???

No no no, Lets hope in a future arrest we will have more fireworks or at least five car bombs.

End of the update, till updates....:(  

(18 March 2009) Not very often both the Wall Street traders and me agree:

It is good news when the US Federal Reserve will buy 300 billion in US Treasuries (government bonds).

The FED will buy more crap beside US Treasuries and at the end it will total in 1.25 trillion US$ in accumulated garbage.
Why Wall Street thinks this is a good idea is unknown to me, but the Wall Street ways of thinking are only known to the Almighty and may be a few people with the DOWn syndrome.
I think it is lovely news because the FED buying government bonds is one of the most pure forms of printing money; do you really think the 1.25 trillion of collected garbage is paid by taxpayer money?
Please get real; the 300 billion is already debt that has to be paid by (future) taxpayers and now this debt is bought with printed money.
Again; why Wall Street considers this good news beats me... 

Lets quote a bit (source):

Fed purchases should boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt. The last time the Fed set out to influence long-term interest rates was during the 1960s.

The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion.

"This is not only going to keep mortgage rates low for a long period of time," said Greg McBride, a senior financial analyst at "The mere announcement may produce a honeymoon effect and bring mortgage rates down to even lower levels in the coming days."

In addition, the Fed said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.  

Comment: Aren't the quoted words lovely words? Any idiot with only high school in economics knows that printing money will not work. And on a more advanced level we observe printed money at almost 10% of the total US economical output, almost 10% of that fake GDP...
Just like with the first TARP round of only 750 billion US$ (the same day the news came out I declared: The first TARP is the cheapest), now I can say:

The first buying round of US Treasuries with printed money is the cheapest.

The fucking Chinese should use this as a method of getting rid of their US government bonds but as usual China will play the financial whore she is...
By the way China; how is your trade surplus doing?
The fucking Chinese will get what they deserve!    

We are nearing the end of this update, a few links left:

The Washington Post has amazingly good news:

HIV/AIDS Rate in D.C. Hits 3% 

Willem explaining the difference in quantitative and qualitative easing (I live by the rule that 'quantitative = more shit' while 'quantitative = deeper shit'): 

Quantitative easing and qualitative easing: a terminological and taxonomic proposal 

That's it for today; if you can kill a few more Americans and you think that's important please do not hesitate! After all they are a big pest on humanity...:( 

Till updates, have a nice life or try to get one. 

(15 March 2009) Yesterday the last components of the new computer were bought and screwed in the casing.

Today it was time to plug the power in and see how she reacts on 220 volts of alternating potential currency (220 AC).

It was bad, it seemed that the front panel USB sucks up so much power that the machine cannot boot. So for the time being: bye bye front panel USB.  

Another problem was far harder to solve: An old hard disk could not be installed, it is so bad that the machine won't boot up when it is attached. When I use a similar hard disk there is no problem.

This hard disk problem is a 'fucking weird' problem because, as memory serves correctly, this is exactly what I wanted in case that particular hard disk was stolen or so. Tiny problem: I don't know of any kind of software that binds old hard disks to the original configuration, let alone I used that kind of software...
This problem is a big blind spot until now; I have to test this hard disk in other computers before I can say: Two years of family photo's are gone, just like about 1200 music and a large array of computer programs that I did not back up elsewhere...  

As usual the Windows XP crack did it's perfect job and beside the problems there are also huge benefits from a new and faster computer: within one second radio music can pop up (ok that is with the media player from Microsoft, it is always advised to use non Microsoft related alternatives if they are there because that always gives less hinder from viruses & the likes like spying programs...) 

Enough of the computer stuff: I found two links related to math that drove me crazy.
For most of my scientific life I simply hang on to the proposition: If the math isn't there, just create it yourself!
I did not do much calculations and I only ponder the next question:

Why the fuck did I not find this myself????? 

You know there are days this 45 year old just feels so stupid...
Why the fuck did I never find this math on my own? 

Look at the end of both files to understand why I am mad at myself:  

In case this is too difficult you can enjoy the words from that weirdo named Cheney (the former US vice prez), in the Dutch language we have:

And the NYT tells it like this:

Cheney Asserts Obama Has Has Raised Security Risks  

I might have some problems with the basics of string theory and be mad at myself when I found out the spherical cap was not discovered by moi, me, myself & I. But this Cheney idiot pretending he has a comprehensive worldview turns my stomach even more... 

Yet the Americans vote for guys like that so kill kill kill the Americans until as a nation they have grown older and wiser.

Kill kill kill, that is the only dialogue folks like Cheney understand.


At last a stock market prediction:

Since in the last week (that was the best week since Nov last year) the US stock markets decided to rally about 8%, it is logical anther 10% more will follow this week.

After all a sucker rally only attracts sucker investors, so 10% at least my dear suckers!  

Till updates. 

(12 March 2009, temporary update) Oh oh these poor billionaires; the number of billionaires shrank about 30% last year. Combined wealth shrunk from 4.4 trillion to 2.4 trillion US$.
Contrary to the 1000 richest people on the planet, there are almost no statistics on the 1000 most poor people on the planet but all in all:

It looks like wealth distribution gets less skewed & that's a good thing in many ways. 

A wrong kind of wealth distribution inside an economy will always be a destructive force to that economy; if the wealth distribution gets too skewed (in favor of the elite) you will only end in some kind of dictatorship with a few rich folks calling all the shots to stabilize that particular kind of economy. As usual the US economists skipped that detail and that is only more proof of the level of corruption inside the USA.  

By the way (source) the USA New York major Bloomberg did see his net value rise in the last year from 11.5 to 16 billion US$. Again (as often observed in the past) this Bloomberg guy is somebody to be reckoned with, I remember I was very pleased when it came out he would not run for US Presidency (that was a wise decision, Bloomberg is too ugly looking to make it as a US Prez in this television era).  

It is high time we go to the two items of today:

Item 1) Inflation or deflation, I let Gary Shilling do the talking.
Item 2) US economist Menzie Chinn was faster than me...:( 

Item 1) Inflation or deflation, I let Gary Shilling do the talking.

Ok many months ago I constantly lambasted the European Central Bank for not raising interest rates fast enough. In those long lost months just a few hedge fund could join forces and for example choke a market like the global wheat market. 

In those long lost months it was easy for all that fake capital to hijack important parts of the real economy, a lot of global metal markets were only some average Nasdaq listing.

After a long wait finally the ECB raised with 25 basis points; at present day you still have these guys at CNBC stating this was the proof that the ECB was 'behind the curve'.  

My advice to those guys they parade on CNBC: Please eat your used toilet paper every day after you did your shitting in your family home or wherever you do your daily shitting...

The ECB coughed up the concept of 'disinflation' and indeed it is a charming concept: when far too high oil prices dive we have lower consumer prices for all oil related products but this is no proof of deflation. I agree.

Yet with all this new techno around like computing power, advances in gen techno and so on I still hope for a few decades of moderate deflation.

Let me give you (very non scientific) an example of today in my own shopping list:

Today I bought a 320 Giga hard disk for 50 €, about 2 or 3 years back I bought a 120 Giga thing for 65 or 70 €. The public considers this to be 'rather normal' and nobody thinks this is a big threat to the economy.

I think Central Bankers need to give up the theory that 'moderate inflation' is the thing that rules and state more often that 'moderate deflation' is simply the way economies worked for a long long time.      

After having preached so much, let Gary do the talking:

Don't Sweat Inflation: Deflation "In the Cards" for 2009 and Beyond, Shilling Says  

Item 2) US economist Menzie Chinn was faster than me...:(  

This item is hard for me; at some point in time I discovered that US family house prices would decline about 50% from their top. This day I found out Menzie was at least 3 to 5 weeks faster and from the standard 'male competition feelings' I think I do not like this very much...:(

Ok Menzie; I admit defeat.

We can talk long and short of this; we can observe Menzie is a professional economist and as such has access to sources I can only dream about.

Lets keep this short: Menzie was before me in discovering US house prices will decline about 50% (that is something in the order of 10 trillion US$ wiped out housing value). So I have to give my congratulations for his victory: Congratulations...:(   

Econbrowser 25 Feb 2009 source file: 

Not Nonsense (House Prices) 

Till updates. 

(11 March 2009, temporary testing update) Testerdetest test test,

Fox news has such a stupid video you must see it, but FOX does not offer any services to link at their video's.

So it is a test:

FOX stupid vid here.

Till updates.

Update: Yes, it actually works (on my browser anyway)!
And the funny thing is: Bandwidth goes to yahoo...;)
I hope you can see the video too; have you ever seen a bigger idiot?
This guy is so stupid, why does FOX news invite idiots? That is because they can see eye to eye with idiots like that!

Till updates.    

(10 March 2009) Only one item today:

Item 1) The 5.80% DOW rally today bringing DOW to 6926 index points. 

I have to admit the Americans come back in a strong way; a staggering 5.80% increase and before you know it DOW will be above 7000 again.

So why did the US stock markets rally so much today?
Everybody says it is that Vikram Pandit’s memo (from Citigroup) so why not take a look at it?   

On the Financial Times they have the entire memo text (I usually never link to the FT because after just a few days everything disappears behind the big subscription wall).

Vikram Pandit’s memo in full  

And the most important part of that memo, quote:

In addition to our strong capital position, I am most encouraged with the strength of our business so far in 2009. In fact, we are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007. In January and February alone, our revenues excluding externally disclosed marks were $19 billion. Our client businesses are strong: our deposits are relatively stable, our client-driven Securities and Banking businesses have been performing well, including our recent #1 rank in M&A, and we continue to provide credit to consumer and corporate customers. You have all done a very impressive job driving revenues and reducing our cost structure, and it is gratifying to see the results first hand. 

Comment: It was the 19 billion US$ revenue remark over Jan & Feb that got the whole thing started but nobody explains what exactly 'externally disclosed marks' are.
I don't have a clue either, it sounds a bit like 'non observable inputs' that are used to value the Level 3 assets...
Lets wait until the 2009 Q1 profits come out.
In the meantime Citi shares jumped over 30% to 1.42 US$ but that is still below their ATM cash withdrawal costs of 1.50 US$ / transaction. (Source)
So if you charge 1.50 dollar for every transaction, it is not very hard to arrive at 19 billion in profits without evil externally disclosed marks.


Intermezzo: Funny! Lets compare European and USA banking costs for clients! 

I have an account at state bank ABN Amro, it costs 3.75 € a Quarter or 15 € a year.
What do I get for that?  

1) A worldwide bank pass.
2) At most 3 ATM withdrawals a day.
3) An unlimited number of pays in shops.
4) Only 1 time a month an oversight via the post.
5) A free internet account for payments comes with my bank account.

If you compare this to the USA ATM fees you observe banking in the USA is just like their health care system; far to expensive and zero bang for your buck...

End of the intermezzo.


Barry thinks we have another sucker rally coming up; Tech Ticker video:

"Big Bear Market Rally Coming," Says Noted Bear Barry Ritholtz    

It is of importance to notice the video was posted on Mar 10, 2009 08:35am EDT so that was before the stupid 5.80% DOW climb of today.

Barry also said combined S&P 500 profits were negative in the last Quarter and I, Reinko, can inform you that you "ain't seen anything yet" now we are only in the beginning of the second leg in house decline... 

So if there is a fresh new sucker rally bringing the DOW above 7000 yes or no, I do not care. Future DOW and S&P values will be dictated by the earnings the companies show, if some suckers want to rally let them do it.

Yes, why not? It will bring only more value to my 12 Nov 2007 prediction the DOW would go to 7000. So suckers: Show what you have got!   

(Ok, there is a small update in the new computer stuff, link: The Rendering Equation, simple stuff is often the good stuff...)
Till updates, have a nice crisis or try to get one. 

(09 March 2009) Lazy as I am, only two new items..:

Item 1) Progression of the new computer.
Item 2) A few links related to yesterdays post. 

Item 1) Progression of the new computer.

Today I screwed most of it together and suddenly I had a big fucking problem: How to connect the DVD players & writers with the motherboard?

It turns out all my DVD players & writers are from the wrong type, to make matters worse the video card is also outdated.  

Lets list my faults (until now): 

---New power supply needed, damage = 30 €
---New RAM memory needed, damage = 28 €
---New DVD player/writer needed, damage approx 30 €
---New video card needed, damage approx 40 € 

Not all of this damage is for real; new RAM memory was simply unavoidable and a video card not coming from pre history times was promised to the kids so for the time being my 'stupidity range' on this detail is about at most 70 €.

In the meantime I just cannot wait to put the DVD with chipset support into the thing and the motherboard booklet promises me things like flushing the BIOS...

Now who does not want to flush a BIOS???   

Item 2) A few links related to yesterdays post.  

Ok, yesterday at the end of item 2) I linked to a video that said there was about 11 trillion US$ lost in stock value.

Barry was as friendly to cough up the next quote (source):

This is based on the Dow Jones Wilshire 5000 index, which includes nearly every U.S.-listed stock. Losses since the start of 2009 are $2.6 trillion. Nearly half of all stocks in the index are now trading at less than $5, and 37% are under $3.  

Comment: Don't forget this is only stock damage, large parts of Western economies are not listed on a stock bourse so we can easily add a few trillions to the reported 11trillion US$ damage...

Before we proceed I have to repost the lovely graphic from yesterday once more:


This graphic is such a beauty; all these last decades we had those debt hugging economists telling us crap upon debt levels. Savings were not needed because 'the economy is still expanding these years' and shit like that.

In nature things that survive in the long run, these things have spare parts like two lungs or two kidneys. In the US financial system where the debt huggers rule, when you take their theories to the limit, one cent paid too late for just one second could (in theory) destroy the entire system.   

For me it is amazing to observe the new US government actually believing more debt will save them from destruction, this axiom is weird.

New debt only helps when you can proof it will bring more profits in the future, no such proof has been observed in the last 16 months...  

Lets close this update with the next link (it is a guest writer on naked capitalism):

Guest Post: More Debt Won't Rescue the Great American Ponzi  

Lets leave it with that, DOW closed at 6547 today and may be DOW values today are only a way of learning elementary economics to fatbag Americans... 

Have a nice life or try to get one! 

(08 March 2009) Lazy lazy lazy, only two items:

Item 1) Progression of the new main computer.
Item 2) Future evolution of the US stock markets. 

Item 1) Progression of the new main computer.

My old computer lasted for an amazing 8 years and I have to admit it was often difficult in the last year to keep the thing alive.

Let me spare you all the details but in the end when you needed to use her you switched the power on. After that you waited at least 15 minutes until the flickering of the screen stopped.
After that you put it out, wait for 15 seconds.
You put it on again and after about one minute you push reboot.  

After that very often (but not always) you arrived at the BIOS (the binary input output system), you set the BIOS in a workable thing and voila: it worked just another day.

Who needs password protection with a computer like that?  

For the new computer I have a casing, a new motherboard and a new processor.

I found out I also need new RAM (random access memory) and even a new power system (something known as ATX, that is an unexpected drawback of 25 € but you won't hear me complain: If we the public demand Moore's law to be fulfilled, that means double speed on anything every few years, in that case I cannot complain when basic stuff like power supply changes).

I also found out I need some lubrication to transfer the heat from the processor to the heat fan, that detail is very important in order to have the new computer still alive in 8 years or lets say 2017...   

So far this boring item. 

Item 2) Future evolution of the US stock markets.  

Lets first summarize the past:

US stock markets peaked in Oct 2007 and since I was fully aware of a 50% withdrawal from that peak, I started the Nightmare files on 12 Nov 2007. Link:

Today 12 Nov 2007 the so called NightmareOnWallStreet is activated again. 

And from that very moment I informed you folks of a future 7000 mark on the DOW.

For me it was a hard thing to do: If DOW would not go to 7000 then forever local authorities would be unwilling to investigate a bit more deeper in the 9/11 stuff from 2001. Or the Madrid bombings in the Spanish election and what about the London bombings?

Always, with a big smile on their faces, I tell rubbish that cannot be understood by 'normal persons'.

Luckily these years most of those 'normal persons' also have a pension deficit...;)    

Let the past be the past and enjoy the next graphic from the present (it compares a broad stock value measure like the S&P from now with the depression one).



My dear reader, in the 1930's depression stocks dropped an amazing 85% from the top. Is it possible to get even more value wiped out?

Yes, this is very much possible; for a large part it depends on two pillars:

Pillar 1) The earnings of the 500 companies listed in the S&P 500.  

Pillar 2) The silly belief in the USA you can borrow more to stay out of trouble. 

If one of those two pillars fails, S&P could bounce back before the 85% decline.
On pillar 2 it can be reported that US consumers have started saving, wow wow wow the idiots save about 5% of disposable income. Yet a serious saving of 5% of the entire gross domestic product is needed to prevent a serious depression; the USA debt huggers will not do that... 

Lets end this update with a tech ticker video where they say about 11 trillion US$ has been wiped away from the stock markets:

$11 Trillion Wipeout: Wall Street's Year-and-a-Half of Dangerous Living   

Till updates. 

(05 March 2009) Of course this is a week of celebration; the DOW fell below the 7000 target as desired in the last 16 months. Yet there are also cracks in the fun:

It is about one 100% sure that nothing will be done for the Palestines in the next four years, so the Obama honeymoon days are over and as usual there is the need for killing more Americans.

Contrary to other anti American observers I waited to see if there is some likelihood of change we can 'believe in'.

On the television I observed the new US Secretary of foreign stuff and she demanded the Hamas recognizing Israel. She did not spell out the details but with 'recognition' power slut Hillary likely thinks that all stolen land belongs to Israel and when apartheid nation Israel does her routine bombings the Palestinians have to say "Thank you for your wise lessons".   

It is obvious: With her support of the apartheid regime named Israel there is a strong need for killing more USA fatbags and from the field of international diplomacy it would be wise if normal democracies isolate the USA more and more from international affairs. 

Ok, the ramblings of power slut Hillary Clinton were a negative for this week. That does not take away there is fun on the stock markets.

Here is today's behavior of the DOW:   


At the end of this update, let me hang out the 'international diplomat' too (just like power slut Hillary Clinton):

Now we, the international community, have observed the USA is totally not committed to bringing peace to the Middle East we have to reject the notion of 'change we can believe in'.

Before I, as an international diplomat, can withdraw my advice of killing more Americans, the Americans have to prove that the Iraqi war was only a 'non commodity driven war' and was only for the official purposes of bringing freedom to Iraq.

So in order to give some value to that, the US government has to declare they will refrain from Iraqi oil just like they refrain from Iranian oil. 

It's as simple as it is my dear power slut Hillary... It is as simple as it is.
Just like the USA will never refrain from Iraqi oil officially, your stupid 'recognize Israel' words will only bring more filled coffins at the scene. 

If these are the wishes of the honorable power slut Hillary Clinton, let it be.
Let it be.   

Till updates. 

(04 March 2009, temporary update) Testerdetest test test (I am updating from a mobile device since my dear old old computer broke down last Saturday; therefore you miss the updates since 26 Jan, lets first test if this can upload...)

Yes, it works; I had to publish the entire freaking website so thanks for the waiting!

Last Monday we had VICTORY because within 16 months we had the DOW below 7000! That is over 50% decline, yeah yeah: VICTORY!!!

We have come a long way since I asked the Iraqis back in Nov 2007 to stop fighting because this was not needed anymore. The Iraqis did so, therefore:


In the meantime all the Americans were capable of was explaining the lack of violence via their surge... Oh oh, these poor creatures; they will always think they are the center of the universe...

In other meantimes I am now building a reserve computer and if all goes well this weekend I will build a new main computer. So I will hang low in updates!

Have a nice crisis or try to get one!

Till updates.     

(26 Jan 2009) Ok ok, lets place five items once more:

Item 1) My new shoes...
Item 2) Dutch bank ING thinks they are a winner.
Item 3) US house sales unexpected up?????
Item 4) US financial expert Ben Stein on air pollution.
Item 5) The empty item. 

Item 1) My new shoes...

At the end of last Summer I bought my new shoes for the next year, two pairs is enough: a pair of Winter sandals and a pair of Summer sandals.

A few days ago after I tested the Winter sandals with a two hour walk, they were perfect... No pain and you can easily walk 40 or 50 kilometer on these perfect things.  

So after the walk I hang behind the television drinking a cup of coffee, the teenage daughter comes walking in with her usual air of being a master of the universe and she looks and looks: 

"Daddy, what are these???" 

I explain to her that these are perfect shoes, that beside the elderly females also the ladies and even the sexy chicks look at me.

The daughter observes: 

"Dad, it are not only the sexy chicks that stare..." 

Item 2) Dutch bank ING thinks they are a winner.

The impending CEO at Dutch bank ING was for the television today and stated "ING belongs to the winners". 

This weekend the Dutch ministry of finance guaranteed up to 27 billion € in US mortgage backed securities that ING has on her balances. It is that alt-A stuff: mortgages that hang between the sub-prime and the prime mortgages. 

The Dutch ministry of finance said the stuff was 92% of face value, as an analyst from SNS securities observed: that kind of stuff trades between 20 and 80% of face value.

It is important to know that these are 'mortgage backed securities' so it is unknown how the underlying mortgages perform whatsoever. My first estimation is that in the long run the Dutch taxpayers will loose at least 10 billion € on this deal or about 625 € per capita Dutch citizen.

Needless to say: This was a very stupid decision made by the Dutch minister of finance Wouter Bos.

In the face of such an avalanche of stupidity at the Dutch ministry of finance, here is an old picture of US finance once more:


Scroll down to 19 Dec for more of this, the Dutch ministry of finance has to study how banks are related to this triangle. Of course they will not do that, it might be a ministry of finance but they too don't understand their own stuff.

Right now the television says that Wouter Bos thinks that there is a 30% likelihood that Dutch taxpayers will make a profit on Wouter 92% of face value deal...
It took some time but we now have solid proof Wouter does not understand what is going on... 

Item 3) US house sales unexpected up?????

Every now and then there is 'positive news' from the US housing front, these are always 'month to month' of 'unexpected positive news'. 

But month to month prices and volumes of new or second hand homes should always be compared to the same month a year ago. 

This is needed because volumes and prices sold have large seasonal components; month to month figures make only sense when you compare them to month to month from a year ago.  

Item 4) US financial expert Ben Stein on air pollution.

With head and shoulders above his peers Ben Stein is one of the most dumb experts on economics and finance. Today the new nigger US prez Obama signed some new laws upon air pollution from cars.

This is what Ben Stein makes of it (source), quote: 

Let me be clear: I hate air pollution. 

When I am in a traffic jam on the 10 Freeway in Los Angeles, with thousands of cars and trucks belching out carbon dioxide and carbon monoxide, I feel as if I'm being gassed by my fellow motorists -- and they probably feel the same way about me.

I am not entirely convinced that the burning of gasoline causes climate change, and there are smart people with good points on both sides of this issue. But I do assume that filling the atmosphere with CO and too much CO2 is not good for children and most other living things (although C02 is good for plants). 

Comment: With the statement that too much CO2 is bad for children, just by accident, Ben Stein has placed a wise comment.
Lets leave the idiot Ben Stein with that.  

Item 5) The empty item.  

Empty empty empty: 

Use your own brain please! 




In case it is not empty enough:  

Even organizations like Amnesty International pick up the call for the investigation of war crimes done by Israel in the Gaza strip.

So I would like to repost the next picture (only lately I observed on the television how these new shells work on the ground):  


Please remark that the whiners of Israel never sighed the treaties that would make this a war crime. Life is simple to understand; the Israelis are in the right when they say this does not violate international law.

By the way; the German concentration camps also were not a violation of international law. That is also a fact of life...

Till updates.   

(22 Jan 2009) Again I am lazy & only 2 items:

Item 1) Are gold prices fixed daily? (From Jesse)
Item 2) The same statistical analysis can be applied to the DOW. 

Item 1) Are gold prices fixed daily? (From Jesse)

In the first place I want to remark that there are major discrepancies observed: 

Jesse places a simple gold buy & sell strategy that gives 1% profit every five days, but Jesse draws from an article from moneyweek dot com that says 1% every 20 days. 

In the second place, both Jesse's post and the moneyweek dot com article do cite some academic sources but all in all there is zero proof for the claimed profits.

So this might all be a big bag of nonsense when it comes to gold but the statistical methods needed are of tremendous high value if you have access to them, that is the main reason for this update. 

Lets first quote the gold buy & sell strategy:

The astonishing pattern in London gold fixing

The strategy is really quite simple. You buy gold at the London PM fix (3PM), as the American markets have just opened for trading, and you sell your gold the following morning at the London AM fix (10:30AM), as the Asian markets are closing. 

Comment: For this multi year strategy to work on average after the London fix, gold prices must rise hence the London fix is 'too low' in general.


Gold is shifting from West to East – along with the balance of power (moneyweek)
Is Gold and the Balance of Power Shifting from the West to the East? (Jesse) 

Please read both sources carefully.

Again this could all be a storm in a glass of water, but here are the two graphics from both articles:

The first chart is from Jesse where the green line is supposed to be your 5 day return. 


And from moneyweek we have the second chart where the green line is your 20 day return (also 1%):


Both Jesse and Dominic Frisby fail to tell us what the blue spikes exactly are; day to day changes? Or week to week? And if day to day are these opening/close London gold market prices or changes in the so called 'London fix'?

Furthermore; why is there only a dull green line giving your supposed 1% return every 5 or 20 days? If this stuff is for real, why not include the 'running 5 day' or the 'running 20' returns?

From Jesse I know he has his economical reasoning on order, he is not a dumb debt hugger or so, but he should have been a little more critical towards the moneyweek stuff. And the main problem is and stays:   

When you use the same dataset and the same buy & sell strategy, you cannot report the same returns on a 5 day scale compared to a 20 day scale. 

Lets leave this item with that. 

Item 2) The same statistical analysis can be applied to the DOW.  

Although the above statistics are a bit shaky, in the hands of a good statiscian you can proof if there is 'market manipulation' in the Wall Street DOW. 

For many years I suspect the DOW manipulated to the upside. I don't care where the manipulation comes from: let it be mutual funds, hedge funds, pension funds or even the US government or a combination of those. I really do not care. 

But if there is indeed multi year long manipulation in the DOW futures this is easy to measure:

Simulate on your modern fancy computer the next strategy (I don't have access to the data you need, but it is all pretty simple): 

Buy DOW stuff at the end of the trading day and sell it just after the opening bell.  

For the time being the working hypothesis is that in the futures it is 'cheaper' to pump the DOW up compared to the real heavy lifting during trading hours. (This hypothesis might be of less value in the last years as derivative products were used more and more, but most derivatives are related to DOW, gold and US$ values so likely derivative markets do not stand in the way of this kind of analysis.) 

I hope some university picks it up (because I cannot pay for the data needed) because from the statistical point of view it is not that hard to detect stock market manipulation. 


Lets leave it with that, our own Dutch columnist Jos Colignon was found back on Barry's hangout. Click on the next screenshot to see the entire series of Jos about Obama:


Till updates. 

(21 Jan 2009) Only two items today:

Item 1) Finally a few more in the USA that can do elementary math.
Item 2) A new beer: Bailout Bitter. 

Item 1) Finally a few more in the USA that can do elementary math.

For about 14 months I have been arguing that US house prices will decline about 50% from their mid 2006 top and that all in all about 10 trillion US$ in family house equity will be wiped out. 

Only very seldom you observe similar reasoning's, as far as memory serves this is only the third time in 14 months. You might think that given the ten trillion size of damage there is a large body of thinking inside the USA on that important detail.
There is next to nothing; on main stream media outlets they only show a large array of guys that for one reason or the other declare that in the next Quarter the stock markets will boom again.

This all is very strange; why do the Americans show this weird behavior?

Lets first place some links to some sources (these sources are not bad but also constantly neglect the fact that in total 10 trillion US$ in home value will be wiped out):

Naked Capitalism: Cumulative Price Fall to Exceed 45% in 2009 
Calculated RISK: National Association of Home Builders: Prices to Fall 29% in 2009 
Review Journal: Economists say housing market to remain unstable

Let me quote from the lady from naked capitalism since she is a sharp knife in the toolbox:

David Crowe of the National Association of Home Builders said he was quite negative in his housing and economic outlook last year, but not negative enough....

The S&P/Case-Shiller Home Price Index fell 25.3 percent from March 2006 to October 2008.

Crowe said he expects prices to fall another 29 percent this year and new home sales to decline 14 percent.

The article does not make clear whether it interpolated Case Shiller, or whether Crowe was using that as his reference point (OFHEO's Home Price Index shows a less dramatic decline). 

But putting it together...... .747 (100% -25.3%) x .71 (10%- 29%) = .530. That means housing price will fall to 53% of their peak level, so the decline through this year will be 47%. 

And we skipped over the last two months of 2008 in this estimate.  

Comment: I don't think it is realistic to say US house prices will decline another 29% this year only. Although I would love that, I know of no mechanism that supports such speeds.
The total estimate looks rather good, but it will simply take a longer time to get there.
The lady Yves calculates a cumulative price decline of 47% (the average Wall Street trader is not capable of such by the way) and there is important news on that:

There are some reports out there that say companies ask their employees to agree to a pay cut instead of a too large work force decline. I don't know how widespread this is but it will bring down the median salary.

If my dreams come out, median income will decline and before the historical house affordability is restored again we will be beyond 50% of wiped out house value.  

For the time being it is still a dream but this particular scenario gets more realistic day in day out. 

Weighing all in all: It is very strange and very weird the Americans do not understand their own economy that much. When it comes to debt levels or house prices you more often than not only get some advertisement talk... 

Item 2) A new beer: Bailout Bitter.  

Since I brew for myself I have some interest in commercial beers since I have left them behind. The best thing in brewing for yourself is is you control the alcohol content and you can leave behind all these drunk making beers.

The perfect mujahedin beer is very simple: less grains, more hops & at times some herbs or tea leaves. I am serious my dear & beloved mujahedin; even bread contains alcohol but you never get drunk from bread... 

Below you see a beer I did not make myself, but it is a good joke. Cheers! 



Till updates. 

(20 Jan 2009) Only two items today:

Item 1) Man oh man how boring: the inauguration of B. Hussein Obama.
Item 2) Nice article: US and UK on brink of debt disaster. 

Item 1) Man oh man how boring: the inauguration of B. Hussein Obama.

It was on most television channels; the inauguration of US prez Obama. A short time later Obama gave a speech, it was the usual stuff like 'uniting people' and 'restoring leadership' and so on and so on.
Ok ok, the speech was not bad.
Later it emerged that a 27 year old speech writer has worked 3 months on that speech!

Do you believe that? I mean that is absurd: how can the USA fulfill a leadership role if a speech already takes 3 months to write?  

Given the fact that the USA was still an apartheids nation only five decades back, on the one hand it is good they have a nigger prez right now but it is strange they support other apartheid regimes like Israel. 

I understand the religious component, but apartheid is apartheid. 

Item 2) Nice article: US and UK on brink of debt disaster.  

Via the lady from naked capitalism I found a nice article with the title:

US and UK on brink of debt disaster.   

It was published on the Economical Times (from the India Times), of course you won't find such an article in the UK or the USA. That's obvious; debt huggers never expose their shit and their schizophrenic logic.

Lets quote a bit:

The only real change was in the composition. Private debts increased (7.8 times) more rapidly than public ones (1.5 times). As a result, there was a marked shift in the debt stock from public debt (just 37 percent of GDP in 1975) toward private sector obligations (117 percent). But this was not unusual. It should be seen as a return to more normal patterns of debt issuance after the wartime period in which the government commandeered resources for the war effort and rationed borrowing by the private sector. 

From the 1970s onward, however, the economy has undergone two profound structural shifts. First, the economy as a whole has become much more indebted. Output rose eight times between 1975 and 2007. But the total volume of debt rose a staggering 20 times, more than twice as fast. The total debt-to-GDP ratio surged from 155 percent to 355 percent. 

Comment: Suppose average interest rates are at 5%, if the total debt to GDP ratio is 3.55 you need 17.75% of the GDP just to fulfill the interest payments...
You can argue that loans and debt need to be paid but in the USA there is widespread use of the refi (the refinancing), in other nations there are always fines and extra payments with a refi but not in the USA.
So interest obligations are mostly paid with fresh debt; do you really believe the Americans use 15 to 20% of their gross domestic product for stupid interest only? 

Quoting on:  

For the most part, policymakers have been comfortable with rising private debt levels. Officials have cited a wide range of reasons why the economy can safely operate with much higher levels of debt than before, including improvements in macroeconomic management that have muted the business cycle and led to lower inflation and interest rates. But there is a suspicion that tolerance for private rather than public sector debt simply reflected an ideological preference. 

Comment: These policy makers are plain dumb idiots that do not understand elementary math...

Quoting on, the article discusses bankruptcy versus inflation: 

The solution must be some combination of policies to reduce the level of debt or raise nominal GDP. The simplest way to reduce debt is through bankruptcy, in which some or all of debts are deemed unrecoverable and are simply extinguished, ceasing to exist. 

Bankruptcy would ensure the cost of resolving the debt crisis falls where it belongs. Investor portfolios and pension funds would take a severe but one-time hit. Healthy businesses would survive, minus the encumbrance of debt. 

Comment: This is wrong because there are no savings in the USA, bankruptcies only lead to a long long chain of more bankruptcies. That is why we have all this bailout fun; even a few small bank failures can lead to a system meltdown.

Quoting on:

The final option is to raise nominal GDP so it becomes easier to finance debt payments from augmented cashflow. But counter-cyclical policies to sustain GDP will not be enough. Governments in both the United States and the United Kingdom need to raise nominal GDP and debt-service capacity, not simply sustain it. 

There is not much government can do to accelerate the real rate of growth. The remaining option is to tolerate, even encourage, a faster rate of inflation to improve debt-service capacity. Even more than debt nationalization, inflation is the ultimate way to spread the costs of debt workout across the widest possible section of the population. 

Comment: In the economy everything is related to everything, in the blink of just a few months cause and effect can interchange. What once was a workable theory is crap a few months or years later, anyway that is the case in the 'present economy'.
To bring down debt to GDP ratio's from 1:3.5 to lets say 1:2 you need over 75% in 'excess inflation' and I don't think the US Federal Reserve is ready for that...

Right now it is 22.00 local time and that is closing time for the DOW; here is the closing number of the DOW while we had Obama inaugurated:


Till updates. 

(19 Jan 2009)  Five items:

Item 1) Gaza strip; cease fire, death ratio's, Dubya pee, UN & shaped explosives.
Item 2) Poking fun at the Royal Bank of Schotland.
Item 3) The bailout game.
Item 4) Jesse on money supply.
Item 5) The empty item.

Item 1) Gaza strip; cease fire, death ratio's, Dubya pee, UN & shaped explosives.

Ok ok, there is at least a rudimentary form of a cease fire in the Gaza strip. The Israelis had their orgy of violence and even reports are observed that say they can get out of Gaza before Obama is the next US prez... 

Death ratio's are very interesting; over 1300 dead from the Palestines, 10 Israeli soldiers and 3 Israeli citizens. That gives a gross death ratio of 1:100 (who says Israel is only a nation striving for peace?).
If we withdraw the friendly fire killed Israeli soldiers the death ratio climbs firmly above the 1:100 and since in the meantime still dead bodies are collected it will climb even higher.

It looks confirmed: We have a new Übermensch nation around, every few years they need a nation to kill until humanity spits them out.

It was funny to observe the United nations calling for an investigation about possible war crimes, rather likely we will not hear from that again because behind the smoke screens there will be a lot of pressure on Ban Ki-moon to stop nonsense like that.

On the use of white phosphorous or WP (read Dubya pee) wikipedia has a nice file, link:  

Very often wikipedia files are 'massaged' by the US military but this one says, quote:

By oral ingestion

The accepted lethal dose when white phosphorus is ingested orally is 1 mg per kg of body weight, although the ingestion of as little as 15 mg has resulted in death. 

Comment: So oral ingestion is lethal on a 1:1000000 ratio to body weight while as smoke far lesser ratio's are accepted? And the article also shines a bright light on the statements from the Israelis that Dubya pee was always used inside international law: Israel never signed the treaties so in fact it is true: Israel worked inside 'international law'. 

My dear reader: Make up your own mind; is Dubya pee a chemical weapon yes or no?

On shaped explosives it is very simple: For many years in the Iraq equation the US military complained that shaped explosives were imported from Iran and used again their brave heroes. In the Gaza equation we observed zero shaped explosives so does this shed a light on the US military statements?

Item 2) Poking fun at the Royal Bank of Schotland.

The Bank of Scotland posted the largest loss of a UK company in history whatsoever.
It is about 37 billion US$ but nobody knows for sure.

Funny detail: The bank I use as a consumer was partly sold to RBS for 27 billion € but strangely enough they had to write down 22 billion € on that beloved acquisition.
This raises questions about the rest of RBS banking but to make this more funny:

The parts of ABN-Amro that were taken under our government wings report a profit for the year 2008... (Talking about a 'Dutch threat' for the UK debt huggers.) 

Item 3) The bailout game.

Via the lady of naked capitalism I found the next funny game, it takes a long time to download but you can play the US Treasury (and her slaves like the US Federal Reserve) bailout game for yourself.  

Item 4) Jesse on money supply.

Money supply, yes money supply inside a fiat money system is hard to understand. The USA has M1 M2 and M3 monies and also MZM money (MZM = money with zero maturity). The UK also has M4 money but I never studied the fine details of that one.

For myself I use often the next:

M3 money: This money goes from the Central Banks to the commercial banks.
M2 money: This money flows in between the commercial banks &
M1 money: That is what you have in your wallet or can get in a notice.

Very different but after a few minutes of thinking you can also view it as next, link:     

The link is also a good way of explaining how the different measures of money work.

I myself did think of this detail a lot because I understand the US dollar is a relatively fake currency when it comes to the long howl. 

Lets quote: 

People often prefer to jump into discussions and turn them into debates (arguments) with hair-splitting definitions (what is 'control' of the money supply) and red herrings (why does a dollar cross the road?) before defining any terms or facts and setting some boundaries for the analysis, because their goal too often is not understanding, but to promote some theory or point of view. 'Winning the argument' is their objective, not a search for the truth. 

Comment: No comment beside: Money supply should always be bounded by gross domestic growth and not by price inflation as the debt huggers would like us to believe.

Item 5) The empty item. 

In the empty item you can view one of the precision bombs as used by the Israelis. 


Till updates.

(14 & 15 Jan 2009) Only five items:

Item 1) Is Mr.  Moszkowicz a Dutch Jewish whiner? It looks confirmed.
Item 2) A message from Osama bin Laden.
Item 3) Finally Deutsche Banks posts a loss; still waiting for ING...
Item 4) Bernanke an Expert on the Great Depression?
Item 5) The empty item: Dubya pee and Financial fun on Obama.

Item 1) Is Mr.  Moszkowicz a Dutch Jewish whiner? It looks confirmed. 

Here in the Netherlands since the beginning of the previous decade there is a soccer song (or slogan) that goes as next:

Hamas! Hamas! Alle Joden aan het gas!

Translated this would be: 

Hamas! Hamas! All Jews go on the gas! 

During soccer matches this is often heard; the phrase 'Jews' refers to the soccer supporters of the Amsterdam based soccer club Ajax. 

When you hear it for the first time it sounds a bit too far but when you know the Ajax supporters are mentioned it is so over the hill it even gets funny.
So far for the background.

A Dutch lawyer named Abraham Moszkowicz is suing a few Dutch parliament folks because they walked in a demonstration against the Israeli bombardments. According to Jewish whiner Abraham Moszkowicz the Dutch parliament folks did not distance themselves from the traditional soccer song that was heard in the background...  

Source (in Dutch): 

Moszkowicz doet aangifte tegen SP-Kamerleden 

What makes this case so sad is the fact that Jewish whiner Abraham Moszkowicz is one of those who is addicted to Media attention, with making a legal case against Dutch parliament folks Abraham once more has the headlines.
Well the little gay prick has his attention once more...

So it looks confirmed: Abraham Moszkowicz is just another Jewish whiner!

Item 2) A message from Osama bin Laden.

Yesterday a new Osama audio tape was posted, I only did read small fragments of it but there is a small part I would like to comment on (source), quote:

Al Qaeda boss Osama bin Laden says the decline of America's dominance on the world stage was one of the main factors which prompted Israel to launch its offensive in Gaza. 

"The great and swift decline in America's influence is one of the most important motivations for Israelis to wage such a barbaric attack on Gaza, in a bid to try and make use of the last days of (President) Bush's mandate and the neo-conservatives," he says.  

Comment: Of course a lot can be lost in translation but it is important to understand that for years the Israelis did dream of a large scale attack on Iran. Lately it surfaced that the Israelis have asked Dubya for permission to use the Iraqi air space.
Needless to say Dubya could not give his permission because doing so could damage future US access to the Iraqi oil.
Another important element is the size of the attack on the GAZA strip; this is induction from the large size dream of attacking Iran. It has nothing to do with a real threat to the existence of Israel, the lost dream induces the rough violence we observe.
At last: Of course there is a power vacuum with the new Obama not sworn in, but to understand the 'need for military action' we must also take into account the impending Israeli elections.
It will not be the first time a sitting democratic government wins elections on the wings of a freshly started war against a perceived enemy.

Item 3) Finally Deutsche Banks posts a loss; still waiting for ING...

Two days ago Deutsche Bank finally posted her first loss when the Q4 2008 figures came out. It was just under 5 billion € and cited were the 'extreme conditions' of the fourth Quarter last year. 

I have not a sniplet of evidence let alone rigid proof but for now I only say 'finally the first loss is there'. I estimate Deutsche Bank one of the weak giants.

In the meantime we are waiting for a Dutch banking giant: ING.
From that bank it is known that they have about 47 billion € related to the US housing market and until now they have done 0 € in downwritings.
Needless to say this compares to burning water streaming uphill... 

So lets wait upon the impending ING figures. 

Item 4) Bernanke an Expert on the Great Depression?

The lady from naked capitalism dot com (see homepage) strikes again in this lovely article:

"Bernanke an Expert on the Great Depression??"  

The lady understands math, she understands what math dynamical models are and even comes up with: Most prices are outside the perfect equilibrium most of the time.
That brings a soft smile on my face; the lady knows how to get to some truth.

By the way, now we are talking about 'equilibrium', or the Minsky Financial Instability Hypothesis, we must not forget there is also a branch of math known as 'Catastrophe theory'. It is just a tip for the US economists but when you have 17 trillion of debt on your financial sector only it is not the most dumb detail to study.  

There can be posted many quotes from Yves her article, but this one I like:

And so to this day, the pinnacle of neoclassical economic reasoning always involves “equilibrium”. Leading neoclassicals develop DSGE (”Dynamic Stochastic General Equilibrium”) models of the economy. I have no problem–far from it!–with models that are “Dynamic”, “Stochastic”, and “General”. Where I draw the line is “Equilibrium”. If their models were to be truly Dynamic, they should be “Disequilibrium” models–or models in which whether the system is in or out of equilibrium at any point in time is no hindrance to the modelling process.

Comment: For me too it is strange to observe there is no ceiling to (for example) allowed debt in the economical models of the Federal Reserve. But that simply is the case for a few decades. They never heard of 'catastrophe theory' so the FED is without any significant weaponry; you won't hear me complain...

So from the math & economical sciences point of view the US Federal Reserve lives in the past. Therefore two pictures of the FED trying to connect to the past.
You yourself can make up your mind:

Who is the Federal Reserve and who is the 'past'?:



Item 5) The empty item: Dubya pee and Financial fun on Obama.

Yesterday already I wanted to write upon the use of white phosphorus in the Gaza strip but due to a small slurry of social obligations I left down that detail.

Today the main facility of the United Nations was shelled by the amateur Israeli defense forces and on the television big burnings of stock supplies were observed.

The United Nations have to understand that in theory white phosphorus bombs are forbidden except when it comes to the next cases:

Case 1) For the use of illumination &
Case 2) For use as a smoke shield for the own soldiers.  

In US military slang white phosphorus is known as wp (speak out: Dubya pee).

The UN has to understand that if Israel declares that during broad daylight they need illumination, the use is not illegal according to international law.
The UN has to understand that in the middle of the night and even when there is a big fog, if Israel states they need a smoke screen, again this is not illegal under international law. 

From the military point of view it all does not make much sense: What military commander sends his platoons through clouds of Dubya pee?
And for illumination there are also plenty of alternatives, but military international law is military international law...

The truly good thing is: In case Dubya pee is used against the main facility it can be measured by so called 'scientists'.

And that my dear United Nations is a true good thing: Or not? 

After the Dubya pee I only link to the dumb economical stimulus package from Obama, right now Obama is constantly portrayed as 'very smart' but the same social thing was observed when Dubya won 8 years ago.

Here is the fun from a guy that rather likely will not be smart enough:

Dems unveil $825 billion stimulus measure 

Till updates.


(13 Jan 2009) Ok, today I would like to concentrate on financial humor but before that I would like to remind the reader that when it comes to aggression and war the killing ratio's are simply most important.

During the second intifada the killing ratio was about 1:2 or at most 1:3.

That means that for every killed Israeli 2, at most 3 Palestines died.
Please remark that the Geneva rules for war do not apply on this conflict but the 'intifada status' was as close as you can come to 'official war'. 

The intifada ended, but the killing ratio's climbed to a strange 1:13 (right now, as a scientist, I regret I never stored the reliable information on this detail). 

Please observe the historical context: The intifada was ended but the Israelis found wisdom to kill 13 Palestines for every Israeli killed.
That kind of behavior was 'peace time behavior' for the Israelis, in the meantime the Israeli whiners complained about Palestine rockets that only killed Israelis on a 'traffic accident scale' in absolute numbers.  

You really do not need much brains to see who is the real aggressor and who is not.
I mean, it was peacetime so why did the ratio climb to 1:13? 


The financial fun items:

Item 1) The fairy tale of the king and the golden coins.
Item 2) Standard & Poors on the AAA status of the USA.

Item 1) The fairy tale of the king and the golden coins.

A long time ago in a country far far away there was a king named Benya. His country was very prosperous for a lot of generations and compared to the other countries the golden coins were much bigger.

The king observed over the decades that in the neighboring countries smaller coins were used to buy the same kind of stuff on the local markets. These countries were not as prosperous, but anyway they also had good armies.

One night when the king was asleep, the concept of 'financial innovation' entered his mind and dream and he woke up and wrote down his dream in words: 'Cut the coins in half'. 

In the months after all citizens were 'invited' to the Royal palaces and had to give their golden coins up. In return they got coins of only half the weight. 

By royal decree it was forbidden to use the old coins in trade, only new coins were allowed.  

Strangely enough, king Benya only observed the once thriving economy tumble... 


Item 2) Standard & Poors on the AAA status of the USA. 

On seeking alpha dot com they have a rather dumb editor named Eli Hoffmann (yes he is a fucking Jew and also rather dumb). Eli does not understand much of the world, but lets not zoom in on Eli but on his latest contribution to the financial front: 

Risks to U.S. AAA Rating Have Grown 

Remark that Eli only 'cuts and paste' the Standard & Poors insights of why the USA should have an AAA credit rating. Just a funny quote from S&P: 

The ratings on the U.S. primarily reflect our opinion of the sovereign's high-income, highly diversified, and exceptionally flexible economy. The ratings also reflect our view of its strong track record in terms of growth-enhancing policies, as well as the unique advantages coming from the U.S. dollar's role as the key international currency. In our opinion, these strengths continue to outweigh the U.S.'s weakening current-year fiscal performance, growing risks in its financial sector, longer term challenges associated with its entitlement programs, and the nation's weak external position. 

Comment: Of course the S&P raters neglect the 17 trillion in debt the US financial sector has upon herself. The S&P folks also think the US economy is 'highly diversified' and that is true: from large prison populations, lots of homeless people to very much millionaires and billionaires it is 'highly diversified', it also lacks a real industrial base but that is not a problem for the S&P folks. 

Standard & Poors hangs out the perfect comedian with stating that US net government debt is 'only 42%' of the gross domestic product, not often you see such good comedians, quote: 

Our own stress tests lead us to believe that, in a reasonable worst-case scenario, net general government debt could rise from its 2008 level of 42% of GDP to as much as 75% by 2011, combining the costs of bailouts and stimulus with the fall-off in revenue. Indebtedness of this magnitude, while a noticeable deterioration, would still be consistent with ratios of closely comparable peers such as the U.K., France, and Germany (all rated AAA/Stable/A-1+), and in itself would not jeopardize the rating on the U.S. so long as the sovereign's other credit fundamentals remain in place. 

Comment: My 'stress tests' say that it is highly unlikely that we can say it is 'consistent' with nations like Germany or my home base the Netherlands. The US government debt is a rather artificial construct, who cannot laugh when the S&P says it is 42% of the GDP?

More laughing fun was found at:

America: A Nation Named Desire 

Funny quote: 

In the article, he stated that foreign investors would gladly buy up any amount, no matter how large, of Treasuries the US would sell. Why? Because they “have” to do it to sustain their economies. I wonder if he has ever left the cozy confines of Manhattan?

Here is a direct quote: “They (meaning foreigners) have nothing, they build nothing, they sell nothing without OUR demand”. So he is basically saying that foreigners are nothing without the United States. The whole purpose in life of everyone else on the globe is to merely serve the needs of Americans and to make their Wall Street masters filthy rich. 

Comment: Even US government folks try to put the blame on countries like China because 'they save too much'. Yes yes yes, the problems started with countries saving too much... 

More funny as this I cannot make it. 

Till updates. 

(12 Jan 2009) Three items:

Item 1) More comparisons on the Warsaw ghetto compared to the Gaza strip.
Item 2) Perfect and superb propaganda from the Jerusalem Post.
Item 3) For the second time: The S&P on a decade long scale. 

Item 1) More comparisons on the Warsaw ghetto compared to the Gaza strip.

After the Germans invaded Poland at the start of World War II they separated the Jews from the normal folks and placed them into the Warsaw ghetto. Not that the 'normal folks' were spared a lot but the Jews got what they deserved according to the nazi insights of those years.

Lets quote (Jewish virtual library source), quote:

Smuggling began at the very moment that the Jewish area of residence was established; its inhabitants were forced to live on 180 grams [6½ oz.] of bread a day, 220 grams of sugar a month, 1 kg. [2.2 lbs.] jam and ½ kg. of honey, etc. It was calculated that the officially supplied rations did not cover even 10 percent of normal requirements. If one had wanted really to restrict oneself to the official rations then the entire population of the ghetto would have had to die of hunger in a very short time....   

Comment: There are more sources that more or less validate food supplies were below 10% of official statistics to what the Germans consumed. I hope the Israelis understand it was the goal of the Germans to get all Jews killed.

Present day statistics are amazingly similar (CNN source), quote:

In 2007 an average of 500 trucks a day entered Gaza with food and supplies. In comparison, yesterday, just 36 humanitarian trucks were allowed access to Gaza. With almost the entire population of 1.5 million Gazans dependent on humanitarian assistance, it is obvious that the incoming aid is not even remotely adequate. 

Comment: 36 trucks is well below 10% of 500 trucks for about 1.5 million Palestine folks in the year 2007. If we take into account how many trucks of food are there for 1.5 Israelis in the year 2007 we have found just another statistic that simply says the Israelis are the best fascists we have right now.
History never repeats itself, we still miss the plans for present day concentration camps, but my humble guess is that inside right wing Israeli politics plans like that are a wet dream... We will see if that insight is correct in the future. 

Item 2) Perfect and superb propaganda from the Jerusalem Post.

With war we always have rhetoric & propaganda. Perfect propaganda was found at the Jerusalem Post, the JP is not the official IDF outlet but the next file is such perfect propaganda that universities around the world should save it and explain how propaganda works.

Here is the Jerusalem Post source file:

Iran warns Hamas not to accept truce 

The title is very strange to begin with, as if Iran would dictate the Hamas.
But indeed that is what the intellectuals of the JP make it, quote:

"The Iranians threatened to stop weapons supplies and funding to the Palestinian factions if they agreed to a cease-fire with Israel. The Iranians want to fight Israel and the US indirectly. They are doing this through Hamas in Palestine and Hizbullah in Lebanon".  

Comment: The Iranians threatening to stop supply weapons and funding in case the Hamas goes into a cease fire with Israel?
My dear reader do you understand the propaganda element of this all?

Two paragraphs further down the line we observe, quote:    

"The Iranians never fired one bullet at Israel," he said. "But now they are trying to appear as if they are participating in the war against Israel. The leaders of Teheran don't care about the innocent civilians who are being killed in the Gaza Strip". 

The Egyptian official accused Iran of "encouraging" Hamas to continue firing rockets at Israel with the hope that this would trigger a war that would divert attention from Iran's nuclear plans.

Comment: This is so stupid, the Jerusalem Post wants us to believe that Egyptian officials warn us of 'diverting attention' from nuclear plans on behalf of the Iranians.
Again: Universities around the world should lock this file in a propaganda case that needs to be studied; how can such dumb stuff even gets published? 

One more paragraph of this remarkably good propaganda:

Egyptian political analyst Magdi Khalil said he shared the view of the Palestinian Authority and Egypt that Hamas was responsible for the war in the Gaza Strip. "Ever since Hamas seized control over the Gaza Strip in 2007, they turned the area into hell," he said. "They imposed restrictions on the people there and even prevented them from performing the pilgrimage to Mecca".   

Comment: As if the Israelis would allow for pilgrimage to Mecca...
Now that I am 45 years of age I finally understand why we had all these pogroms against the Jews for so much centuries: The Jews simply asked for this, just like the JP is doing with publishing stuff like this... 

In the meantime this is reality for Gaza city: 


Item 3) For the second time: The S&P on a decade long scale. 

In the picture below you one of the broadest measures of USA stock value; it is the S&P 500. It was a long time ago when I told you that for the first time in history the S&P was down on a decade long scale.  

That was many months ago, so why bring up this wisdom once more?

Well in the graph below you see the S&P bottoming at 800 to bounce back.
This happened in Sept 2002 and recently in the week of Nov 17 in 2008.

The funny thing is that the Wall Street stock traders do not understand the power of inflation: stock indices are mostly not corrected for inflation.

The idiots forgot to take inflation into account when they defended the 800 S&P level, with six years of inflation about 20% of wealth is destroyed. So 800 on the S&P in 2008 is not 800 on the S&P in 2002. Yet the idiots acted as if it were the same border...  

I hope that when you click on the picture you get a bigger version.


Oh oh, when will these dumbo's understand we need to see 7000 on the DOW before economical repair can set in? When will that be?

Till updates. 

(11 Jan 2009, later updated as found at the end) Today I would like to post two more items about Israel and the Gaza equation, but before that a nice file was found at the NY Times that validates that all these past five years my insights on the Iranian nuclear equation were more or less 100% correct more or less 100% of the time.

For me this is strange; why do I never have big blunders when it comes to entire nations? Anyway, here is the NY Times link:

U.S. Rejected Aid for Israeli Raid on Iranian Nuclear Site 

Most dumb stuff as found, quote: 

Last year, Prime Minister Ehud Olmert of Israel asked President Bush for bunker-busting bombs and permission to fly over Iraq to attack the plant. 

Comment: No comment, it only proofs the Israelis have a severe 'superiority complex' inside their society but that is already known... 

Lets go to the main items of today:

Item 1) Similarities between Israel and the former apartheid regime of SA.
Item 2) Similarities between the Gaza strip and the former Warsaw ghetto.  

Item 1) Similarities between Israel and the former apartheid regime of SA.

A very important characteristic of the former South African apartheid regimes was separation of the black and white communities and a large wage differential. For the same kind of job, blacks always got a fraction compared to their white peers.
Beside this the whites had health insurance, holiday money, sick leave money & so on & so on.

In Israel it is the same for a lot of decades (far more decades then in SA by the way).

This day I observed one of the Israeli propaganda tellers on the television saying:  

The West Bank has a relative far better economical outlook and standard of living, it took only five minutes of the Google thing to arrive at the next source:

Study: W. Bank laborers earn less than 50% of minimum wage 


Palestinian workers employed in West Bank settlements and factories earn less than half the minimum wage stipulated by law, a Knesset study revealed Tuesday.  

Comment: This is a Knesset study so it is just a reliable as a study from the former SA government. In practice things are likely far more worse. 

In general there are far more labor issues in Israel that validates it is only one more apartheid regime. It is not only Palestines who get paid less, when you are black and come from Africa you get a low wage & when you are white and come from Europe or the USA you get the normal wage. 

If the international community did not accept practices like that in South Africa, why are they allowed many decades longer in Israel? 

There is much more to be said on this subject, for example medical treatment of imprisoned Palestines compared to imprisoned Israelis is the same game but lets proceed with the next item... 

Item 2) Similarities between the Gaza strip and the former Warsaw ghetto.   

It must have been over two decades ago when I studied the Warsaw ghetto for the last time, today with the help of our beloved internet the statistics point to only one thing:

Compared to the nazis, the Israelis have far better killing ratio's. 

My compliments go to the Israelis; in absolute numbers they are not very good but they have beaten the Germans when it comes to the Warsaw ghetto.

For example there was hardly any food in the Warsaw ghetto so rather likely there were some tunnels to prevent the Jews from starvation too much. This is correct, see footnote 91 from this file, quote:  

The tunnel from the ZZW headquarters in the Toebbens-Schultz shop area, which connected to the Warsaw sewer system, is mentioned in a number of sources as well. Fella Finkelstein-Shapchik and Simha Korngold relate in their testimonies how they and other ZZW fighters from the Toebbens- Schultz shop area left the ghetto through that tunnel on April 28, 1943. Stephen (Shalom-Stifan) Grayek (Sheloshah yeme kerav [Tel Aviv: Maarakhot, 1972], p. 163.) 

The Warsaw ghetto did also some uprising against the occupiers, I don't know how reliable the next statistics are but here it is (source), quote: 

Approximately 13,000 Jews were killed during the Uprising, with another 50,000 rounded up and deported to death camps. A few escapees continued to fight in the forests, whilst some who were arrested were later freed by the Polish underground forces and joined the Warsaw Uprising. An estimated 300 German troops died in the struggle. 

Comment: About 300 German troops compared to 13 thousand Jews gives a ratio of 13000/300 = 43.
Present Gaza strip statistics say 800 killed Palestines (about one third of them children by the way) and about 10 killed Israelis. Giving rise to a ratio of 80, firmly above the nazi ratio of 43 from the Warsaw ghetto. 

Weighing all in all: Not only make the Israelis a better apartheid regime for many decades, they also have far better kill ratio's when it comes to the nazis. So with about one century of military history in my mind my congratulations goes to Israel:
You are the best fascists on this planet!  


Lets leave it with that, till updates.


Only a few links from the 

Here we go:

Call to Armed Self-Defense (from March 28, 1942)
The Girl Couriers of the Underground Movement (from May 19, 1942)
Goebbels on the Ghetto Revolt (from May 01, 1943)
Himmler Orders the Destruction of the Warsaw Ghetto (from Feb 16, 1943)
The Smuggling of Food into the Warsaw Ghetto (from an unknown date).

From the last link we have a nice comparison about how the Jews in the Warsaw ghetto got the extra food (and also German machine guns although the file does not say that detail). Quote:

The smuggling took place – a) through the walls, b) through the gates, c) through underground tunnels, d) through sewers, and e) through houses on the borders.... 

Comment: So the Jews once digged underground tunnels themselves do not allow the same for the Palestines who did see their land stolen.
Again: My congratulations; Hitler likely would have considered this a 'funny thing' in the Spring of 1941 or so.

End of the update; till updates!   

(09 Jan 2009) And again, boring boring, only two items:

Item 1) More on the Gaza equation, Jimmy Carter & Joseph Goebbels.
Item 2) Easy loans 'financed' dividends & thoughts on future NFP numbers. 

Item 1) More on the Gaza equation, Jimmy Carter & Joseph Goebbels.

You can say a lot about the former peanut farmer and US president Jimmy Carter but the more years he is on my radar screen the higher he climbs in esteem, that cannot be said from Dubya who is only more full of shit year in year out.

But let emotion out, there is too much emotion in the air anyway so lets stay cool. 

Jimmy wrote an article in the Washinton Post, here is the link:

An Unnecessary War  

And let me post two quotes from it, quote 1:

After visiting Sderot last April and seeing the serious psychological damage caused by the rockets that had fallen in that area, my wife, Rosalynn, and I declared their launching from Gaza to be inexcusable and an act of terrorism. Although casualties were rare (three deaths in seven years), the town was traumatized by the unpredictable explosions. About 3,000 residents had moved to other communities, and the streets, playgrounds and shopping centers were almost empty.  

Comment: It is utterly weird that only three deaths in seven years give rise to a traumatized population, after all this is only in the traffic accident range of deaths. Therefore it is important to understand why Sderot & the rest of Southern Israel gets traumatized so easily by only a few fire crackers.
I advise to you to do your own thinking on this (because we have all this emotion in the air) but my first guess is that the Israelis are well aware they live on stolen land.
Only such a deep fundamental fear (living on stolen land) could give rise to such easy traumatics with only a few fire crackers.

Quote 2:

On another visit to Syria in mid-December, I made an effort for the impending six-month deadline to be extended. It was clear that the preeminent issue was opening the crossings into Gaza. Representatives from the Carter Center visited Jerusalem, met with Israeli officials and asked if this was possible in exchange for a cessation of rocket fire. The Israeli government informally proposed that 15 percent of normal supplies might be possible if Hamas first stopped all rocket fire for 48 hours. This was unacceptable to Hamas, and hostilities erupted.

Comment: There is only one source (Jimmy Carter) and it is only 'informally proposed' from the Israeli government, but if the 15 percent of normal supplies is really true we are in a situation that a third intifada is just the only way forward for the Palestine people. That might be regrettable but 15 % can only be classified as a 'fascist proposal' and nothing less.  

After Jimmy Carter that leaves us with other examples from war history and air attacks. There is a wide body of military history from the previous century how nations react on air attacks, for example in World War II the London folks were never broken because of the V2 rocket attacks.
The UK pm Churchill was a driving force on bombings on German cities, it never broke the German spirit.

What is the difference between the UK, Germany and the present Israel?

That is the concept of living on stolen land, both the UK and Germany did not live on stolen land. The Israelis, they do...

From the Joseph Goebbels files I have selected a speech from 14 June 1942, as far as memory serves allied attacks on German civilians were only peanuts at that time. But peanut farmer Churchill guided his folks the best he could.

Here is the link:

The Air War and the War of Nerves 

And the quote:

It would do the Jewish press in New York and London too much honor to give any attention to their bloodthirsty commentaries on the air war and the war of nerves. They will have to pay for it with the extermination of their race in Europe, and perhaps far beyond. They are not to be taken seriously, for they represent their own interests, not those of England or America. We are waging war against enemies who threaten our very existence. We are fighting for everything dear to us. The war's victims will one day stand in worthy comparison to the size of the victory we will achieve. That can no longer be altered. Our enemies are in a position to postpone our victory for a period of time. But that will make the end even more inevitable.

Here, too, the old proverb is true: That which does not destroy us makes us stronger. 

Comment: Please remark one more coincidence with World War II: the Israelis constantly make a big deal of 'threatening our existence'. If it is Iran, the Hezbollah or the Hamas, everybody has to bow bow bow for the superior Israelis.
That which does not destroy us makes us stronger & a few fire crackers in Sderot brings us down... 

Good luck with these dumb insights Israel; you have found just one enemy more & the name is Reinko. Good luck with it! 

Item 2) Easy loans 'financed' dividends & thoughts on future NFP numbers.  

Via the lady from naked capitalism I came across that lovely article that once more assures the USA will loose it as the major military force. I already understood that the US financial sector used fresh debt for higher profits, but as a scientist I was also diplomatic by stating 'profits are derived via more debt'. 

Only now we are in a situation where we can say:

10 US$ more debt = 10 US$ more dividend. 

Here is the New York Times source:

Easy Loans Financed Dividends  

And a lovely quote: 

It was not only public companies that were able to pay dividends with cash that might have come from lenders rather than profits. Private equity firms were able to bolster their returns by having companies they owned borrow more money and use the cash to pay dividends. Now some of those same companies are struggling to find cash to finance operations. 

Comment: Yes my dear Pentagon, even the days of private equity are over. No longer they can borrow 10 billion US$, buy some companies with that and later park the 10 billion of debt in these companies...
So who is going to pay for your military stuff now?
Only the Ben Bernanke money printing press can buy you new weaponry...
Also good luck with it!


At last: US non farm pay roll numbers declined another half million. That leaves 2008 as the worst year since World War II but it were mostly the last five months that shed the 2.6 million jobs lost. 

If the pace continues we have about 6 million more lost jobs in 2009, but if you take into account the housing fun it will be more

It all goes perfectly, even better as I thought when I started the NightmareOnWallStreet on 12 Nov 2007. 

I mean, why are the accountants of the USA so dumb as to let flow debt directly to dividends? Why is that? I know but you don't!

Till updates. 

(08 Jan 2009) Again only two items:

Item 1) The Gaza strip equation.
Item 2) Jesse on Ben & COMEX. 

Item 1) The Gaza strip equation.

This morning started with the nice news a few rockets were launched from Lebanon, it wasn't much of a big deal but it had everybody on edge and that's a good thing. 

Of course everyone in Lebanon was denying they fired the rockets, a lot of observers stated it was highly unlikely the Hezbollah has done it while in the meantime so called 'Palestine factions' got the blame.
Other observers noted those factions simply do not have rockets...

In another development I can give my full hearted congratulations to the IDF once more (no link, it was on the television):

The Red Cross reported they went into a home in the Gaza strip to find 15 dead bodies. Nasty detail: The surviving children were simple left and abandoned by the IDF.   

More and more it looks like the IDF is only a bunch of amateurs that learned next to nothing from the 2006 Lebanon adventure. 

By the way: Have you seen those propaganda movies from CNN where the IDF has imitated a complete environment like they were supposed to meet in the Palestine territories? Thus suggesting the IDF was a fully professional army ready for everything?

I wonder what leaving children together with 15 dead corpses has to do with a 'professional army'; these IDF people are only amateurs... 

A bishop from the Vatican even equated the Gaza attacks to a concentration camp but that is historically not correct. It is more like the Warsaw ghetto, in the past 18 months when the brave Israelis sealed the Gaza strip from the outside I often compared it to 'Warsaw ghetto light'. Now we are in real Warsaw ghetto conditions.

More from the television: Israelis running for cover when the air alarm sounds, we see all kinds of Israelis seeking shelter but in the meantime statistics still say that from traffic accidents more people die.
Conclusion: Israel is indeed only a nation of whiners.  

On the USA media outlet time dot com I observed water burning! From an article with the title:

Can Israel Survive Its Assault on Gaza? 

only in the first paragraph it says, quote:

Ideally, in a war shaped by television images, Israelis would like a tableau of surrender: grimy Hamas commanders crawling from underground bunkers with their hands up. Instead, the deaths of at least 40 civilians taking shelter at a United Nations–run school north of Gaza City are more likely to become the dominant image of the war.   

Comment: It is a long call to make the shelling of a UN school the dominant thing, this ain't over by far and leaving children with 15 dead corpses in a house is also a 'dominant thing' don't you think?
All in all the time article still is very 'pro Israel', no emphasizes on actual war crimes but a blanket of love on a misguided loved one. 

In the meantime the United Nations is skipping humanitarian aid because too many drivers get shot during cease fire times (only one more clue the IDF is only a bunch of amateurs) and my own Dutch government sees no reason to get tough on Israel.  

 Item 2) Jesse on Ben & COMEX. 

The financial news is also important because only breaking down the funding base of the idiots at the Pentagon can solve Mideast problems also.

I have selected only a few:

Lets start with the words from the impending US prez Obama: he stated there will be trillion large Federal deficits for years to come. This is a very humble statement and I have done only very sketchy calculations but it could easily be double. 

So there is a brand new economical axiom:

From now on the money printing press will rule, no more nonsense talk of tax payer money on the hook or 'passing the bill to future generations'. From now on the money printers will rule the scene.  

Don't believe me? Come back in a year or five and explain to me why you were utterly dumb in 2008!

Jesse has a nice picture that shows you the deepest of insights at the US Federal Reserve, above you see the honorable FED chairman Ben Bernanke but who his Toga Toga Toga adviser is I don't have a clue (likely one of the Princeton economists).  


Source: A Budget Forecast from President-elect Obama 

Also of importance: Is it true that actual gold delivery is not there?
And why does this not affect the gold price?
I know why but I don't tell, I only post the link & please use your own brain!

Source: Is the Comex Doing Fractional Reserve Delivery of Gold? 

Till updates. 

(07 Jan 2009) Only two items:

Item 1) Why all peace initiatives in the Palestine equation will fail.
Item 2) Joseph Goebbels on the year 2000; the iron curtain & stuff like that. 

Item 1) Why all peace initiatives in the Palestine equation will fail.

There is all kinds of talk that there should be an end to the fighting in the Gaza strip and that always includes the evil Hamas should stop it's devastating (rockets) attacks against the peace lovers from Israel.

If you ask our political leaders what causes terrorism they often talk about hateful ideologies, fanatics, brain washing and lots of other 'evil attributions' projected on the enemy.

From the social sciences it is well known what creates most terror attacks, these are very simple to understand:

1) Military imbalance between determined parties &
2) Political change.   

In Iraq both factors added their full weight and we have all seen the results of that, in the Palestine equation it is mostly the military imbalance that causes the decade long problems.

Our political leaders are a large part of the problems because they also represent the military power, so from that side of the equation we often get that 'poverty' is a driving force of terrorism.

Our political leaders are a large part of the problem because they want to make the military imbalance even stronger. The facial cream smearer Tony Blair (a fake guy by the way) wants tunnels to the Gaza strip to be destroyed because 'otherwise we cannot achieve peace'.

The crap that comes out of the political scene is sheer unbelievable; enslaving the Palestines via even lesser military means is so stupid, only guys like Dubya or Tony can dream that up.    

The only way forward is putting up much more pressure on Israel, economical sanctions could be handy to bring the military imbalance down. Remember the South African apartheid regime; it took a long run but in the end economical sanctions there worked. 

For the time being it is a good thing there are three hour long cease fires to get food and water in. 

For the time being I advised a third intifada only to be there until the 1000 threshold is taken, of course the Palestine people have to decide for themselves...   

Item 2) Joseph Goebbels on the year 2000; the iron curtain & stuff like that.  

For a few decades it is one of my hobby's to study war, of course like most of my generation I started with World War II. Until the present years I never studied Joseph Goebbels but lately I try to read at least one file from that relatively smart guy.

What I miss is in how far Joseph was aware of the actual situation in the concentration camps and how rough the stuff was on the Russian population like we had in the Stalingrad and Leningrad sieges. 

Again, here is the index and this is the (source) quote from Joseph Goebbels on the year 2000:

No one can predict the distant future, but there are some facts and possibilities that are clear over the coming fifty years. For example, none of the three enemy statesmen who developed this brilliant plan will still be alive, England will have at most 20 million inhabitants, our children's children will have had children, and that the events of this war will have sunk into myth. One can also predict with a high degree of certainty that Europe will be a united continent in the year 2000. One will fly from Berlin to Paris for breakfast in fifteen minutes, and our most modern weapons will be seen as antiques, and much more. Germany, however, will still be under military occupation according to the plans of the Yalta Conference, and the English and Americans will be training its people in democracy. How empty the brains of these three charlatans must be — at least in the case of two of them!

The third, Stalin, follows much more far-reaching goals than his two comrades. He certainly does not plan to announce them publicly, but he and his 200 million slaves will fight bitterly and toughly for them. He sees the world differently than do those plutocratic brains. He sees a future in which the entire world is subjected to the dictatorship of the Moscow Internationale, which means the Kremlin. His dream may seem fantastic and absurd, but if we Germans do not stop him, it will undoubtedly become reality. That will happen as follows: If the German people lay down their weapons, the Soviets, according to the agreement between Roosevelt, Churchill and Stalin, would occupy all of East and Southeast Europe along with the greater part of the Reich. An iron curtain would fall over this enormous territory controlled by the Soviet Union, behind which nations would be slaughtered. 

Comment: Not bad, we see Joseph is not the dumbest from the previous century.
For myself speaking I do not have a clue whatsoever as what will happen in the years 2060 to 2070.
From the military, political or economical point of view I simply don't know.
If my knowledge is correct, climate change will be far more large because the oceans will transform far more then we know; if the climate truly starts heating the oceans will release the carbon dioxide stored within giving rise to a 'doom and gloom' scenario. 

Till updates. 

(06 Jan 2009) And, boring boring, another five items:

Item 1) Congratulations Israel: Only 3 UN schools shelled.
Item 2) Video: Shilling says US housing another 20% to fall.
Item 3) Estimate earnings for the S&P 500 (real funny).
Item 4) The US Federal Reserve minutes; again only blah blah stuff.
Item 5) The empty item. 

Item 1) Congratulations Israel: Only 3 UN schools shelled.

Congratulations: 3 UN schools shelled, that is a remarkable achievement!

For me it is strange to observe how much similarities there are with World War II, only the Israelis are this time in the role of the fascists.  

A very important detail in this is the Israeli 'superiority complex' as reflected in the death ratio's. Another important detail is the official propaganda from the Israeli government, for example when asked on the 'proportionality' of the attacks the Israeli pm answered (as on CNN television, so I have no source file):

What is proportionality? When the Hamas attacks a school, should we respond by attacking one school? That is proportionality, we don't do that. 

Comment: Indeed the Israelis don't do that, they shell 3 schools instead... 

From the military point of view it is also weird; it might very well be true that the Hamas lobbed a few mortar grenades, but why aim your tank fire at UN schools?

At best this is utter amateur behavior from the IDF, at worst these are plain war crimes. As usual there will be 'investigations' and just as usual we will never hear from it again.

A CNN link:

Israel: Hamas mortars prompted attack near U.N. school

Comment: The whole problem is that the Israelis simply have lost all credibility, only when there is solid proof of Hamas mortars we could believe it is only amateur behavior from the IDF. For the time being the working hypothesis is that war crimes are committed, I don't say the Israeli government orders for stuff like that but it smells like war crimes. 

There are much more similarities with World War II, but lets leave it with that.  

Item 2) Video: Shilling says US housing another 20% to fall.

Now gheesh gheesh gheesh; for over one year (about 14 months) I am constantly telling that US family house prices will fall about 50% from the mid 2006 high.
Price tag: Only about ten trillion US$ 

On tech ticker there was a guy named Shilling who stated that from the present levels US house prices will fall another 20%. If we add a few years of inflation Shilling is standing at about 46% decline from the mid 2006 top.


Shilling thinks the house inventory is the main culprit, he forgets that in the science of economics everything is related and cause and effect often change role. 

At the end of the video Shilling says that at the end of the house price decline about 50% of US home owners will be under water in relation to the height of their mortgages, this is in line with my own estimations. 

Item 3) Estimate earnings for the S&P 500 (real funny).

We all know that the Americans think they have the greatest economy in the world, in fact it is a house of cards with almost no industrial base any more. They live on borrowed time, on borrowed money and they borrow from the world reserve status of the US dollar. 

On Barry's hangout I found a nice file with S&P 500 earnings estimations, let me give you a nice (source) quote: 

On a trailing one-year basis, that puts the Price to Earnings Ratio (P/E) at over 19 as of today. This does not make the market cheap. 


The current projections are for $42.26 for 2009. That makes the forward P/E 22. That doesn’t look like value at all, when the historical average is closer to 15.

In 2001, as-reported earnings were $24.67. Operating earnings in 2002 were $27.57. Does anyone think the current recession will be milder than the last one? Or shorter?  

Comment: There are more estimations out there but all Price to Earnings ratio's hang above long term P/E ratio. That makes clear US stocks are still far too expensive and it is also very beautiful: It proofs the US belief in having a 'superior economy' is still there.
In fact they only have a flexible labor force because of the lack of social security so large parts of the labor force are working under their real level... 

In the picture below these are the earnings per 'average share' on the S&P 500. 


Item 4) The US Federal Reserve minutes; again only blah blah stuff.

So often I have argued that the absolute amounts of debt in the USA are the real problem relative to the US gross domestic product. 

For example the total amount of debt that the total US financial sector has is far above the US GDP and the problem is as next:

---Routinely this debt grows a large multiple compared to GDP growth.
---The debt has to be paid via the profits of the financial sector.
---For a long time the total interest obligations are far above the total profits of the US financial sector.  

Again, for the 384 time or so, just look in the one before last column in the next link (if European pension fund managers do not withdraw investments from the USA they are too dumb to have their job):   

It's 17 trillion of debt for a shrinking sector & what do the dumb European pension fund managers do? They talk about 'economy stimulus packages' and what that has to do with their 'investment strategy'. That is dumb as dumb can be... 

Not only the European pension fund managers are dumb, the Central Bankers from the Federal Reserve are dumb too. Here are their latest minutes and once more they avoid the subject of absolute debt levels compared to absolute profit levels, just read it and you see only people loosing themselves in details that are important but they avoid the real stuff.

Why this is I don't know, it only validates you cannot trust Central Bankers.  

Item 5) The empty item.  

One more empty item, you can use your own brain or enjoy the next insights from Joseph: 

Morale as a Decisive Factor in War 

Yes, morale as a decisive factor in war;

Once more I would like to congratulate the Israelis with shelling 3 UN schools! 

Keep up the great works! Once more: 


 Title: What is the difference?

Till updates.

(05 Jan 2009) Today's package of five items:

Item 1) And the (only) goal is....: Stopping Hamas rockets.
Item 2) International law and the right of self defense.
Item 3) Is it true that Palestine civilians are spared as much as possible?
Item 4) More on the Value at Risk model.
Item 5) The empty item.

Item 1) And the (only) goal is....: Stopping Hamas rockets.

For two days on a row it is constantly reported that the only goal is stopping rockets coming from the Gaza strip. 

So no more wiping out the entire Hamas, but only stopping rockets... 

Lets do a little experiment of thought; how could the Israelis achieve this via military means? After my humble opinion this can only be done via carpet bombing; one time from the North to the South and a second round from the South to the North.
Since there are also rockets stored underground; the carpet bombing has to reach about 10 feet deep in order to achieve this goal of 'stopping the rockets'. 

Anything less will not stop rockets from the Gaza strip to land claimed by the Israelis but that ownership is a little bit in dispute since it was taken after the six day war & the likes.

Item 2) International law and the right of self defense.

From pro Israeli folks like the US White House we constantly hear that the Israelis have a right to self defense. But under international law, is that true? 

The land was stolen, there are all kinds of Israeli settlements (read lebensraum) and I do not have a clue to be honest. Is it really true that the Israelis have a right to self defense? 

For the time being I still doubt this; the international law folks have never showed some kind of rigid proof to this. We only have US White House rhetoric on this, but the White House is a 'neglectable quantity' by now. 

Item 3) Is it true that Palestine civilians are spared as much as possible?

Like said before: With war always comes rhetoric, propaganda and the projection of 'evil attributions' on the perceived enemy.

What I forgot to remark, there is always also projection of 'good attributions' on the own leaders and the own military force.

And so there is a large stream of statements that 'civilian casualties' are always avoided 'at all costs'.

For example they tell us that the Israeli army even takes a lot of time to decide to shoot what window in a building in order to avoid civilians killed below.

For example they tell us that the peace loving Israeli military makes a lot of phone calls to the people inside a particular Palestine building before it comes under attack.

Stuff like that is needed to keep the pro Israelis on the pro Israeli side; this has nothing to do with vague 'conspiracy theories', it is simply a by product of the human brain during times of war. (The 'we are good & they are evil' kind of stuff.)    

To put an end to all this crap, just look at the pictures below. When you see this kind of artillery shell in action on the television it is even more impressive...

I have never seen a shell like this before; it is not a cluster bomb but it is definitely an area weapon. And hence; all that talk of sparing civilians is only utter crap.

Just look on CNN; every now and then these 'civilian sparing' shells come along!  


I am sorry for the 'getty images' stuff, but it was too time consuming to collect logo free pictures when getty images had it all.

Don't forget: This is an indiscriminate area weapon & can the Israelis please stop all that crap of 'we try to spare civilians'? Just please?  

Item 4) More on the Value at Risk model.

Sometimes a war has many fronts while at other times one front is used for many wars. 

For me poking fun at the Value at Risk model (the VaR model) as used by the financial companies is just one of the many fronts in the war against the present military axioms.

Facts are facts and in the 'over the counter' markets there are about 600 trillion US$ in so called 'nominal value' derivative contracts. The people that buy and sell stuff like that cannot calculate the value of such contracts with only a pencil and paper, they need computer programs and simply do what the program tells them to do...

In general they cannot solve stochastic differential equations; they do not understand the math to crack the stuff.

Look in the next link on page three:  

Doesn't it clearly say the banks only post collateral against the net positions of these multi trillion jokes?

Doesn't that clearly proof the banks still don't understand how to handle risk? With every contract they should put up collateral and not on the net position of a large number of trades?

The lady from naked capitalism lately put it so nice in words:

In market conditions like this everything gets correlated.

That is a wise insight, others argue that the VaR model is like and air bag in a car that works perfectly every day except when you have a car accident. 

That is also true, the VaR model uses some matrix of covariances but inside the matrix is only knowledge of the 'accident free' ride until now.

Conclusion: Until now banks still do not understand their own business!

Item 5) The empty item. 

This item is empty; just as empty as the Israeli propaganda upon 'avoiding killed civilians' is.

In case that is not empty enough for you, you can read the next wise words from a master of propaganda named Joseph Goebbles (source), quote:   

As the Jews first appeared several weeks ago on the streets of Berlin graced with their Jewish star, the initial reaction of the citizens of the Reich capital was surprise. Only a few knew that there were still so many Jews in Berlin. Everyone suddenly found someone in the neighborhood who seemed like a harmless fellow citizen, who perhaps complained or criticized a bit more than normal, and whom no one had thought to be a Jew. He had concealed himself, mimicked his surroundings, adopting the color of the background, adjusted to the environment, in order to wait for the proper moment. Who among us had any idea that the enemy was beside him, that a silent or clever auditor was attending to conversations on the street, in the subway, or in the lines outside cigarette shops? There are Jews one cannot recognize by external signs. These are the most dangerous. It always happens that when we take some measure against the Jews, English or American newspapers report it the next day. Even today the Jews still have secret connections to our enemies abroad and use these not only in their own cause, but in all military matters of the Reich as well. The enemy is in our midst. What makes more sense than to at least make this plainly visible to our citizens? 

Comment: It is a bit naughty from me to post the above stuff, but propaganda has to be fought with propaganda... By the way; is there a dress code today inside Israel to separate the 'true Zionists' from the 'lesser ones'? 

Till updates. 

(04 Jan 2009) Today I was just so tired, so tired of all that weird reasoning from pro Israel political folks. It is really no secret my vote goes to the Palestine people (because they are the ones who's land is stolen) and so I am very willing to listen to arguments from pro Israeli folks.

All I hear is rubbish, all I hear is crap.

War is in the air: All folks who otherwise only use logic now only craft logic from their emotions. I get so tired from the New York major Bloomberg stating that Hamas is like a 'madman knocking on the door', I get tired of that Israeli pm stating that 'all cross boards are open, now even more than in the past'.  

I am sorry: From the pro Israeli side not one valid argument was observed, these folks seem to be lost in a strange forest of landgrabs for free. 

The Palestine folks contributed a nice extrapolation: 

About 3000 dead or wounded on a population of 1.5 million compares to:
About 600 thousand dead or wounded if the population would be 300 million... 

Of course the pro Israeli Bloomberg idiot will never be capable of making such an extrapolation; the guy that founded bloomberg dot com cannot add one and one when it comes to Israel.


Since the present military powers have no interest in other formats for war & the international regulation of war, it cheered me up that Barry had a nice file on future pentagon finance. 

Source link:  

Source quote: 

The 5 years of combat we have had has aged equipment 16-20 years and acquisition programs cannot keep pace and they are unfunded at even that level. For example HUMVEES were programmed for 8000 miles per year. The current inventory in the past 5 years has surpassed the 20 year life of the vehicle (i.e. the average is in excess of 150,000 miles). The vehicles replacement is due in 2014, but is expected to slip to 2018.

Conclusion: What the next administration does with regard to force structure and force missions will have a significant impact well beyond the 4 or 8 years that they will serve. DOD needs to be an active player in that discussion and each Service needs to make significant adjustment immediately. 

Comment: Nice to observe even the HUMVEES lack funding...

On Barry's file another source file was mentioned:  

And from slide number 32 we have the next screenshot: 


Comment: It is very seldom and extremely rare to observe 'pro Democrat' and 'pro nigger' comments from the US military. But if you understand the funding of the US military a little bit it even makes sense.
There is only a little problem unsolved: Every body thinks Obama is such a smart guy but Obama thinks one trillion more debt in the form of a 'stimulus package' will repair the US economy.
It remains to be seen if that is correct (in fact it is nonsense; economical stimuli only work from savings but the USA has no savings beside belly fat). 

Lets leave it with that; 

Till updates. 

(03 Jan 2009) Like expected the ground war against the Gaza strip has started, so all I can do is wish the Palestines good luck:

Think well, fight well & hopefully live well afterwards. 

It is interesting to see what the actual objectives (the goals) are, it looks like the Israeli political leadership is a bit confused on that. Depending on who says it, it varies from wiping out the entire Hamas to only stopping the rockets.

When the objectives of the Lebanon invasion were simply not met, the Israelis still declared 'victory' after that adventure. The Israeli political leadership only made big fools of themselves declaring victory; just remember those investigations about what went wrong & stuff like that: Olmert micro managing the war from his 'war room' and laughable stuff like that.  

From the White House we have a tremendous good insight from US prez Dubya about ever lasting peace to come (source), quote:

President George Bush said in his weekly radio address that Hamas must take the initiative to end the fighting by halting its rocket fire into Israel.

Comment: As so often with Dubya, it is just to plain stupid to make even one comment on it. But it is interesting to observe that after 8 years of taking zero initiative by the White House, it is the Hamas that is supposed to take the initiative.

On the television I observed the Hezbollah leader calling for a third intifada; that is good news but I stay with my advice to wait until Palestine death toll stands above one thousand. Of course a third intifada has to be effective and I truly hope the Hezbollah and also Iran throw in some big coins too.

Iran must not forget they were the main target all these years... 

Beside this the Fatah is stating they want to fight together with the Hamas (source), quote:

In a Saturday interview with Press TV, the faction's spokesman, Abdullah Abdullah said that the group would support Hamas fighters in case Israel launched a ground incursion into the coastal sliver. 

"We are standing solidly behind all our resistance movements from various factions in Gaza. We are taking part and we are a sizeable presence in Gaza. This ground invasion must be destroyed," he said. 

"We are calling on all our members in Gaza to get back their weapons that was confiscated from them so they would be able to join publicly and openly not only relying on whatever pieces of weapon that we have which is not that effective," he added.  

Comment: Of course the Hamas has to decide for themselves, but it is not the strangest of ideas to hand back some weapons.

That's it for the time being, think well & fight well me dear Palestine people...


Till updates. 

(30 Dec 2008) Five items:

Item 1) Israel: A nation of whiners?
Item 2) Case Shiller housing fun: Another 5+ trillion to go...
Item 3) WP on AIG: The beautiful machine.
Item 4) Wall Street gains as GMAC gets financing.
Item 5) The empty item. 

Item 1) Israel: A nation of whiners?

At a first glimpse it looks a bit strange; the Jews as a cultural and religious group are supposed to have lost up to six million people in World War II. So you might expect the survivors having some backbone and most of all: some better insight in social and political processes.

But today with every interview I did see on the television, there was only confirmation that they are only a nation of whiners. All we miss is that living near the Gaza strip is 'just as bad' as Buchenwald or the likes.

A point completely missed by these whiners is the fact that they live on the land stolen in the landgrab from after the six day war, with that come some costs you might think. So not the Israelis, they want the Palestines to rubber stamp the theft of land.  

Generally speaking with war come always at least the next things:
Rhetoric, propaganda and lots of 'evil projections'.
Evil projections is the process of contributing criminal and evil behavior to the perceived enemy. 

Let me give you an example of 'evil projection' I observed today:

The Hamas are double criminal because not only did they build their 'power structure' (police stations and stuff like that) inside the population, they also hide amongst the population.

This is so fucking stupid; as if the Israeli police stations are always far out of towns and villages and as if Israeli military folks were never to be found inside civil area's.
You see: This is a clear case of dumb whining.   

Another example that the Israeli whiners constantly pop up:
The Hamas fires rockets at civilian populations with the intend of  killing them. 

This is so utterly dumb; would the Israelis allow the Hamas having the latest GPS rocket technology so they can pinpoint on military installations?

I am very sorry; but the entire Israel is only a whiner nation at best.  

Item 2) Case Shiller housing fun: Another 5+ trillion to go...

Today the Oct 2008 Case Shiller house value index came out; it proofs that we are still not halfway the decline in US family house prices because the speed of the price decline is still accelerating. 

As far as I know reality, the graph below is not adjusted for inflation (click on the picture for a larger version):


The most stupid statement I observed today on the business channels was as next:

"At the moment house prices bottom out in decline the stock markets will boom, there is a whole lot of money sitting on the sidelines waiting for this to happen."

I will not deny there is still plenty of fake money backed by nothing sitting on the sidelines, but the second leg of the house price decline will bring much more havoc to the economy. Let me name only one:

Compared to the first half, in the second half much much more mortgages will go under water driving up foreclosures and thus the unsold house inventory.

When about one year ago I calculated (or estimated) that overall US house prices will decline from the top in mid 2006 by something like 50%, I was thinking a lot of Americans could do the simple to understand calculations too...

Until now this is a bridge to far for the average US analyst, but on a website named clusterstock we have at least this (source) quote:

House prices plunged again in October, with the rate of year-over-year decline accelerating to a new record high of 19%. The peak-to-trough decline in the Case Shiller 10-city index is now 25%; the 20-city index is down 23%. (Full release below).

We still occasionally hear folks predicting that the overall house-price decline might be on the order of 20% or so--or maybe 25%, tops. Might be time to adjust those forecasts. Given the current rate of decline and the fact that house prices still have yet to reach their long-term historical average relative to incomes and rents, we remain comfortable with our prediction of a 35%-40% total decline. Unless the rate of price decline moderates soon, this could even prove conservative. 

Comment: My estimation of a 50% decline was also a conservative estimate based only on the Case Shiller index and the development of median income in the period 1996 - 2006. We will see in the future who is the better analyst my dear clusterstock folks!   

All in all: there is still over 5 trillion US$ to go before reality will set in on the average US home owner... 

Item 3) WP on AIG: The beautiful machine.

The next two links are both a long read, the more you know on haute finance the more fun you will have when reading it. Never hand out nukes in kindergarten to play with my dear fellow scientists! 

The Washington Post has done a good job in this! (Yes, it is not all crap that is coming from the USA...) Links: 

The Beautiful Machine 

A Crack in The System 

These are both five page readings... Have fun! 

Item 4) Wall Street gains as GMAC gets financing.

Today the DOW Jones was up over 2%, you can think of a wide array of reasons as why this should be, but on Yahoo finance it was so cute in it's dumbness...
They think you can 'short cut' the recession (source) quote: 

NEW YORK (AP) -- Wall Street staged a big advance in the next to last session of 2008 Tuesday after Washington's latest lifeline to the auto industry bolstered hopes that the government will do whatever is necessary to cut short the recession. 

Comment: This is so stupid I just cannot comment on it. 

Item 5) The empty item.  

Empty empty empty: Is Israel truly a nation of whiners? Are they truly smart at Yahoo finance? When will US house prices bottom out? How much US dollars are coming from the printing machine & how much comes from rock solid US government bonds? 

I hope this item is empty enough for you! 

Till updates. 

(29 Dec 2008) Just two items:

Item 1) Palestine equation: 2 Israelis dead and guess what?
Item 2) The most stupid predictions for 2008. 

Item 1) Palestine equation: 2 Israelis dead and guess what?

For a relatively long time it is more or less constantly in the news: In Southern Israel they live in constant fear because of the rockets coming from the Gaza strip. 

Yes you read that right: They live in constant fear...
In traffic large multiples of death and wounded are there but the Israelis do not fear traffic but the occasional rocket from the Gaza strip is the deepest of horrors for those tar souls... 

A far more down to earth explanation for the military actions is the fact the Israelis cannot attack Iran in the end days of the US Dubya regime, so with the impending Israeli elections it looks logical that the present Israeli government is appeasing the right wing 'blut und boden' part of the Israeli political spectrum.

Lets prop 60 years of history into a nutshell:

--After World War II and with the wisdom of hindsight, the international community made a big fault by allowing an Israeli state. They thought it would do just to the Jews and for the rest they did not think that much.
--We had the 'six day war', the Israelis won rather good and conquered lots of new land.
--Since that time the Israelis try to force the Palestines to recognize the landgrab as being the 'new borders'. That policy has not worked for over 40 years but the Jews do not bother about a few decades more or less.   

So far for 'history in a nutshell'. 

Lets put the present days in a nutshell too:

--Some Hamas leaders have spoken about a third intifada.
--The Lebanon Hezbollah spoke words like 'We are ready'.
-- Does Iran understand they were number one on the Israeli wishlist?

What can I say?

I think a multi year third intifada could be wise, but better wait for the death toll standing above one thousand. When there are over one thousand Palestines killed compared to just a hand full of Israelis, it is clear who are the fascists and who are not.

Like said before: I hope that there are more nations willing to help and in case the Hezbollah can lob a few rockets I only hope the rest of the Lebanese will not act as 'girlie men' on that small detail.

Iran could lob a few things too, if the Iraqi political leaders refuse help to the USA & Israel there could hardly be any problem. After all, the Israelis tried for years to get some military action against Iran so this is only 'protecting our borders'.   

So far for the military stuff for this day. 

Item 2) The most stupid predictions for 2008.  

Beside military stuff there is also financial stuff. 

Financial stuff is lovely stuff because it rams away the financial footing of 50% of the entire world defense budget. 

Let me recall it once more: 

After my humble calculations as drawn from the US Federal Reserve files in Nov 2007, the US financial sector needed about 2.5 trillion or 2500 billion US$ in order to do 'business as usual'.

Of course such an amount of new debt would not be available and so it was rather logical that there would be a tidal wave of bankruptcies. That was what I understood and that was what I made of the files of the US Federal Reserve.

How did the Federal Reserve sail on this detail?

Let me quote from a 28 Feb 2008 file where the wisdom of US Federal Reserve chairman Ben Bernanke is exposed (source) quote:

"I expect there will be some failures," Bernanke told the Senate Banking Committee, referring to smaller regional banks who became heavily invested in real estate.

"Among the largest banks, the capital ratios remain good and I don't anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system," he said in response to a question during semi-annual congressional testimony.

Bernanke's remarks hit U.S stocks, pushing losses on the Dow Jones Industrial Average .DJI to around 1 percent.

Big U.S. banks have already raised billions of dollars of fresh capital to make good on losses on subprime mortgages, often by tapping foreign investors. Bernanke said that he hoped this trend would continue in order to bolster lending.

"They have already sought something of the order of $75 billion of capital in the last quarter. I would like to see them get more," Bernanke said. 

Comment: In Nov 2007 I understood it would be different, until now I have not observed only one quote from Ben that shows he understands the real troubles. That is amazing but it is also a fact. Just like Alan Greenspan this is just another idiot, by the way: What US administration appointed this guy?   

Barry made a short list with files like this:

Worst Predictions for 2008  

Till updates. 

(28 Dec 2008) Since we now had the most bloody days in the 60 year Palestine equation and since the most mighty political and military forces try to shine a light on their insights in this all; why not look at rhetoric & propaganda?
After that we look at 'how to measure' reality via chaotic media files.

Lets start with:


What is rhetoric?

The dictionary says it is 'hollow bombast' but what does that mean?

An important example of rhetoric is found in all those years where US political leaders declared that the 'economic fundamentals are strong'. They never explained, journalists routinely never asked and indeed it was nation wide hollow bombast.

Another fine example is Ben Bernanke stating in 2005 or 2006 that the high US house prices 'are merely a reflection of a strong economy'. Hollow bombast means more or less hollow & dumb (merely reflecting real insight is lacking).  


What is propaganda?

It is the same as rhetoric in the sense it is hollow, but it is crafted by smart people. Another important characteristic is that the propaganda writer is capable of playing with the emotion of the public.

In some corners of this planet it is well known a German guy named Joseph (what's in a name) Goebbels was very good in writing that stuff.

In case you have never read it, here is a nice collection of that stuff.

From one of the files of that collection (I have chosen a part of 'unser Hitler' from the year 1945) let me (source) quote:    

Is there a single German who disagrees? After six years of battle, could our people debase itself so low as to forget honor and duty, surrendering in the turmoil of the moment its holy and inalienable right to its great coming life for a pot of soup? Who would dare suggest that? Who holds us in such contempt that he believes that now, just as we stand before the final and decisive round of the war, we would be untrue to all our sworn ideals, that we would throw all our hopes for the future of our Reich overboard, giving up in the midst of the confusion of misfortune that has overcome us on ourselves, our land and people and the lives of our children and children's children? 

Comment: Will you give up your Holy land for a pot of soup?
Playing with emotion is an integral part of good propaganda.
You can overplay or underplay the emotional thing; for example the Israelis explain that they are forced to kill up to 300 Palestines in just two days because 'they give us no other choice'. (With 'no other choice' they mean there are a few Israelis with a broken finger nail or so.) 

Next item:

How to measure reality?

Of course anyone can do the Google thing and so can I.

From CNN I have selected the next source file:

Gaza humanitarian plight 'disastrous,' U.N. official says   

Lets quote (source):

"Long, long lists of drugs and other medical supplies which in the U.S. would be considered standard in any hospital -- they're just not available in Gaza," he said. "When people have been turning up for treatment following this massive attack, they are simply being turned away. If you've got things like shattered limbs, broken arms, broken legs, feet blown off, that kind of thing, you're simply not being seen. If you've got very light injuries and you need bandages or aspirins, you'll get seen."

The United Nations Security Council held a four-hour emergency meeting early Sunday on the situation, ending with a call for an immediate halt to violence. The council also called for a reopening of border crossings to allow humanitarian supplies to reach those in Gaza.  

Comment: This is nicely in line with the hospital pictures as shown, for example, on CNN. Where is all the real stuff?
Beside this, I almost know nothing of international law, but for so long withholding elementary medical supplies to the Gaza strip, does that not fall under some 'crime chapter' or so?
It is well known: for a long long time the Israelis are choking the Palestines with the silent support of the Dubya regime.
And international law? It stays silent and the cowards whisper 'God thank we have Obama'.  

Till updates. 

(27 Dec 2008, temporary update) Only yesterday I published the next paradigm shift: When I am through with the Pentagon, I will go after the Israeli IDF & I hope a few nations will help me with that.

Only today the IDF started doing her thing, latest reports are about 190 killed Palestines, as usual the killed children are 'regrettable' because they were not 'the targets'. 

This update is for the IDF only and I would like to keep emotion out; lets look at some easy to understand statistics to understand who is the aggressor and who is not. 

During the second intifada in the long run there were only about two or three killed Palestines for every killed Israeli.

The second intifada ended and overall killed numbers declined, but as far as memory serves, in the last year the ratio of Palestines killed to Israelis stood at a strange 13:1.
So during 'peace time' 13 Palestines died for every Israeli...
(I don't have the source files after so long, sorry.) 

So beside all that rhetoric from the political folks, the IDF is allowed to ponder the question who are the peace doves and who are the true aggressors?  

The numbers don't lie my dear IDF: From a ratio of 2:1 to 13:1 it is not in your benefit. 

Lets leave the IDF with that and enjoy some perfect Joseph Goebbles propaganda (source):

* Israeli Foreign Minister Tzipi Livni, who hopes to defeat right-wing hawks to become prime minister in an election in February, has said the rule of Hamas in Gaza must be ended because the Islamists will never make peace with Israel. 

Comment: Please my dear political leaders, please leave all emotion out only to observe Joseph Goebbles would be proud with propaganda like that. Reasoning like that is nonsense reasoning, as if the problems started with the Hamas...
No, this kind of logic is only 'Joseph Goebbles' logic; the Israeli political leaders are invited to cough up some better stuff!

Again: leave that stupid emotion out please. Till updates.

(26 Dec 2008) So the Christmas days are over, yesterday during some family visits I was even forced to watch a movie named 'Lord of the Rings'. Now wow that was some revelation; there was an old guy with white hair and a white beard riding on a white horse and every time you needed a new army the guy simply pops it up!

His name was Gandalph or so, I think we should ask him to become the next Dutch minister of defense. We might have NATO membership but because we are such a small nation it is not unwise to prop up some other armies when this is needed!

Yet serious, lets look at a few items: 

Item 1) Macro Man on US household wealth decline.
Item 2) The fairy tale of deleveraging.
Item 3) Madoff scandal counter: 36 billion & counting.
Item 4) Jesse on more Ponzi schemes.
Item 5) The empty item. 

Item 1) Macro Man on US household wealth decline.

Via Macro Man the next nice graph was found, since it comes from the Macro Man I simply trust it without any verification whatsoever.

The timescale of the graph is 55 years and depicted is year on year US household wealth growth (or as lately wealth decline), it is obvious you have to subtract inflation from it...

At the right of the graph you see that year on year wealth decline is over minus 10%, that amounts to six trillion US$ a year and it will only get worse.

Click on the pic for a larger version:  


It will only get worse, I can promise you that! 

Item 2) The fairy tale of deleveraging.

Even folks that normally have their stuff on order sometimes fall in the trap:

US and European banks are supposed to be in a process of down leveraging.

For example the girl from naked capitalism lately said between nose and lips: Former investment bank XYZ has deleveraged from 30 to 11 just like a normal commercial bank.

Lets poke a bit of fun:

There are many ways to measure leverage, one of my favorites is total assets divided by total market cap. Suppose a bank stands at 30 with this kind of leverage & all other banks are 'deleveraging' too. So they can only sell at, lets say 70 cents on the dollar.    

Suppose one of those investment banks goes from 30 to 29 in a particular Quarter, so they sell one entire market cap in assets at 70 cents on the dollar.
The brave folks report (lets say stock stands at 10 US$) a 3 dollar loss for every stock... 

And this for a leverage of going down from 30 to 29.

Of course in the USA, often on channels like CNBC, they parade these guys that state that banks 'are in the process of deleverage'. It's a fairy tale, just like most of the other fairy tales coming from CNBC & the likes.

You must not forget that the goal of getting rid of this leverage is to bring down the debt these banks have, so lets look at a nice screenshot from the US St. Louis Federal Reserve:


You see: there is no credit crisis for the US commercial banks, they can get plenty of credit... 

There is absolutely no decline in leverage; welcome in the leveraged fairy tale world of CNBC (where they never show you difficult to understand graphs of course). 

Item 3) Madoff scandal counter: 36 billion & counting.

Bloomberg has the latest tally on the Madoff Ponzi thing: 36 billion US$ & counting. 


Madoff’s Investors Had About $36 Billion With Firm: Table  

The good thing about the Madoff pyramid game is the fist in the face of a lot of rich folks. It gets really funny when you scroll down the table to observe that the Madoff Family Foundation has also lost 19 million US$... 

It makes you wonder: Are there even bigger non government Ponzi schemes out there? 

Item 4) Jesse on more Ponzi schemes.

The last updates from Jesse (from the CaféRoadCrossingStuff) suggest he is after bigger Ponzi schemes like the US government bonds (how to pay that back) or the stuff in the commodity markets (I have written about that before, but strangely the commodities do their thing in protection for the developing nations).

A few links from Jesse: 

The CFTC Is Failing to Regulate Commodity Market Ponzi Schemes 

Ponzi Nation 

Comment: As usual the European pension funds will not act on stuff like this, the idiots still don't understand US government bonds are not the most wise investment, let alone all that other weird US finance stuff. 

For example the index of future payouts of the Dutch pension funds stood a long time above 110, now it stands at 85 or so.

Since after all these years I am still unemployed, suppose what would happen if I would send a letter for 'do you have a job for me' to one of those local pension funds? Very simple: 'We do not need your qualifications'.

For me this is fun, let the mental dwarfs do their thing...   

Item 5) The empty item.  

Only emptiness;

To the Israelis: I am not satisfied about the way you behaved towards the democratically chosen Hamas government of the Palestines.
From the democratic viewpoint you simply made 'eternal sin' so after I am through with the Pentagon, after waiting so long to write it down:

You are next on my shortlist.

(Lets hope I will get some serious support from the neighboring nations, I don't count on it but I hope for it.)


Till updates.  

(22 Dec 2008) The five items of today:

Item 1) Bad news: The VIX panic indicator is declining.
Item 2) Good news: Toyota reporting trouble for the first time in 71 years.
Item 3) Tech ticker: Madoff puts the noose on Fund of Funds.
Item 4) More on Benford's law.
Item 5) The empty item: scorpions in your mouth. 

Item 1) Bad news: The VIX panic indicator is declining.

Indeed as every one might have noticed, the volatility in the stock markets is going down. No matter how much bad economical news is there, the markets hardly react to the news.

Of course there is a wide array of explanations about why this is, some say that investors are beaten so heavily they just don't react to the news like a boxer that is going down. Others say this is a clear proof of a bottom in the markets so after this everything will be normal again & predict gigantic booms.  

VIX is now down to about 40, what a pity. Shall I throw in another bombshell or wait for next year? Of course I wait for next year, a 'good start' of the year is always important... 

Some quote (source):

Prior to the credit crisis this year, a VIX above 30 suggested a high level of volatility, and 40 was indicative of a sharp recession.

But with the collapse of the credit markets and the ubiquity of options trading, the VIX soared past 80 at one point in the crisis, suggesting to some that the gauge is not as reliable as it once was--or at least that a paradigm shift has occurred and 80 may be the new 40.  

Comment: No comment. 

Item 2) Good news: Toyota reporting trouble for the first time in 71 years.

Just last Friday the White House gave the green light to the first rescue loans for the US automobile industry. And just a few days later the supposedly best car maker in the world, Toyota, gave it's second profit warning in just a few weeks.  

No link, no quote given. 

I only want to remind the dumb debt huggers from the White house to the situation just a few years ago:

On a massive scale the US car makers started offering loans to US consumers, so beside cars the car manufacturers sold loans for these cars...
Industry observers often stated that with this the entire US auto industry had revitalized itself and other industries should take an example of that.  

As usual the debt huggers from the White house did not understand what was happening... Year in year out they reported 'fantastic fundamentals' of the US economy while of course forgetting to mention what these fundamentals actually were... 

Item 3) Tech ticker: Madoff puts the noose on Fund of Funds.

Another fundamentally fantastic industry in the USA is the hedge fund industry, these are so called 'smart investors' and compared to other economies the Americans seem to be much smarter. 

Beside normal hedge funds there are also 'fund of funds' around, of course these are even more smart because they have much more diversified portfolio's. 

On tech ticker they poke a little fun on those mental dwarfs in relation to the 50 billion US$ ponzi scheme from monsieur Madoff: 

Madoff Scheme Tightens Noose on Fund of Funds 

Item 4) More on Benford's law.

This is for my colleagues in math only: 

In the previous update from two days ago I suggested four uniform distributions in the exponent and if you generalize that a bit it is reasonable you can solve most 'Benford like' questions inside finance or physics. 

But I felt challenged into identifying the characteristics of all distributions that give rise to Benford's law.

Please remark that when you draw a number from a Benford distribution the probability that the number starts with the digits abcd is log(1 + 1/abcd).

There is a 'fundamental solution' that covers the entire real line:

Let Xn have a uniform distribution on the interval [-n, n]       

If we use the 10 base decimal system of writing down numbers, Y := 10X for every n follows exactly Benford's law and all other base systems follow in the approximation. 

Little problem: When we take the limit of n going to infinity, the standard deviation follows suit. So for the time being there is no 'fundamental solution' for the entire real line.

It is only two days ago when I observed the possible scale of the problem, colleagues in math know it often takes 3 to 6 months to crack only the start of the solution, but I think that an important boundary condition is the next:

Theorem (no proof given, I have no proof):

Let Y have a Benford distribution, so in all base number systems with base m we have the starter digits abcd having probability 

logm(1 + 1/abcd) 

And we form the new variable X := logY (base is irrelevant),

Then the derivate of X is zero almost everywhere. 

Item 5) The empty item: scorpions in your mouth.  

According to the BBC: 

And in a shopping mall in Thailand, Nong Na sets a new world record by holding a scorpion in her mouth for over two minutes. 

Comment: Her mouth is empty, but why are her teeth that yellow? 


Till updates.

(20 Dec 2008) At first today I wanted to write a good rant against all those idiots that declare for the television that the deleveraging at the US banks is well underway & also a rant at all those media outlets that put it in their programs.

It is rather easy to proof this is not the case at all; may be 25 cents here and 50 cents there go from the balances, but that's it.

No, I decided to dig a bit deeper into the Benford's law because in a previous decade I have done my own calculations and never ever checked what the fellow colleagues have written on that detail.

I started at wikipedia:'s_law   

In the wikipedia article you can find a few good remarks that exponential growth will always give the simple Benford's law (the fact that in numbers from nature the leading digit d of a number will always have probability of log(1 + 1/d)). 

For the math less skilled but interested in how you can use Benford's law to detect financial fraud, a good starter might be this file from 1999:  

And the main dish of today is as next:

A few days back I already remarked that the likelihood of a number from nature starting with 911 is log(1 + 1/911) and my American colleague in math Theodore P. Hill published in 1995 an article with the title:  

A Statistical Derivation of the Significant Digit Law

We get what the title promises: A statistical derivation and not a analytical proof, so we have to eat a lot of complicated Borel sets and measures.
For me that was hard because I did not recall exactly what Borel sets were, but all in all this was not a bad article.

`Here is a nice starter result: 


Speaking for myself: I felt challenged to think about the criteria that give rise to Benford's law; what probability distributions do and what doesn't?

Identifying those who do is simple, just a few examples:

Let the stochast X have a uniform distribution on the next real intervals:

[0, 1]

[0, 2]

[0.5, 1.5]

[75, 125]

In each instance form the new stochast

Y = 10X 

In all cases there is perfect fit with the Benford law... 

Do you already see what you can do to the exponent distribution in order to preserve the Benford law? 

I hope, my fellow colleagues in math, you do! 

Till updates.   

(19 Dec 2008) Flip man, today I failed in finding one of those US economists to thrash. 

About an hour ago I thought 'Lets nail down one more US economist to the thrash bin' and so I went to the Cato dot org, in the past I have read very stupid publications from Cato and even some of the Central Bankers from the USA visit that organization sometimes.

Dumb as I was, only the second article looked like it could be from a thrashable economist.  

Little problem: The article was rather good, the insights offered were not of superior quality but it is a far cry from thrash. 

Here is the source file: 

The Credit Triangle 

Sometimes a picture paints a thousand words and sometimes one words paints a thousand pictures, lets look at the picture of the US credit triangle: 


Of course as a scientist I am always very skeptical, but if shadow stands at 14 trillion in assets with almost no reserves to cover damage to that vibrant 14 trillion, life could be worse...

Until now I only knew total shadow balances of the commercial banks more or less equaled their non shadow balances, if you add the investment banks the 14 trillion could be true. 

Completely new for me, quote: 

Banks and other financial institutions outside the US accept US dollar deposits, issue dollar-denominated debt and make dollar- denominated loans and investments. This segment does not hold reserves at the Fed and is more leveraged than its onshore counterparts.

At $39 trillion, it is large and important. Indeed, it plays a critical role in supplying credit (letters of credit) to those who engage in international trade. 

Comment: If this quote is true, this explains the troubles in international trade with the letters of credit. The letters of credit are century old bank practices and all reports until now only say these are cumbersome practices with a lot of work that bring almost no profits to commercial banks.
Again: if the quote is true I am beginning to understand why the letters of credit have become a hinder in international trade. 


One before last: The US gross domestic product is also like 14.5 trillion, just as the gross value in the upper layer of derivatives fun. The 'gross' value is what it costs to buy all these contracts, the nominal value is what it costs to pay for all of these if they were all 'in the money'.

Needless to say: 14.5 trillion is just 2.4% of 596 trillion, so a small ripple of just a few percent in the 596 trillion fantasy world wipes out an entire USA gross domestic product...  

Welcome to the world of Alan Greenspan and Jean Claude Trichet; folks like that are responsible for stuff like this.


At last: So I cannot trash Steve H. Hanke (a professor of applied economics) at the Hopkins university. 

The Hopkins university? Wasn't that university one of the roots of this file (about Iraqi so called excess death toll)? 

Not much of a miracle Steve is not trashable... 

Not much of a miracle... 

Till updates.  

(18 Dec 2008) Today I would like to look at an 'accountancy thing', so we have only one item & I can assure: You will find it a very boring item.

Sometimes companies who get into trouble find wisdom in placing future earnings on today's balances. These companies often argue that since the 'future earnings' are almost '100% sure', what's the problem of taking a small part of that on the present balance?

Not amazingly, accountants who have to sign for the health of the present balances sometimes have a little problem with that.

As a dual to placing future earnings on today's balances you can also place (more) present debt on the balances of the past.   

The 'accountancy' benefits are huge:

When you borrow today another billion US$ at, lets say 5% interest, you need to cough up 50 million a year to pay for the interest.

If you manage to place this loan not in this boring year 2008 but in 2003 you can show a 250 million US$ in profits to your accountant as long as that idiot is not aware of the fact you transported the present debt to the past.

I mean this form of time travel is very solid: The loan was made today so it is impossible that weasels in the past eat away only one buck from your 250 million in 'already paid' interest obligations. You place the 250 million in some other stuff, the accountant grabs the calculator and concludes: The figures add up.

If you understand the above, you can also understand why the US Federal Reserve is 'transporting debt to the past'. Enjoy the two updates to the last entry to the Nightmare files; 

13 Nov 2008: But is it fraud at the US FED level?  

Till updates. 

(16 Dec 2008) Five items:

Item 1) The answer to the comma question.
Item 2) The US Federal Reserve reaching to the whore rate of 0%.
Item 3) Dynamite fun in Paris.
Item 4) The Hamas turns 21 years of age; congratulations!
Item 5) The empty item. 

Item 1) The answer to the comma question.

In the previous update I asked you to think upon a very simple math question: 

Take the number 10, grab the comma or decimal point at the end of this 10 and place it exactly halfway inside the zero. 

What value does it have? 

The answer is very simple: If placing the comma one position to the left is the same as dividing by ten, moving the comma a half position gives the square root of 10 as the answer. (In the 10 based digit model of writing down numbers a replacement of a half correspondents to multiplying/dividing by the square root of ten because if you do this two times you replace by 1 position.)

Item 2) The US Federal Reserve reaching to the whore rate of 0%.

In capitalism, when a Central Bank declares a 0% rate policy this is nothing but a whore policy contradicting money as being a store of value. 

About 14 centuries ago in a country far far away a guy named Mohammed slashed interest rates to zero forever, until this day his followers hang on to a zero interest policy. 

For al Qaida & the likes it must be great fun to observe US FED chairman Bernanke bowing for the wisdom of Mohammed... 

Not only did Bernanke bow, his entire team of 12 Federal Reserve chairmen did bow because the rate decision was unanimous. 

Item 3) Dynamite fun in Paris.

Funny news from Paris: In a famous department store five packages of dynamite were found without detonators.

Previous some press agency (likely the AFP = Agency France Press) received at letter with details like 25 bombs and (of course) it was related to military affairs because France is pumping up her presence in Afghanistan.    

Needless to say the number 'five' is somehow a basis of the fun & needless to say the local authorities will deny that. Local authorities constantly stick their heads in each others asses only to declare 'wow what a great smell around here, lets turn it into perfume'. 

Lately we also had some Belgium message and again that message was purely related to military affairs & of course our responsible leaders neglected that.

On the contrary; our Dutch main anti terror leader stated that the Netherlands were high on the terror ranks because of the political slime named Geert Wilders...  

You just don't believe it: It is not that the Netherlands has political leadership inside the NATO but it has to be mental dwarf Geert Wilders. 

Item 4) The Hamas turns 21 years of age; congratulations!

The democratically elected government of the Palestines celebrated a few days ago they were formed 21 years ago. 

My congratulations! 

Lets post some history insights:

From history we know that powerful yet corrupt countries have a tendency to work together. Example from World War II: Germany, Italy & Japan were the 'axis nations'.

Once you understand how that works (because there are similar levels of corruption in those countries, individuals from these nations 'speak the same language') it is refreshing to look at present unfolding of history:

The fundamentally corrupt USA supports the Israelis because they 'speak the same language'. Christianity has a lot to do with it because they think the Israeli regime represents the 'Holy Land'. The USA is so corrupted, they even corrupted religion, but this is their problem and not mine.

A small small size of USA corruption was exposed via the multi billion Madoff scandal: Lots of Jewish organizations in the USA got an extra hit.

Let that be my birthday gift for the Hamas: Corruption cannot win it from you!   

Item 5) The empty item.  

Empty empty empty; as usual use your own brain! 

(14 Dec 2008) Only two items today:

Item 1) Finally the Google prank makes it to the media.
Item 2) Accountancy, fraud & the Benford law. 

Item 1) Finally the Google prank makes it to the media.

I don't recall when I reported it for the first time, it must be over one year at most two years, but Google is cooking the search results.

For years we were supposed to believe that it was the superior search algorithm that gave Google it's sway over the competition (and in the beginning this was true) but at the moment Google had done her IPO, a lot of that was in fact human handwork.   

I know this because my own brother has worked for Google (not directly but via via of course), he worked from his home and got long lists of search items.
For every search item he looked at the websites as they popped up and rated the websites with something like five rates from 'very good fit' to 'not rateable'. 

Most investors who bought Google at lets say 600 US$ a piece of stock never knew it was in fact human labor and not superior math... 

Well it's finally out, via the Drudge report I found the next (source), quote:

Google this week admitted that its staff will pick and choose what appears in its search results. It's a historic statement - and nobody has yet grasped its significance.

Not so very long ago, Google disclaimed responsibility for its search results by explaining that these were chosen by a computer algorithm. The disclaimer lives on at Google News, where we are assured that:
The selection and placement of stories on this page were determined automatically by a computer program. 

Comment: Very interesting to observe it takes such a long long time for stuff like this to pop up. This also explains why the Google results for this website are so utterly strange:

When via USA channels I search for 'Reinko Venema', this website pops up nicely at number one.

Via local channels a Google thing gives that even Reinko Venema's who are dead over 100 years easily win it from me.

In short: Google search has become a fraud in many instances. All we need is that you can pay Google for popping up higher (I offer 25 cents to win it from 100 year dead Reinko's, this without any disrespect for my forefathers of course).  

Item 2) Accountancy, fraud & the Benford law.  

Last week we had that nice Ponzi scheme in the USA, until now reported damage is in the range of 17 to over 50 billion US$. Beside the size also the time it lasted is extremely long; only because there are all these hedge fund redemptions this Ponzi scheme came out. 

Of course there are a lot of people shouting 'why was this not discovered much sooner? These people simply do not understand how deeply rooted corruption is inside the American society; once a critical corruption threshold has been taken all regulators are turned into lame ducks. Let me spare you a long long list of elementary examples.

Inside the art of accountancy there are some methods to detect fraud, a lot of them only revolve around the detection of spikes. So if you are in a position of fraud, don't make 15 payments of exactly 4000 dollar but vary the payments in size, don't round off but also pay cents (like 3837.27 dollar).
If in your company payment size 3750 comes in frequently you can try to use that one if you use the codes that come along with it...
Anyway, avoid spikes! 

On The Big Picture I found the next file: 

Does the SEC Do Quantitative Research ? 

And at the end of that short article was the next link: 

Numbers follow a surprising law of digits, and scientists can't explain why 

Let me quote from the above source: 

Besides the number 1 consistently appearing about 1/3 of the time, number 2 appears with a frequency of 17.6%, number 3 at 12.5%, on down to number 9 at 4.6%. In mathematical terms, this logarithmic law is written as F(d) = log[1 + (1/d)], where F is the frequency and d is the digit in question.

If this sounds kind of strange, scientists Jesús Torres, Sonsoles Fernández, Antonio Gamero, and Antonio Sola from the Universidad de Cordoba also call the feature surprising. The scientists published a letter in the European Journal of Physics called “How do numbers begin? (The first digit law),” which gives a short historical review of the law. Their paper also includes useful applications and explains that no one has been able to provide an underlying reason for the consistent frequencies. 

“The Benford law has been an intriguing question for me for years, ever since I read about it,” Torres, who specializes in plasma physics, told “I have used it as a surprising example at statistical physics classes to arouse the curiosity of my pupils.” 

Comment: At first this looks a bit strange, for example when rolling dice you expect the numbers 1 through 6 to pop up in similar numbers. And since our numbers always start with one of the nine digits 1 through 9, why do they behave differently? 

In a previous decade I solved that puzzle myself and within a few minutes I was able to calculate the likelihood of, for example, a number from nature starting with 911.
The likelihood is log(1 + 1/911). (The fixation in Benford's law on only the first digit is a rather dumb one).

My conclusions were:

1) When you have no clue about the size of a number whatsoever, this gives rise to a uniform distribution in the exponent.

2) When you take it to the limit, this distribution in the exponent is the inverse of a delta function. (As far as I know there is no uniform distribution on the real line, I know of no math that uses the inverse of the delta function. Let me spare you the technical details...)

3) Our way of writing down numbers compares to a primitive form of taking the logarithm (when a number is ten times as large you need only one more digit). Without being able to proof it: there are no better ways to represent numbers then what we have right now. In that sense Benford's law is a consequence of how we write down numbers...


For my colleagues in math: Today I came across the next file that is chapter 34 from a thick book. It isn't the sharpest analysis on Benford's law but the guy Steve Smith takes Fourier transforms (of course some convolution products) and he comes remarkably far with that!

Let me quote from page 17 of that 22 page pdf file: 

This last result is very surprising; the mystery of Benford’s law turns out to be nothing more than distribution width.


Comment: This is indeed a deep mystery, therefore it is 'Benford's law' and not 'Benfords theorem' because we do not have uniform distributions on the entire real line... 


Lets close with a bit of simple math:

Here in the Dutch landscape we use the comma in numbers, like pi = 3,1415926... and in other nations they use the decimal point like in pi = 3.1415926... 

We use a base digit of 10, that means if you multiply by 10 the decimal point or the comma goes one to the right. If you divide by 10 you go one to the left.

Now I give you the number 10 in your hands (or in your head). This number has a comma at the end but you don't write it down usually. 

Now I pick up the comma but I do not shift it one to the right or the left, no I place the comma exactly in the middle of the zero.

QUESTION: What number is represented by this?

ANSWER: May be in a next update.

Dogbert on investing in the USA (source): 


Till updates, see yah!  

(12 Dec 2008) Bored bored bored, I don't know why but I feel so bored.

Luckily at the end of this boring day I found two video's that cheered me up a little bit.

Video 1)

On Charlie Rose dot com is a 1.14 min video with Nassim Taleb.
In case you don't know it; Nassim advices something like the Black Swan Fund, this fund looks for rare events that fall outside the risk modeling of standard banks / brokers / the likes (you know; those fat folks that are bad in math and even proud to be bad in math).

Right now the Credit Default Swaps of US government bonds stand at 64 pips, these are expensive contracts because you need 64 thousand US$ to buy one.
If the US government defaults on her debt, you get 10 million US$ in return.

Remark 1: The sellers of these kind of contracts do not post enough collateral to pump up the volume to 10 million so better buy such a contract outside the USA if you can. 

Remark 2: Only 64 pips means 0.64% likelihood a year on US default so that is a once in 156 years event (anyway that is what the CDS sellers think...). 

Here is the video:   

Video 2) 

In another development a 50 billion US$ Ponzi scheme came to light (for the locals: a Ponzi scheme is a pyramid game in local speak). The reported profits are only the last laid in money.

For me it was very amusing to observe the Tech Ticker folks making fun of all those who lost big money, even described how a Ponzi scheme works, while at the same time still not understanding their own financial system is just one of those.

All the time decade in decade out the US financial sector picked up debt at a 13% annual speed while profits were always far below that. The Tech Ticker dummies think 50 billion is the biggest Ponzi scheme around & they don't see the 17 trillion of debt on the US financial sector...  

I just guess: The smarter people are the more stupid they can be...

Here is the video link:

I knew Bernie Madoff was cheating, that's why I invested  

Till updates. 

(11 Dec 2008) This is the 'sorry for being stupid' update & has only two items:

Item 1) The ING rumor is withdrawn (for the time being).
Item 2) US financial sector total debt: Only 17- trillion. 

Item 1) The ING rumor is withdrawn (for the time being).

Some time ago I posted a rumor that came from monsieur Rienk Kamer via the local financial news broadcast RTL7.

The rumor was that ING had practically stopped all lending.  

Today it was reported that ING transacted more credit in 2008 compared to 2007, so the rumor was baseless. 

I think I owe an apology to ING for taking part in a baseless rumor; it is not my habit to stand on the wrong side of reality my dear ING! 

On the other hand, total assets of ING are about three times the entire local gross domestic product & I hope that at ING head quarters they will understand it is better to shoot first and ask questions later... 

Lets leave it with that. 

Item 2) US financial sector total debt: Only 17- trillion.  

Today the long awaited US Federal Reserve Z1 release came out, one year ago I estimated from this Z1 release that the US financial sector needed about 2500 billion US$ more debt to do 'business as usual'.

Of course there was no 2.5 trillion more debt available, hence we would see a tidal wave of bankruptcies in the US financial sector.

For the record it has to be remarked once more: My insights panned out to be true, all investment banks are gone. The largest insurer in the world AIG is gone.
A lot of banks that would have disappeared also are saved because the accountancy rule 157, the Mark to Market rule, is upgraded to the Mark to Make Believe rule.

Level 3 assets who's values are based on 'unobservable inputs' are still on the rise topping 600 billion US$ at the moment of writing.

The US financial sector used the Mark to Market rule to write down on her own debt obligations to the tune of over 200 billion US$.

And last but not least, the balance sheets of the US Federal Reserve blowed up in the last months from 800 billion to a nice 2 trillion US$.

With the above info in your head, lets look at a picture of total debt outstanding for the US financial sector & did my 2500 billion 'more debt needed' come out yes or no?

I have chosen 2006 Q3 as the starting point because at that point in time the top of the US housing market was there. (US Federal Reserve source)


Upon inspection you see that 16903.4 - 15760.4 = 1143 billion US$ more debt, a far cry from the estimation of 2500 billion don't you think?

Ok ok, the FED has expanded 1.2 trillion or about 1200 billion and lots of that is 'investment grade' collateral for loans that somehow are not reflected in the source file.  

Ok ok, we had some bankruptcies like the Lehman Brothers fun... 

If you add it all up:

1143 billion +
1.2 trillion +
Level 3 asset growth +
Mark to Make Believe,

You get over 2.5 trillion.  

So I think I owe an apology to the accountants of the US financial sector; I am so sorry that I was not capable of transferring the 2.5 trillion into the source file.

Sorry for being stupid... 

Till updates.

(10 Dec 2008) This morning I did read it for the very first time: According to the Wall Street Journal the US Federal Reserve is weighing options to sell debt herself...

If true, this is a big watershed. Lets take a look at the original WJS file (source), quote:

The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.

Comment: Ok. what's the problem? It gives more muscle to the FED so we do not have any longer this perception of the FED as being a 'money printing machine only'.
Lets quote on (remark we have no solid proof of such scheme's whatsoever, we only have some WSJ stuff):

At the core of the deliberations is the Fed's balance sheet, which has grown from less than $900 billion to more than $2 trillion since August as it backstops new markets like commercial paper, money-market funds, mortgage-backed securities and ailing companies such as American International Group Inc.   

Comment: Again we see that the USA is a nation of whiners, didn't Bernake say he only sucked up the 'investment grade' stuff? Ok ok it was also to 'provide liquidity' but it was still 'investment grade' and they never made a loss in the entire history.
So if you refuse to buy FED debt, one thing is clear: You hate America!

My dear reader, do you not understand the concept of 'financial innovation'? 

It has been going on for a few decades, if the WSJ report is for real, this is only the next step. Quoting on:

The Fed also has turned to the Treasury Department for cash. Treasury has issued debt, leaving the proceeds on deposit with the Fed for the central bank to use as it chose. But the Treasury said in November it was scaling back that effort. The Treasury is undertaking its own massive borrowing program and faces legal limits on how much it can borrow. 

Comment: Nice to observe the 'money printing machine' has turned to the Treasury Department for cash... 

Lets leave it with that.

Till updates.   

(09 Dec 2008) Only two items today:

Item 1) The USA needs a 'car Czar' but not a 'bank Czar'.
Item 2) More on Credit Default Swaps.  

Item 1) The USA needs a 'car Czar' but not a 'bank Czar'.

With amazement I looked at CNN: the US political 'leaders' were grilling the Detroit Auto Executives. Don't forget: It is just 15 to 34 billion US$ they need so this is peanuts!

Yet the US lawmakers were asking all kinds of candid questions over peanut stuff that I truly thought why not putting a DVD like 'Alice in wonderland' into the television.

With the financial stuff the US lawmakers have committed themselves to countless trillions, when it comes to car makers even a lousy 15 billion seems to be a problem.

How come? 

Oh, the US political 'leaders' know how cars are crafted & understand the costs and the profits. 

When it comes to financial institutions the simple minds do not have a clue & lets leave it that way... 

Have you ever heard of a 'bank Czar' and is the US Federal Reserve chairman supposed to be a 'Czar'? Come on, these are only 'printing money' folks because no one complains... 

Item 2) More on Credit Default Swaps.   

On naked capitalism we have much more fun compared to the dumb US law makers, don't forget Credit Default Swaps are only about 10% of the entire 'Over The Counter' market in derivatives. They are declining a little bit but as far as I know reality it is still a 600 trillion US$ joke... 

Talking about leverage; that is about 1:12 to 1:15 of the entire World Domestic Product. 

Yet, since the US$ has so called 'reserve status' there is no problem at all.

After feeding so much wisdom in your brain, lets link the link:

Dizard: "Put the credit default swaps market out of its misery" 

Don't forget: CDS is only about 10% of total OTC market that think they can put the financial outcome where it is supposed to be... 

Till updates.  

(08 Dec 2008) The stuff for today:

Item 1) Neelie Kroes thundering: If and only if the money is leant out.
Item 2) How much longer for dollar strength?
Item 3) Nice new blog found: Option Armageddon.
Item 4) Barry on the US Non Farm Payrolls (even better than reported).
Item 5) As usual: The empty item.

Item 1) Neelie Kroes thundering: If and only if the money is leant out.

Neelie Kroes leads the European agency against cartel forming, illegal state support of local companies & the likes. She is famous for giving large fines at dinosaur companies like Microsoft & the likes. 

Today she was on the local television, stating more or less the next:

With these new rules for bank support, the supporting money from the governments should be used for use in the real economy.  

Needless to say: This is a nice tactical atom bomb going off, but will the soup he as hot eaten as it is served? Since the policy until now was propping up the banks reserves, stating that government supporting should be used for the 'real economy' is a big thing. 

Note: At this European agency they differentiate between the 'real economy' and banks (the 'imaginary economy').

I thought a few hours on this, since these rules are extremely important in the long run. More banks will go bankrupt of course, for the real economy this is a good thing: there is far too much banking capacity anyway.
Of course some political 'leaders' will start doing difficult about 'systematic failure' but all in all I give a green light to these kind of proposals.


Kroes: strengere eisen bij staatssteun aan banken (in Dutch of course)
EU's Kroes juggles principles with politics (from Reuters) 

Item 2) How much longer for dollar strength?

As we all know the US dollar has a tremendous strength lately, all kind of folks offer all kinds of insights about this strength. Let me name a few:

--This is only unwinding of the carry trade, that explains Japan's Yen strength.
--In times of financial havoc it is logical people turn to the world reserve currency.
--The US dollar strength is merely a reflection of a vital US economy with good fundamentals.

And more of that 'bla bla with two fingers in the nose' kind of stuff.   

I too had my thoughts, what explains the low volatility when it comes for example to the €/$ pair? I think you have to study the decline in commodities, the low real rates on government bonds and currencies as a whole.
If you do that, only the biggest players come in mind; what is in their playbook and how long will it last?  

Yes, how long will it last? Because on creditwritedowns dot com I found a lovely file that looks reliable; it says that US exports are declining much faster then their imports...
This in relation to US$ strength of course.

Here is a funny (source) quote: 

With Detroit already on the verge of collapse, the decline of the Korean won from 900 to 1400 massively improves Korea’s competitiveness in the US auto market. If dollar strength persists, then bailout or no bailout, GM, Ford and Chrysler are toast. 

Comment: No comment, the internal logic of the quote should do it's own work. 

Item 3) Nice new blog found: Option Armageddon.

Looks like a charming blog, it looks like it is not that much visited (because simply how much people can calculate the value of an option?). But it has charming articles. 

Let me link two out of the last six articles: 

Citi’s leverage: 280! (Leverage by the Numbers, Part 2) 

CDS: “The Global Poker Tour” 

Comment: You do not have to understand the option pricing mechanism to read this blog, I thought it was funny to relate the credit default swaps to a global poker tour. 

Item 4) Barry on the US Non Farm Payrolls (even better than reported).

For me the latest unemployment figures from the USA were very good: 533 thousand jobs shredded & it will only get better.

Barry is USA based so for him the figures are 'worse' for him when they are 'better' for me, it is just a detail...;)

Before I place the link with the fun, Barry always says you have to study the Non Farm Payrolls into the light of the 'Birth Death statistics'.

When I observed that for the first time I just shrugged my shoulders; why should new baby born or old granny dead have something to do with the non farm pay rolls?

But the 'Birth Death statistics' do not refer to babies & grannies but to birth and dead of small companies. The logic is very simple: A lot of people who loose their job try to start a small company for themselves, that is logical. And as such they do not enter the official NFP numbers as a 'leave'.

Once you know this, you can enjoy the numbers of unemployed stuff:

NFP: Even Worse Than Reported    

In case you are interested how to get health care to all Americans, according to Barry it is very simple. All you need is five billion US$ to start with: 

How to Pay for National Health Insurance 

For years it has been my proposal to give the Pentagon a NASDAQ listing so they were able to pay for the Iraqi thing with Iraqi oil and leave all that weird 'political stuff'' out, but the way Barry does it is also very good. 

Item 5) As usual: The empty item. 

Here is only emptiness found; in the vacuum of interstellar space more density is always found...

The next link contains information why 'investors rallied' on the Obama stimulus thing, don't forget to visit interstellar space before thinking these 'investors' have it right!

Stocks show sharp advances as investors cheer Obama spending plan, await Detroit bailout 

Till updates. 

(05 Dec 2008, updated 06 Dec) Only a few links:

Bloomberg's Kathleen M. Howley is reporting that one in every 10 American home owners is behind on the mortgage and up to 3% is in foreclosure:

Mortgage Delinquencies, Foreclosures Rise to Record  

Bloomberg's Bob Willis and Rich Miller report NFP jobs down 533 K in Nov, this file doesn't say it but the Oct figures were downgraded from minus 240 to minus 340 K.
If a similar downgrade for Nov will be there, we could look at over 600 K in non farm payroll jobs lost... 

U.S. Economy: Employers Eliminate 533,000 Jobs, Most Since 1974 

Bloomberg's Dakin Campbell and Cordell Eddings report that US Treasuries are up for the fifth week, I am glad all that money goes into the Treasuries bubble and no longer does it's damage in food, energy and commodities: 

Treasuries Head for Fifth Weekly Gain as Jobs Lost in November 

On the Prudent Bear is guest writer Rob Lee the actions of the US FED comparing to the Reichsbank of the Weimar Republic: 

This is Not the Great Depression - but it could turn into the Great Inflation 

In case you need a good laugh; the Ass Press has estimated that already 1.2 billion shares that the US Treasury bought until now, have lost about one third of their value: 

Kashkari: Taxpayers will see return from bailout 

Video: Roubini sees much more losses at the banks (who doesn't), he is mentioning a 3 trillion figure and to me that looks a reasonable estimation (although it could go even higher due to derivative jokes):

Massive Destruction of Capital  


Update from 06 Dec, just a few links more: 

The day before yesterday I posted this link also but via the television I got some additional information: The Bernanke fool wants to offer 4.5% 30 year mortgages (to replace a lot of the existing ones)...
Ok I understands why he has to propose weird stuff like that, Bernanke is an expert of the great depression and as such tries to avoid another one. 

But please folks, get for real: is refinancing via government sponsored 4.5% mortgages taking away the damage? Of course not, it is only an accountancy gimmick, link:  

At Greycourt dot com there is a good white paper (I found it via the BP café), it is about the 'moral behavior' of the diverse players when it comes to the financial crisis.
The white paper does not say it, but the lack of ethics is simply caused by the corruption inside the official US politics. Just an example: The original TARP plan was 700 billion US$, total cost in so called 'earmark spending' is 850 billion: What more proof do you need to observe deep corruption is there?
The US political 'leaders' do not concentrate on the real problems but only on 'what is my earmark'. Link:  

Suddenly in the USA there is all kinds of panic because the 'velocity of money' is coming down. Basically the velocity of money is how often it changes hands and as such is one of the measures of economical activity.

Of course declining money velocity is only a symptom of recession; it is an effect, not a cause of recession.
Of course in the USA there are plenty of economists crying wolf and say that the US FED needs to pump in more money to compensate for the decline in money speed (otherwise the gross domestic product will decline as we are told).

There are even some who think you can do 'rigid analysis' if you relate the stuff as next:

Y=MV, where 

Y = gross domestic product,
M = some money supply base &
V = the velocity of that money supply base.  

The dumb debt huggers observe: If V comes down we must prop up M.
Of course they forget M was too big in the past and that was the root cause of this crisis to begin with... (But debt huggers are very good in interchanging cause and effect.) Link:      

More on debt huggers: Obama wants the biggest 'reviving plan' since 1950.
Of course this will fail since the US economy has no savings, Bloomberg file:    

More on the 'One in ten mortgages are in trouble':

Jesse is observing that the best way to attack these kind of problems is propping up the median income. Of course, wise as I am, I never ever pointed to so called 'median income problems' since the Spring of 2004.
All I want is to destroy the US military so why concentrate on boring statistics?

Of course this administration should have focused on minimum wages, median wages and not on cheap mortgages, that was obvious from the beginning.

Dumb as Dubya is, every night he says his prayers & proceeded his stuff.

One in Ten US Mortgages Are in Trouble 

Till updates. 

(04 Dec 2008) Here's the stuff:

Item 1) Flip, my chocolate is ruined!
Item 2) A look at US house affordability.
Item 3) Interest rates going down; it won't help.
Item 4) A short Mumbai update.
Item 5) The empty item.  

Item 1) Flip, my chocolate is ruined!

Tomorrow here in the Netherlands we have Santa Claus evening and so, dumb as I was I promised some nice chocolate. I had five bars of butterscotch & five bars of white chocolate, melted it and it gave a horrible result.

The problem is: butterscotch does not melt very good, it stays too thick. And so my very complicated design never emerged. Compared to what I had in mind, the chocolate below looks more like the US housing market.
Luckily it will taste good so that won't be much of a problem.

Traditionally here people give each other chocolate characters, I always get an R because my name is Reinko. But statistically speaking, most sold are the M and the W because people think there is more chocolate in them... 


Item 2) A look at US house affordability.

This item is an update from 25 Nov when the latest house prices came out and I posted the picture below:


In reality I expect house prices to be more or less half way and don't forget: the latest Case Shiller index was from September so we have to wait a few months to see if indeed the price decline acceleration has stopped.

On the blog Calculated Risk there was a very good graphic based on Case Shiller stuff that suggests we are already two third down the line when it comes to house affordability.

The graph is supposed to be an index and for me it is a delight to observe finally an index centered around 1(the economists have trouble understanding math so they always multiply the 1 by a factor 100). 

(Calculated Risk source) Click on the picture for a larger version: 


Remark 1) If my 'S shaped' model is coming out, house prices will decline for anther 2.5 years. If the above graph carries more truth, house price declines will be over in about 1 at most 1.5 years.

Remark 2) There are a lot of reasons why it will take 2.5 years, for example if median income is hollowed out by inflation, recession, unemployment or even depression and a rough batch of deflation, it will be 2.5 years before we are at the bottom of house price declines.  

Item 3) Interest rates going down; it won't help.

A flurry of Central Banks lowered all kinds of key interest rates today, a record rate cut was observed in Sweden where the Swedish Riksbank rammed it down 175 basis points to just 2%.

Remark Sweden stayed out of the Euro and can now enjoy the benefits of having a small currency backed by only one nation.

The same goes for the United Kingdom that rammed 100 basis points down to 2% (reporters say that is the lowest since the BoE existed, I don't know if that is true but it fuels the rumors that say that the UK has over 5 times her GDP in total debt outstanding on herself).

It all won't help, to much credit created the fun from too high house prices to giant derivative markets and more cheap debt won't help.

It only helps the banks who now can borrow more cheap so their reported future losses will be a little bit smaller. For me it is very funny to observe all those political 'leaders' constantly complaining that now the commercial banks have gotten so much help, they should turn to their basics again.

The poor political leaders don't understand how banks function: It is nonsense that banks can borrow cheap at the Central Bank and make their profits from asking a higher interest from the real economy. In the past banks worked that way because banks were a part of the real economy.

For example in the USA the financial sector grew above 20% of gross domestic product, just compare them to water companies: when water companies would be above 20% of the entire economy wouldn't you scratch your head? And if water companies would trade in WDS (water default swaps) or CWO (collaterized water obligations) would you consider this normal?

No of course not, water companies would be told to deliver water and not a bunch of nonsense. 

It all is very simple: When the financial sector grows too large without any reason at all, their level of debt is the best predictor as to what Central Banks will do...

Of course the Central Banks will do their stinking good best at telling 'bla bla' stuff about consumer inflation, but in the end that is only lip service and the Central Banks will do that was is best in the interest of the commercial banks... 

 Item 4) A short Mumbai update.   

After a full week a fifth bomb was found on a train station in Bombay, India. So it looks confirmed: the attacks on India were mostly centered on the number five.

To be honest: Although in a previous update I stated that India simply deserved these attacks, even I feel pity for a population with such a corruption riddled police force.

I might not like their religion and their abortion practices but somehow the Indians don't deserve such a police force. But it is their owns society so they do it all to themselves...

When we compare India to the USA, in India corruption is more rooted at the consumer level while in the USA corruption is rooted in politics.  

Item 5) The empty item & only an invitation to use your own brain.

In case you cannot cough up anything, this Bernanke file as found on Bloomberg is another example of an empty headed guy. It is funny reading!

Till updates. 

(03 Dec 2008) Propaganda, what is propaganda and when it is reported how to react?

Via Barry's hangout in this file (home page of Barry's hangout) I found the next beautiful propaganda. It is about the present 'costs' of the financial crisis restricted to the banking sector, this in terms of the gross domestic product of the diverse nations:


The source file from this propaganda comes from portfolio dot com and placed by a rather dumb fucking Jew named Zubin Jelveh. It has to be remarked that this file dates back to 23 Oct 2008 so at that point in time it was not known that the US FED indeed is going to print money (to buy up 'troubled assets'). 

So the fucking Jew thinks that my nation the Netherlands pumps up 39% of the gross domestic product and that vital the USA economy needs only 5.1%?

Seldom you observe such stupid reporting... 

The latest reported US gross domestic product from 2008 the third Quarter was 14,420.5 billion (source file), if we take 5.1% of the official statistic we see that the USA only needs 735 billion US$ to fight the entire crisis. 

Not only is the fucking Jew named Zubin Jelvin wrong on small countries like my own, he also does not understand where the US ticker will end... 

But it is beautiful propaganda written by our beloved fucking Jew Zubin Jelvin; his head is just as deep in his perfumed ass as the Israeli political leadership has...

I will not write down a long list of why we do not have a 39% of GDP problem right now (I only worry on the bank ING because the totals of their balances are triple of our GDP so that could give some problems if ING does not do accountancy tricks like 'local losses are local losses').

No, propaganda is like porno: it is hard to define but when you see it you recognize it & the Zubin stuff is just so beautiful in it's propaganda take: Very likely he leans upon the ideas of Joseph Goebbles...

Lets leave it with that, till updates. 

(02 Dec 2008) Torture, what is torture and when it is reported is it for real?

This day no financial news but we take a look at the evil terrorists that tortured Jewish peace lovers (Indian Catholic source), quote:

The reports say many of the bodies showed signs of torture. The doctor, who conducted autopsy on the bodies of Israeli victims in the Jewish house, said they bore torture marks. 

“They were killed on the 26th itself. It was obvious that they were tied up and tortured before they were killed. It was so bad that I do not want to go over the details even in my head again," the doctor told media.  

Comment: Please observe we have not one quantum of 'torture proof' in here, so we are supposed to believe that already on the first day of attacks in India the evil terrorists took hours and hours to torture folks to death... Don't forget we are talking about only 5 to 8 killed Jews & there is no reliable report on actual torture at all.

Next funny thing (I heard it via the television so I cannot link):

In India there is not much interest to enter the 'anti terrorist' parts of the police forces, this is because when you have a normal job as a police guy you can get lots of bribes to boost your income...
You fucking don't believe it but it looks reliable; India is nothing but a rotten law enforcement country & the rich can pay for 'justice' and the poor cannot pay the police force in case criminal investigations should be there.

Given the size of that country India, this deeply rooted corruption takes a manifold in unsolved crime. Conclusion: India deserved these attacks.

By the way; Is a corrupt police force a torture on the population yes or no?   

Another detail that does not enter our beloved Media files as torture (VOA news source), quote:

The Israeli navy has ordered a Libyan ship carrying humanitarian aid to the Gaza Strip to turn back. 

Officials say the ship, the Al Marwa, was carrying some 3,000 tons of aid when it was stopped by the Israeli navy.

Israel says there was no physical confrontation when it ordered the ship to turn around.

Palestinian officials say the ship is now sailing to the Egyptian port of El-Arish. 

Gaza's borders have been largely sealed by Israel and Egypt following a violent takeover by the militant Hamas last year.

The blockade has been stepped up in recent weeks due to a surge in border clashes between the Israeli military and Palestinian militants. 

Comment: I do not understand why it is forbidden to deliver humanitarian aid to the Gaza Strip. As far as I know reality, it was me (Reinko Venema) that explaining to the Hamas the benefits of democracy, they won the elections over the corruption riddled opponent.
As usual the USA did not help after the Hamas election victory, but that is logical: the USA is only one big incest crowd of weird stuff.
For me after all these years I still do not understand why the Israelis behave like they are the USA; their university math departments have good math & when you have good math you also have good brains.
I simply do not understand this Israeli behavior of withholding 3 million of kilo's of humanitarian aid; I simply do not understand...  

Is it torture to withhold just one ship in humanitarian aid? 

According to the Media files it is not. 

That's it; till updates! 

(01 Dec 2008) Today only one item, or may be better, two items.

At first the 'insignificant item' and after that the 'significant item'.

Item 1) The insignificant item: US recession is now official.
Item 2) The significant item: The march of the junk bond status.

Item 1) The insignificant item: US recession now official. 

After a long wait the USA based National Bureau of Economic Research finally declared that the USA was in a recession since Dec 2007...
It took them a long long time to arrive at that conclusion, but you won't hear me complain because this 'official declaration' will put a cap on all those wild swings to the upside in the DOW Jones.

Let me quote the fun (Yahoo/Reuters source), quote: 

WASHINGTON (Reuters) - The economy slipped into recession in December 2007, the nation's business cycle arbiter declared on Monday, and the downturn could be the worst since World War Two.

The National Bureau of Economic Research said its business cycle dating committee members met by conference call on Friday and concluded that the economic expansion that started in November 2001 had ended. The previous period of economic expansion, which ended in 2001, lasted 10 years.

The current recession, which many economists expect to persist through the middle of next year, is already the third-longest since the Great Depression, behind only the 16-month slumps of the mid-1970s and early 1980s. 

Comment: This is good news of course, but I would like to help the Americans to avoid more recessions and somewhere I did read that up to one thousand US economists contribute to the US based NBER. Beside using official US statistics that avoid all that inflation stuff it could be handy if there would be some kind of census in declaring economical recessions. Wouldn't it be far better if the conclusion was 'unambiguous' (meaning that all 1000 economists have to agree there is a recession and if only one member disagrees, you still can avoid recession). 

It is just a tip for the US incest crowd of 'scientific economists'... 

Item 2) The significant item: The march of the junk bond status.

Far better to bring the DOW down to 7000 is the good stuff as found on immobilien blasen, it were only two graphics but their sources looked reliable.

In the picture below on the top to the left you see a decade long development of the median bond rating in the non-financial sector of the USA.
In the top and on the right you observe a painful spread for bonds issued by companies with a 'junk bond status' (most small US companies have junk bond rating and this is not for nothing).  

On Naked Capitalism I found the picture of the lions in the snow, it was just a funny picture so it is included for no reason at all.

Why is this the 'significant item'? Please use your own brain!



Number Of The Day " Percentage Of US Companies With A Junk Rating"
Lions in the snow   

Till updates. 

(30 Nov 2008) The stuff for today:

Item 1) Trashed US economist of today: N. Gregory Mankiw.
Item 2) A new update in the NightmareOnWallStreet file.
Item 3) Jesse on money supply, Paul Krugman & other things.
Item 4) Barry's update that had no echo on other financial blogs.
Item 5) The empty item. 

Item 1) Trashed US economist of today: N. Gregory Mankiw.

Gregory aroused my attention only a few days ago and yesterday I posted a link to his blog in item 4 '280 thousand US$ for every job created'.

I never heard of the guy before but I was curious about why he took the axe on the Obama team while the Republicans created the real mess in the last eight years. Isn't the guy supposed to be a 'scientist' since he works at Harvard?

Today the monkey came out of the sleeve; Gregory was an economical adviser at the Mitt Romney Republican team... That explains his non scientific bla bla on his financial blog.

Gregory could publish on the New York Times & was allowed to publish the next article:

What Would Keynes Have Done? 

Funny quote from the start of that article:

According to Keynes, the root cause of economic downturns is insufficient aggregate demand.  

After that our mental dwarf observes:

The economy’s output of goods and services is traditionally divided into four components: consumption, investment, net exports and government purchases. Any expansion in demand has to come from one of these four. 

Comment: And after that wisdom our mental dwarf starts looking in detail at these four components to see where 'hope for the economy' will come from.
Of course our mental dwarf Gregory has no clue about the debt on the US financial sector only; he is one of the incest products of the US economists... 

Gregory cannot do elementary math; he is a mental dwarf. 

Item 2) A new update in the NightmareOnWallStreet file. 

This is only a repost from 19 Nov, but only recently I studied the debt growth into the US financial sector on a decade long scale. And I arrived at the conclusion this is a far better hammer than the US housing market decline. 

The US housing value decline could be as high as 10 to 11 trillion US$ (in 2006 US$) to the US house owners, that's good stuff of course but will it break the backbone of financing the US military? 

Temporary and for a few years it will, but the long term debt growth will do a far better job when you look at the decades to come.

For the first time I can write (remark this is a seven year old website):

All they can do is print money...    

Yes yes, where dozens of folks have complained about 'monetizing stuff', for the first time I can say: They cannot borrow any longer, they have to print... And the 800 billion US$ is only a starter, more will follow.

Here is the update:

30 Nov 2008 US financial sector: Prognoses of future debt growth for the next four years 

Item 3) Jesse on money supply, Paul Krugman & other things.

Although Jesse is very good, he too does not understand it when it comes to exponential growth. That is strange because when the interest on your debt is 5% a year and your income is, lets say, 100.000 a year you might run into trouble if you borrowed above two million & you have no savings to save you. (Hence where is the word 'savings' come from?)

From Jesse we can derive folks like Paul Krugman are 'loosing it' (source), quote:  

We like Paul Krugman and enjoy reading his columns. But every so often he writes a column that is so off his normal standards that it makes us wonder if he is on vacation and the task of producing the column has been delegated to a graduate assistant. 

Comment: The graphs are beautiful, for the rest no comment. 

Item 4) Barry's update that had no echo on other financial blogs. 

Don't get me wrong: The graphic in the link is one of those 'leading indicators' and with US 'leading indicators' you better think twice before you act.

For example: On a particular day US stocks rise because in the main stream media it says 'leading indicators came out very positive today'. But a large part of that indicator were S&P values that were far to high.
So S&P climbs on the news they were far to high in the past due to 'leading indicators'.

Yet the source file from Barry looks very reliable & therefore I post the next link:  

Item 5) The empty item.  

In the empty department only a bit of a German guy who made it alive after the Mumbai attacks, he stated more or less the next: 

"We had police guards before the hotel but it really made no difference if there was police or not. This was rather interesting because whatever kind of protection there would be there outside German hotels, it would always be much more professional."

I hope this is empty enough. 

Till updates. 

(29 Nov 2008) For today:

Item 1) A few India Mumbai attack details that seem relevant.
Item 2) Toys R US shooting fun & the US constitution.
Item 3) 30 reasons why the US will enter a depression.
Item 4) Obama economical news: 280.000 US$ for every new job.
Item 5) The empty item. 

Item 1) A few India Mumbai attack details that seem relevant.

Even to my surprise the were only 10 mujahedin staging the Mumbai attakcs, nine are dead and one is alive. For the time being modus operandi was splitting up in pairs so for me it looks confirmed for the time being:

The number five was indeed used in the basic planning.  

But there is more, authorities tell us that from interrogation of the one alive this was supposed to be India's 911 call. And in this we simply miss five or seven car or truck bombs exploding simultaneously, but the Washington Post is reporting (look on page 2, source), quote:

"Their plan was to kill 5,000 people, we recovered two big bombs, other than guns," said R. R. Patil, Maharashtra's deputy chief minister. "They were using mobile phones, GPS and satellite phones. We have many clues from these." 

Comment: This is a strange detail, how to kill 5000 people when the number of people in the hotels are only measured into the hundreds?
If the report of these two big bombs is true, it if far more likely that only the two hotels would be blasted away.

And what about the 'foreign links'? The one captured alive says he is from Pakistan and thus for the Indians a red flag is raised, even stronger; when Indian police capture a shop lifter stealing only one kilo of bread, the first thing they do is checking if the Pakistan secret service ordered for that. 

If there are so called 'foreign links' it is far more logical that Indian Muslims have to protect their families in general and their religious sect in particular. 

Item 2) Toys R US shooting fun & the US constitution.

Ages ago the American founding fathers wrote a thing called  'the constitution'. In that constitution the Americans have the right to carry arms, rather likely this was supposed to be an antidote against big government doing weird stuff.

Centuries ago this made some sense, but in present day statistics the US murder rates are always five fold compared to normal democracies. For the most these are gun deaths, but even when you filter that out Americans are very good in killing each other. (Here in Europe in the 20th century we are also very good in killing each other but that was always done via the governments in World War I & II.)

Only from the USA you can get quotes like this (source):

PALM DESERT, Calif. (AP) — Two men pulled guns and shot each other to death in a crowded toy store Friday after the women with them erupted into a bloody brawl, witnesses said. Scared shoppers fled but no one else was hurt.

The violence erupted on Black Friday, the traditional post-Thanksgiving start of the holiday shopping surge, but authorities indicated the shooting wasn't related to a shopping frenzy.   

Comment: I could not find the original fun to link to, but two females got angry with each other and both were accomplished by a male. One of the males lifted his shirt showing his handgun, the other guy also had a gun and they engaged each other.
Result: Inside a crowded Toys R US children toy shop we had two dead gunners & for the rest there were no wounded or so.

Sometimes it makes we wonder; if the founding fathers had a crystal ball and could look into the future, would they have written the US constitution as it is today? 

(That is because I never observed media reports stating that carrying a fully loaded weapon inside child stores prevented more murder.) 

 Item 3) 30 reasons why the US will enter a depression.

On Marketwatch dot com we have a guy named PAUL B. FARRELL having 30 reasons as why the USA will enter a second depression.

For me there is nothing new, all stuff like foreseen in the Spring of 2004 is coming out. But if you were not that sharp in the Spring of 2004, here is a link:{BAM

 Item 4) Obama economical news: 280.000 US$ for every new job.

A guy named Greg Mankiw is simply dividing the 700 billion US$ Obama stimulus package by the 2.5 million new jobs as promised by the new nigger prez of the USA.

(Please remark: I am not a racist, far from that, I only like to name him a nigger in the White House chair...)  

The Greg Mankiw forgets to mention the horrors of the Dubya regime: At least 400 thousand for every new job and in my own country the latest figures are above 500 thousand Euro's for every new job... 

I think it is unwise to try and get every idiot attached to the real economy, for myself speaking I am unemployed for many years and I reject numbers like this.

Better handout half a million to me in person & let me write a contract that I will never ever make use of government money again... 

The old economical models, they simply do not apply to the present situation. 

 Item 5) The empty item.  

Empty, empty, empty... 

Till updates. 

(28 Nov 2008) The Mumbai (or Bombay) attacks in the financial sector are now in their third day. The news reports are still very chaotic, of course I try to measure in how far the numbers five and seven are used in the attacks.
But given all the chaos in the data this is still hard to validate; for example how many boats were used? Reports vary from three to seven.
How many mujahedin did participate? Some say two dozen, others 25 mujahedin.
The start of the attacks was 10 o'clock in the evening, but there will be battalions of critiques who on emotional grounds will say it is 'logical' to view that as 22 hundred hours... By now I fully understand the way most people think; the enemy is evil by definition and as such there is no logic whatsoever to be found.

The fact that only 25 attackers can hole up a professional army for days clearly contradicts the 'evil theory' so that part of the logic is usually skipped. After the original 911 attacks from 2001 in the USA there were zero Western observers who simply stated that America deserved this. All these Western observers did not let logic do it's elementary flow but emotion or a 'set of beliefs' hindered the logical process for a long long time.
From a social science viewpoint this even makes sense; when a country constantly doubts her basic set of beliefs, such a country or society gets paralyzed.
And then they start doing weird stuff like selling mortgages for clearly overprized houses on a massive scale and only worry if there is no default within 90 days (after 90 days the mortgage was sucuritized and sold to 'investors').

But lets end this update, since there is still ample proof that the Bombay operation (as usual) leaned on the numbers five and seven, I collected a few CNN headline graphics and combined it into the next picture.

So although the news is still rather vague, all pixels below are exactly on the place where they are supposed to be. Click on the pic for a larger version:


Of course my compliments go the the planners and the mujahedin that staged the attacks in the financial sector of Bombay. Congratulations! 

Of course there are many ways to take a view of the effects of such an attack; for example if there would be five or seven car or truck bombs and for the rest 'nothing' in that case the Indian stock market would have fallen deep today.
That did not happen, so that is important knowledge. (That is not an advertisement to use crude bombs only my beloved mujahedin! Keep on building the entire military arsenal: From crude truck bombs to sniper stuff!)

Of course this website is not 'Muslim only', when you have a healthy brain and work for example in the financial industry and you think it is not the craziest idea in the world to bring down the US military power: You can help!  

Lets leave it with that, till updates.

(27 Nov 2008) Only a short update about the Mumbai (Bombay) attacks in India:

Before we start I would like to say that when I did hit the button 'publish website' yesterday, it was about 22.15 local time so the Indian attacks were well under way. But I was not aware of it since I only scanned a bit of financial news.

But it was lovely to see all that police and military folks running around all day long!

Yet the news is so chaotic, for the time being most news has to be taken with a grain of salt and after a few days a clearer picture will emerge.

In the first place: My dear reader might think it is not lovely news because until now the death count stands at 125 or more and most of them are so called 'innocents'.
As an antidote I can remark that on this day, or any day, a large multiple of female babies are aborted by Hindu doctors simple because they are female.
Muslims do not have a habit of cutting up female embryo's...

In the second place: There is more proof that democracy brings idiots forward that are supposed to be our leaders. Let me quote from a CNN media file, we are now over 24 hours into the attacks and we can safely conclude that Indian Prime Minister Manmohan Singh is a full blown idiot only comparable to Dubya (CNN source), quote:

Indian Prime Minister Manmohan Singh suggested the group behind the terrorist attacks, which killed 125 people, was based outside the country.

Singh said: "It is evident that the group which carried out these attacks, based outside the country, had come with single-minded determination to create havoc in the financial capital of the country," he said.

Comment: Of course I have no proof that the attackers are solely based inside India, yet the concept of foreigners hating India so much is not a very realistic concept.

In the third place: The ritual comments of so called political 'leaders' from around the world. Every time only a little bunch of people die from that what is perceived 'terror attacks' the international community acts if like they were space invaders that will root out humanity.

Let me give you only three examples (CNN source), quote:

Indian Prime Minister Manmohan Singh deplored the attacks, saying they were well coordinated and apparently launched by people from outside the country. 

Russian President Dmitry Medvedev said: "The monstrous crimes of terrorists in Mumbai arouse our wrath, indignation and unconditional condemnation. 


"President Bush offers his condolences to the Indian people and the families of the innocent civilians killed and injured in the attacks in Mumbai, India. The United States condemns this terrorist attack and we will continue to stand with the people of India in this time of tragedy." 

Comment: Dubya still has some explaining to do with the so called 'excess death toll' related to 'Operation Iraqi Freedom' (about one million) and the USA as a whole still has to answer upon that other million of dead Iraqis when it came to the economical sanctions against Iraq.
The Russian guy Medvedev can explain to me why the Russian army behaved the way they did inside Chechnya, it is only 125 dead in India so can you tell me what the 'monstrous crimes' are in detail?
Please Medvedev, don't talk shit to me... 

In the fourth place: Among the so called 'terror experts' there is a wide range of views as if this was 'al Qaida related' or not.
For example on the pro USA Times Online you will find only experts that say it is clearly related to al Qaida because of 'this or that'.
On news outlets that are not so pro USA you observe 'we miss the hallmarks of al Qaida, like suicide bombers and remote controlled bombs'.

Comment: Funny to read all that knowledge, please read again as I posted it on 10 Nov 2007 you bunch of imbeciles:

-Reinko: Yes, but never forget to pick up military might. 

In the fifth place: Use your own brain to clean your own brain please! 

Till updates.  

(26 Nov 2008, temporary status lifted 28 Nov) Since the financial news of the last days can only be classified as boring (I really do not want to waste my time at DOW levels climbing to over 8000, I only say this is good for pumping up the volatility) I can make a small update on some 'terror DVD's' that were distributed to some Belgium and Dutch media outlets.

There are a few very intriguing details into this 'terror' DVD, let me name a few:

1) It is very short, only about four minutes and that's it.

2) It has truly beautiful music with it, is it the music from the heavens?

3) It relates military air power behavior of Belgium to attacks. (Belgium is sending more air power to Afghanistan & Belgium is the head quarters location of NATO.)

4) Beside Belgium news outlets, Dutch news outlets got also a copy of this DVD. As far as I know reality, no other nation got the announcement. 

Before we proceed lets take a look at history:

In the past I have explained to the mujahedin how terror attacks work on the general population, but I lacked some insight: What would happen if such an attack occurred just before the elections?

A few months later we had the Madrid bombing & from the Madrid bombing we derived a very important statistic: Up to 11% in voter change.

After that month in month out I explained that when staging attacks make sure the numbers 'five' and 'seven' are included.

So we had the London bombings, on the sevenths day in the sevenths month of the year 2005 stuff blasted in London.

Of course local officials have a good habit of sticking their heads into their asses, so I had no so called 'judicial problems' at all. 

So far history, is the DVD for real?

Well my dear reader, this is to be made up for your own brains. International terrorism relates the sending of more air power to Afghanistan to more attacks & if you do not want to see the sheer simplicity of elementary logic, this is your problem and not mine.

In short: I wish the DVD folks good luck, the music choice was perfect...

Till updates.   

(25 Nov 2008) The five items of today:

Item 1) New Case Shiller housing index; the fun continues.
Item 2) Only 800 billion US$: The FED going TARP.
Item 3) Only 700 billion US$: A stupid economy stimulus package from Obama.
Item 4) Again that fake FDIC fund.
Item 5) Wall Street advertising agency reporting: Is Tim Geithner really our guy? 

Item 1) New Case Shiller housing index; the fun continues.

Indeed the fun continues: The 10 city index was down 18.6% year on year in September and the 20 city index down 17.4%. (USA Today source.)

It is good to observe the speed in the price declines is still increasing and as long as we have positive acceleration in the price declines we still are not halfway these declines.
A long time ago I wrote that I am expecting more or less an 'S shaped' model in price declines, but I fully understand the mental dwarfs from Wall Street do not understand what an 'S shaped' model is.

So let me explain:

You take a S, flip it left to right and rotate it 90 degrees.
After that you remove the parts of the S that are not relevant, you put it in a picture add an arrow and write some annoying text in it.
Then you get the next picture:  

Although the text is very funny (since the second half of the price declines will bring far better economical havoc), it looks slightly better if you add some circles and small rectangles in it: 


Then you could stop, or proceed: 


I think I like the middle pic the most, the third pic is slightly overdone.  


Item 2) Only 800 billion US$: The FED going TARP.

Well this comes as a surprise but didn't I write it very clear when the first 700 billion US$ so called 'Troubled Asset Relief Program' was unveiled by the US Treasury:

The first TARP is the cheapest.

The original 700 billion program is used for other things like buying preferred stocks from banks in order to keep them afloat and now the Federal Reserve is buying up to 800 billion US$ in garbage. (And they have already so much garbage on their widely expended balance sheets). 

Plans are as next (Ass Press source):

500 billion in mortgage backed securities,
200 billion in consumer loan backed securities &
100 billion garbage from Frannie. 

Mark my words: In the previous item we observed we are not even in the second half of the house price decline, the second leg will bring much more economical turmoil because more and more mortgages will come under water.
So this 800 billion US$ program is only the beginning! 

Item 3) Only 700 billion US$: A stupid economy stimulus package from Obama.  

We have more proof that the US economists form indeed an incestuous clique because no one will tell that this new program will also not work.
There is only one thing that will work: Cut back spending, pay the debt and start saving. After a few years things will turn around.

But no, we get one more of these dumb 'economic stimulus' packages.
Just like an obese person will not loose weight under a new 'stimulus diet' of 25 hamburgers a day and no exercise, so will the US economy not get back on her feet with more debt.    

Lucky me: The incest clique will always refuse to see the obvious & hang on to their weird and outlandish version of economical theory... 

Here is a Washington Post file with a few details.

Item 4) Again that fake FDIC fund.

It is very annoying but the US government keeps on coming with this fake and non existent bank insurance fund. It is a short media report so let me quote the entire article (Yahoo/Reuters source):

U.S. problem banks rise to 171 at end of third quarter: FDIC
Tuesday November 25, 10:37 am ET 

WASHINGTON (Reuters) - The number of problem U.S. banks and thrifts jumped in the third quarter to 171, from 117 at the end of the prior quarter, marking the highest level since the end of 1995 and adding to expectations that more banks will fail, regulators said on Tuesday.

The Federal Deposit Insurance Corp said the industry-funded reserve to back deposits was $34.6 bln as of September 30, a 23.5 percent decrease from the previous quarter.

The FDIC also reported that bank industry income fell 94 percent from the previous year to $1.7 billion in the third quarter. 

Comment: Again there is no such fund, this is only an accountancy vehicle that keeps track of what money banks have paid and what money goes out. The 34.6 billion US$ mentioned are only Treasuries, even the coupon is paid in Treasuries.
The money the banks have laid in is long gone, that keeps the official deficit artificially low (just like with all other Federal funds; they are only vehicles to keep the official deficit artificially low).
Every bank that needs a rescue, is rescued with tax payer money or, since there is a growing deficit, with borrowed money.

There is nothing left in the USA, only the capability of borrowing money is left. 

Item 5) Wall Street advertising agency reporting: Is Tim Geithner really our guy?  

Only very seldom you see the Wall Street Journal (the official propaganda outlet for main stream Wall Street trader news) being so critical upon the US government...

What is the case?

They doubt the qualities of  Tim Geithner as the next US Treasury king only to neglect the perfect wisdom of the present Paulson clown...

It is so lovely (source), quote:

Mr. Geithner was also on the Fed's Open Market Committee when it made its fateful decisions to keep real interest rates negative for so long, fueling the credit mania that has since turned to panic. 

Comment: Since when is the Wall Street propaganda machine allowed to express elementary facts that contradict elementary economical reason?
Why not put the blame on Dubya or the Paulson clown?
That is since a nigger has been appointed to be the next US prez... 

Till updates! 

(24 Nov 2008) This update is only one item and before I start I have to say I will make small and even large faults because this is about the one and only detail in this entire credit crisis that I just don't understand.

Lucky me, Yves from Naked Capitalism doesn't understand it either and Jesse from Jesse's Café American tracks the stuff for years but never offered any insight why it should be logical that up to 5 trillion US$ in Treasuries transactions can fail in one week.

It is important to remark that 5 trillion US$ in failed US Treasury (= government bonds) transactions is about 50% of the official US Federal debt or about one third of US GDP... (And that in one week...).

But insight is growing, a lot of these 'failed transactions' emerge from the fact that US Treasuries are put up as collateral for loans. Let me quote from a quote (Naked Capitalism source), quote:

Now, an industry group is trying to fix the mess, which New York Fed Executive Vice President William Dudley said could cause the U.S. borrowing rates to rise if not rectified. The Treasury Market Practices Group wants to impose a “penalty” on failed trades, a move that may result in borrowers who put their Treasuries up as collateral for loans effectively receiving 2 percent interest. 

Comment: Since these failed transactions reach up to 50% of the entire official US Federal debt, this could be some of the 'grave concern' bla bla stuff of the New York FED... 

The Bloomberg source where the above quote comes from started as next (Bloomberg source), quote:

Owners of Treasuries may soon get paid to borrow as the U.S. tries to break a logjam in the $7 trillion-a-day repurchase market. 

Treasuries are in such high demand that investors are lending cash for next to nothing to obtain the securities as collateral through so-called repos, which dealers use to finance their holdings. The problem is many parties involved in repos aren’t delivering the bonds because there is no penalty for not doing so, causing “fails” to exceed $5 trillion, according to the Federal Reserve Bank of New York. 

Comment: As far as I know reality, the 5 trillion are weekly numbers (the Bloomberg reporter Liz Capo McCormick doesn't say so) and from the 7 trillion-a-day repurchase market it is not told if this is US Treasuries only or all repurchased bonds.
So Bloomberg is a bit misty & lets leave them alone.

When at first I came across the weird large numbers of failed transactions in US government bonds, the only weird explanation I could make was:

When inside a large financial institution a sell of a few million US bonds is reported, this instantly goes as 'cash' to the balances of that institution.
Now we know there is no penalty in setting up phony Treasury transactions, my original insight is gaining more weight.

For me this looks a bit like the next:

Before the US investment banks started collapsing, according to the Princeton economical & finance folks, up to 25% of their entire balances were financed with one day borrowed money. (That is why the one day intraday bank rates jumped after the Lehman collapse.) So the investment banks needed day in day out to finance up to 25% of their total balance sheets.

As a comparison: These failed transaction data in American government bonds topped at 50% of total US Federal debt in one week.

It looks like there are strong similarities.

At last I want to close with an update from Jesse (source), quote: 

US Treasury Default Swaps Soar to Records 

NEW YORK, Nov 24 - The spread or risk premium on 10-year U.S. Treasury credit default swaps hit record wide levels on Monday, prompted by worries about how the cost of rescuing banks and carmakers would affect U.S. creditworthiness, CMA DataVision said.

As the global financial crisis worsened in recent weeks, traders increased their bets on the bigger toll of the U.S. government's array of programs to help these ailing industries.

Ten-year U.S. Treasury CDS edged out to 49.8 basis points from 49.3 basis points at Friday's close, according to the credit data company.

Five-year Treasury CDS grew to 43.5 basis points versus 43.0 basis points late Friday, it said. 

Comment: Fifty basis points only means that the sellers of these Credit Default Swaps think that the US government only goes bankrupt once every 200 years.
In case you are interested in the math behind such '200 year calculations' it is very simple: 50 basis points = 0.50% and as a number this is 0.005.
Since 1/0.005 = 200 we observe the sellers of US Federal CDS still have a 2 century wisdom inside their heads...


Ok I only wanted to talk about the transaction failures of US government bonds, but Christopher Whalen is recycling some funny CDS stuff in the next link:

What Barack Obama Needs to Know About Tim Geithner, the AIG Fiasco and Citigroup 

Ok ok, let me quote the fun but after that I am really hitting the button 'publish website' and I am going to listen to some music: 

1) Start with the $50 trillion or so in extant CDS.

2) Assume that as default rates for all types of collateral rise over next 24-36 months, 40% of the $50 trillion in CDS goes into the money. That is $20 trillion gross notional of CDS which must be funded.

3) Now assume a 25% recovery rate against that portion of all CDS that goes into the money.

4) That leaves you with a $15 trillion net amount that must be paid by providers of protection in CDS. And remember, a 40% in the money assumption for CDS is VERY conservative. The rise in loss rates for all type of collateral over the next 24 months could easily make the portion of CDS in the money grow to more like 60-70%. That is $40 plus trillion in notional payments vs. a recovery rate in single digits. 

Comment: Convincing the owners of this Black Swan song giving up their rights is the only problem Christopher does not answer...

Till updates.

(23 Nov 2008) As usual five very boring items...

Item 1) Links.
Item 2) A strange wasteland.
Item 3) Math: Strange attractors.
Item 4) Most stupid Republican article read today: David Limbaugh on Obama.
Item 5) The empty item. 

Item 1) Links. 

Calculated risk: Two graphics un US bank failures; one graphic in number of banks and one in total assets & deposits:  

Calculated risk: An old advertisement from Downey Savings (two days ago Downey went belly up, here is the FDIC statement):  

Jesse: Musings about US Citigroup going belly up yes or no:

Is it premature to speak of the failure of Citigroup? 

Jesse: Jesse has a very good graphic with all major DOW corrections since 1900 (look at the 'you are here' dot):

This Bear Market Is Already One for the Record Books  

Naked Capitalism: 

Citi Rescue Talks Underway 

Naked Capitalism (a graphic from the 1930 depression): 

No Corporate Profits for Two Years During Depression 

Prudent Bear: From the credit bubble bulletin:

Just the facts  

New York Times (a good interactive timeline)

10 weeks of financial turmoil  

Big Picture Café: Chris Whalen argues that all CDS contracts need to be cancelled, he does not explain how to convince the potential receivers of these many trillions to give up their positions:

Do We Need to Cancel ALL CDS Contracts? 

Big Picture Café: Prieur du Plessis wrote an article with the Baltic dry Index in it (scroll down). This index validates that the DOW Jones price/earnings ratio's are still far too high (but it is well known the only task of the Wall street traders is 'staging rallies'): 

Economic woes torpedo stock markets 

IMF chief economist (they finally wake up at the IMF): 

Worst of financial crisis yet to come 

Immobilien Blasen: Corporate Europe needs almost 200 billion refinancing in the next year, scroll to the graphic. Remark that European financial institutions only need a very small fraction from that:

Debt Pile Looming Over European Firms 

Macro Man: MM has a very good graphic about dividend yields versus bond yields since 1900. Scroll down to the one before last picture:

A few thoughts on banks  

Macro Man: As MM observes via Reuters, an amazing 186 companies on the S&P 500 have a market cap of under 4 billion US$ and as such should be excluded from the S&P 500. Reuters reports:   

Reuters: It looks almost official (I am glad that the new US Secretary of the Treasury uses US crafted so called 'economical laws' to fight the crisis):

Obama taps Geithner, Summers for top economic jobs 

Reuters blog: A dumb blog article with the title:

Thank You Mr. Geithner  

At the Daily Mash is a reporting reporter reporting:



Item 2) A strange wasteland.  

In the last link above (banks not happy...) there was a nice picture from a dead tree in a strange wasteland. As an antidote I made the next of it: 


Item 3) Math: Strange attractors.  

Why always concentrate on financial stuff or war? This item is a very beautiful concept from mathematics and you really do not have to understand math at the academic level in order not to learn a bit from it.

Inside the math field of dynamical systems, let me spare you all kind of difficult looking formulas. Basically all dynamical systems are like:

Tomorrow = Function (Today )  + some noise.

The 'tomorrow' can mean anything you like, for example:
--The stock price of manufacturer Philips,
--The money in your bank account,
--The weather,
--The position of the earth,
--The flow of the continents & so on.

Pictured below is a very famous strange attractor, you see more or less two 'wings' and some curves going from the one wing to the other. It is important to understand you see only a small part of the Lorentz attractor, only a few trajectories are made visible.
When you are in one of the wings you are always in one of the trajectories, but a very small push (or noise) will drive you into another trajectory that will drive you to the other wing tomorrow.

It is just like reality: small things can have big consequences... (Wikipedia source)

There is plenty of more in strange attractors, at US Standford they have a few collections that, I hope, serve as an advertisement for the study of mathematics.

This file is from 1995 (ignore the backgrounds please, it is advertising):  

At last (for this item): You my dear readers are dynamical systems on their own, but we from the math department are not capable of building a good model for emotion. That's the only reason you still have some freedom left; at the moment we understand how to model emotion, economical recessions and depressions will be a thing of the past.

Finally we could turn humanity into a machine that only needs some maintenance every now and then... 

Luckily there is no math model for freedom; freedom of humans is 'not observable' as they say in quantum mechanics (but that is another branch of sport).

Item 4) Most stupid Republican article read today: David Limbaugh on Obama.

It is well known that David Limbaugh, just like Ann Coulter, represent the finest of US conservative thinking. David and Ann are not street fighters, they are the intellectuals of the US conservative party. Let that be clear!

We all know that the US conservatives understand that

Taxing people = Stealing jobs. 

We all know that US conservatives hate the democrats because they tax people for no reason at all. The US conservatives think and think and they ponder the question why the democrats hate America so much, after all these years they still have not found the answer... 

Let me quote from the Limbaugh intellectual this eternal wisdom (source):

Already some 38 percent of Americans do not pay income taxes, and Barack Obama wants to increase that percentage dramatically.  

Comment: This looks like a wet dream for the US conservatives, may be that is why they lost the elections...

Item 5) The empty item.   

Empty empty empty; please use the own brain to fill this!

Till updates. 

(21 Nov 2008, Item 5 updated on 22 Nov) Doink! Yesterday finally the man with the hammer hit me when I read the S&P 500 had breached dot com bubble crash levels...
Somehow I felt just as tired as satisfied and rather tranquil when the giant size of this all was felt, so huge and therefore so pleasant... Today's items:

Item 1) Barry reports: Record breaking data everywhere!
Item 2) US car makers versus US financial institutions.
Item 3) Institutional Risk Analyst: Math and the crisis.
Item 4) Collateral damage: European industrial production falling from a cliff.
Item 5) The empty item. 

Item 1) Barry reports: Record breaking data everywhere!

Barry collected a bunch of tremendous beautiful data, le me quote a few (source):

From the October 2007 highs of 1,565, to yesterday’s close of 806.58, the S&P 500 market capitalization lost $6.69 trillion.  

Comment: Love is in the air. Quoting on:

The dividend yield on the S&P 500 is now greater than the yield on the 10-year Treasury. That hasn’t happened since 1958.  

Comment: This is a very important detail: Since stocks carry a higher risk anyway, by elementary logic they should have a higher yield compared to bonds.
I never studied in deep detail why the golden standard collapsed, rather likely it is the same as what destroys today's financial system: Too much money supply backed up by nothing (only fancy theories from dandy economists).
Don't get me wrong: I do not want to go back to the golden standard, fiat money is fine by me. But if the folks running the fiat money system do not understand the basics, we are in for a whole lot of problems... 

Item 2) US car makers versus US financial institutions.

The US car makers only want a lousy 25 billion US$ (teaser) loan, the US financial sector gets 700 billion US$ and the ticker is counting.

The US car makers get a cold shoulder and only when they cough up a good business plan they get approval. The financial sector was never asked to cough up a good business plan...

What's the difference?

The difference is that the US law makers understand the way the small pocket money will get burned away by the car makers. When Freddie Mac and Fanny Mae report losses of over 50 billion in the last Quarter, the US law makers do not complain.
Why is that? They do not understand the way financial companies work; all reported profits from the last decades were in fact profits derived from more credit. 

Year on year debt grew by about 13% since the mid seventies while profit growth was always below that...  

In short: US car makers get a cold shoulder because all Americans understand how they operate, when it comes to finance the Americans still worship the rich and worship the banks. 

They don't worship the golden calf but the fiat calf... 

Item 3) Institutional Risk Analyst: Math and the crisis.

The folks of the IRA are amazingly smart, their articles are sometimes hard to swallow (even for me). As no other website they are capable of shaking the foundations of my thinking. I always like it when my foundations are shook a little; a new delta function can enter my system... 

The article from IRA is very long (that also explains why I did not update yesterday) and if it was up to me I would quote the entire article but I understand most readers do not find joy in reading stuff like that.

So only a small (source) quote: 

The core of this grand project was to reconstruct financial economics as a branch of physics. If we could treat the agents, the atoms of the markets, people buying and selling, as if they were molecules, we could apply the same differential equations to finance that describe the behavior of molecules. What that entails is to take as the raw material, time series data, prices and returns, and look at them as the observables generated by processes which are stationary. By this I mean that the distribution of observables, the distribution of prices, is stable over time. 

Comment: In theory this is true; in the long run run prices are stable. But after a good day of work I hope you get some sleep in the night.
The problem with models like these is very simple: molecules don't have a memory let alone emotions. Science will always be incapable of finding the differential equations for emotion. That is also why all proceedings toward artificial intelligence have failed decade in decade out. 

Item 4) Collateral damage: European industrial production falling from a cliff.

Raw stuff: For example the large BASF company is locking down entire factories for a full month. Local steel producer Corus has only one real order left; other orders for steel have been drawn back (even when this comes to a high cost for the ordering company).

For me this is only collateral damage.

The entire US military has run on cheap credit for far too long and in case I want an end to that please don't come complain at my house address...

Furthermore, I am unemployed for many years and in case of some dumbo guys who's job hang on to the access of easy credit: This is your problem and not mine. 

Item 5) The empty item.  

This item is empty because yesterday the DOW visited the 7500 regions, this day it jumped up to above 8000... Here is the empty picture: 



I hope this item is empty enough for you: 

The DOW came from 8000, it magically returns to 8000.

Updated 22 Nov 2008:

There are persistent rumors that a guy named Tim Geithner will be the next US Secretary of the Treasury department. On my radar screen he never popped up before but he seems to be the New York Federal Reserve President so in a normal world he would be one of the most mighty of our beloved fiat money system.

Let me make, rather easily, make chopped meat of this debt hugger, (NY FED source) quote:

These concerns have been heightened in some quarters by the problems currently being experienced in the subprime mortgage sector. It will take some time before the full implications are understood and the full impact can be assessed. As of now, though, there are few signs that the disruptions in this one sector of the credit markets will have a lasting impact on credit markets as a whole.

Indeed, economic theory and recent practical experience offer some reassurance against both these specific concerns and more general worries about the implications of credit market innovations for the performance of the financial system. 

Comment: The date this quote came from is very important, it sheds light on 'how far they are' and the above quote comes from March 23 of the year 2007.
In the Summer of 2007 two major hedge funds cracked and in the main stream media this is the 'starting point' of the credit crisis...
For me life is simple: Tim Geithner does not have the stuff you need to preserve a fiat money system. So if the rumors are true, I only welcome another idiot into the Obama team & if the rumors are not true I wish the NY FED idiot all the luck he needs.


Understanding governments,

My dear reader, our governments constantly buy billions of so called 'preferred stocks' in order to 'provide liquidity' or 'prevent a meltdown' or whatever shitty reason they have to blow away your pension rights.

Most banks are 'recapitalised' via preferred stocks, so what are they? What exactly are preferred stocks?

On a rather lousy website known as they have managed all outside linking impossible because you never make it outside

No permalink, no this no that, only arrogance...

But if you scroll down to 'popular articles' and click on the 'Fixed income and interest rates' you understand how your pension fund will screw you up. 

Here is the stupid link to their main page:   

Rather likely the 'Fixed income and interest rates' is withdrawn within a day or two & the mental dwarfs over there think protecting links = protecting America...

Till updates.

(19 Nov 2008) Let this be the 'Obama update' and lets explore some future expected developments given the present situation.

Since I wanted to write Item 1) once more and since today we also had an al Qaida statement around Barack Obama, why not combine this?
Two items today:

Item 1) US financial sector: Projections of future debt growth.
Item 2) The al Qaida statement as released today + comments from my side. 

Item 1) US financial sector: Projections of future debt growth.

Before we calculate the future projections I would like to go back in time to the day when in this credit crisis that broke out in the Summer of 2007, the first Quarterly debt figures of the total US financial sector came out in the Autumn.

The same day the debt figures came out, I understood the US financial sector needed about 2500 billion in new debt in order to do 'business as usual'. Of course, since this was supposed to be a credit crisis, the new debt would not be there and hence there would be a tidal wave of bankruptcies...

You can find these in the D3 sub-release of the Z1 release of the US Federal Reserve, let me 'cut and paste' it in a table:

D.3 Debt Outstanding USA Domestic Financial Sectors (source)
Year & Quarter Credit crisis? Debt in billions US$
2007 Q2 No 14998.1
2007 Q3 Yes 15627.0
2007 Q4 Yes 16021.0
2008 Q1 Yes 16238.3
2008 Q2 Yes 16507.5
2008 Q3* Yes 17500
* Based on media reporting.

For me, as a scientist, it will be exiting to observe on 11 Dec (when the new Z1 release will be out) how good or bad my 2500 billion estimation of new debt was. 

So far the past, lets explore some future developments of this mountain of debt.
Since this is the 'Obama update' we calculate 4 years into the future. 

In that we use 16507.5 billion US$ at the starting point and calculate three scenario's:
Scenario 1) The historical debt growth (since 1975, about 13%),
Scenario 2) The 9.3% YoY growth since the FED gives Quarterly Z1 releases &
Scenario 3) Use only data since the credit crisis started (that's 10.1% YoY).

Here we go: 

Title: Obama fun scenario's for his presidency, inflation included*,
all in billions of US$** 
Year  Historical Q releases Z1 Credit crisis
2008 Q2 16507.5 16507.5 16507.5
2009 Q2 18653.5 18042.7 18174.8
2010 Q2 21078.4 19720.7 20010.4
2011 Q2 23818.6 21554.7 22031.5
2012 Q2 26915.0 23559.3 24256.6
* At this point in time it is unknown if deflation will set in,
it is likely but there is no proof whatsoever.
** All in 31 July 2008 dollars or course... 

One thing is clear: The credit crisis only lives in the real economy, in the imaginary economy (the financial world) it is the opposite. 

So Barack Obama, this is my gift for you: I have done the calculations that your so called 'economical experts' will never give you. Bad luck for you; you will never read it, your 'economical experts' will prevent that...

At the end of Item 1), in case if you are interested if the US Federal Reserve is interested in the development of the total debt of the USA financial sector?
Today the latest minutes came out, you only observe a bunch of people loose themselves in small details and nicely ignoring the big stuff, link:   

 Item 2) The al Qaida statement as released today + comments from my side.  

There are many media reports on this but lets make only two quotes from a mainstream US media outlet named msnbc (source), quote: 

Speaking in Arabic, al-Zawahri used the phrase "abeed al-beit," which literally translates as "house slaves." But in the video message, posted on Islamic militant Web sites Wednesday, al-Qaida supplied English subtitles of the speech that translated the phrase as "house Negroes."

In Washington, White House press secretary Dana Perino said the tape is a reminder that al-Qaida is irrational. 

Comment: For many years we hear from the White House that the economical fundamentals are strong; were these rational or irrational statements? 
Of course the new prez will work on the so called 'American interests', that is what the guy got elected anyway...
Proceed the stuff: 

The video graphics underlined the contrast al-Zawahri aimed to show: On one side of the screen was a photo of Obama wearing a Jewish skullcap and meeting Jewish leaders. On the other side was a photo of Malcolm X praying in a mosque. Interspersed was footage of Malcolm X talking of a "worldwide revolution" against the "Western power structure." 

Al-Zawahri addressed "all the world's weak and oppressed," and warned them: "America has put on a new face, but its heart full of hate, mind drowning in greed and spirit which spreads evil, murder, repression and despotism continue to be the same as always." 

Comment: For the time being I take a somewhat softer approach and point to the middle name Hussein in Barack Hussein Obama; until proven guilty he is innocent.
The proof of the pudding is not the promised 16 months withdrawal from Iraq; that was an election promise so this has to be carried out anyway.

No, the proof of this nigger pudding is in the Palestine equation.
Mark my words:

The Israelis have exactly 12 months from now to do their stinking best to solve their problems with the Palestines in general and the Hamas in particular.
Monsieur Hussein could be helpful to make all those unconditional billions of 'help' to the Israelis conditional on getting a real Palestine state & stop telling all that propaganda nonsense!

Mark my words: Obama is innocent until proven guilty on this detail. 

Lets leave it with that and hit the button 'publish website'.

Till updates.   

(18 Nov 2008) Only one item today because the financial news evolves rather good but the main point as why this all will collapse is still missing.

A week ago I published the latest update in the Nightmare files:

11 Nov 2008  US financial sector: Debt growth through the decades 

Please take your time to think about it; over the entire span debt figures of the total US financial sector are reported, the debt grew about 13% year on year.

Total debt on that sector is now 16.507 billion US$ (source, see the one before last column and scroll down) and I have to wait for the next release on 11 Dec 2008 to see if my just calculated estimate of 12% year on year grow will come out...

When I started the Nightmare files over one year ago, it was mostly based on my estimation that the entire US financial sector needed about 2500 billion US$ in new debt in order to function properly. Right now this 2500 billion estimate is indeed doing her majestic path, it seems to come out rather sharp... 

Yet non of the financial media outlets and none of those financial blogs (there are dozens of them) mention this high school math of simple to understand exponential growth.

I am still amazed on that detail; Nobody wants to see this easy to understand debt trap on the US financial sector. From the political leaders to these so called 'critical' financial bloggers; they don't want to see it.

Why move small stones around when there is an avalanche of big rocks coming from the mountains? This massive denial looks like some 'psychology thing'.

Don't forget: Now the US government is constantly helping her financial sector, all that debt growth will end as government debt in the end. It is rather dumb to expect that one or two trillion in tax payer money (in fact it is borrowed money) will make any kind of significant difference. (Again: Read the post linked above and use your brain!)

This massive denial makes otherwise smart people look standing outside reality, let me give you an example:

On the Prudent Bear gives Martin Hutchinson some good thinking if we are now into a deflationary or inflationary period (to be honest: I haven't figured that one out either, for the time being consumer inflation seems to be caged).
But on the size of the impending contraction of the US economy, Martin thinks a nice restore of the savings ratio of the US economy is all we need. He neglects that this saving ratio was absent for far too long and now we can proceed as if nothing has happened... (Source), quote:    

The recent spate of truly terrible economic numbers, such as the 2.8% retail sales decline in October (4.5% down on the previous year) and the 32% decline in automobile sales, suggests that wherever the bottom of the recession is located, we will get there quickly. The US savings rate and the balance of payments both need to be improved by about 5% of Gross Domestic Product, so a top-to-bottom decline in GDP of at least 5% is likely,. However there is little reason for GDP to decline more than 5% top-to-bottom, or maybe 7% to allow for a little overshoot. Once GDP gets to its new equilibrium level powerful factors stabilize it and produce renewed growth – after all, at that new level of GDP the United States is once again internationally competitive, selling goods and services to customers worldwide in a way that has been impossible for a decade. 

Comment: Just look at the USA car makers, for 18 years complaining but in fact doing nothing and now they could face bankruptcy... And 'internationally competitive' with what? Ok, computer, aviation and space techno is still investment grade.
But what country wants a health care system the USA has? Only lunatic countries... 

Lets leave it with that, but I want to mention only one link:

Have you ever heard of the Federal Reserve ABCPMMMFLF rescue program for commercial paper? It is a bit like 'Asset Backed Commercial Paper bla bla Liquidity Fund' and it avoids 'mid air collisions' between on and off balance items:   

It's a long but good read, till updates.  



Previous: history/index02 

Next: history/index04 














-Food for thought 1:

My dear reader, now the band of brothers known as the US Lehman Brothers investment bank is going for the Chapter 11 thing we can conclude that the band of brothers are broke. 

This is good news and there are some ripples on the 62,000 billion US$ so called 'credit default swaps' market. CDS is an instrument to pump risk through the entire system, it maximizes system failure.

But I don't want to talk about small markets like a 62 trillion market. I have a habit of going after the real stuff and you can find the real stuff at the Swiss Basel based Bank for International Settlements. (Source)

That bank has real stuff to tell, for example in Dec 2007 we only have 596,004  billion US$ of total derivative contracts. This is no problem; the USA gross domestic product is 14 trillion US$ a year and when this 600 trillion joke of the USA banks goes wrong they can always borrow more money from China, India or Vietnam. 

Here is the link to the Basel stuff & I hope you have enough to think about this 600 trillion joke.

In case you want to know what OTC derivates are, OTC means 'Over The Counter' and thus there is no registration and no regulation. It is just 600 trillion in free market stuff, please trust the US banks and go to sleep safely. 

Dated 16 Sept 2008   


-Food for thought 2:

And it makes me wonder, it makes me wonder so much...

If at the end of the second quarter of this year, the total US financial sector that is about 20% of the US economy, has 16507.5 billion of debt on herself;

Why does nobody sound the alarm?

In the last decade this debt has always expanded exponentially by 9% a year.
As a comparison, the US gross domestic product has grown just over 3% in the last decades after we left the golden standard and hugged fiat money.

Don't forget 16.5 trillion is far above the US GDP that is around 14 trillion US$ a year.

This is elementary math: you can explain it to 16 year old high school pupils that the US financial sector is doomed.

But if 16 year olds could understand this, why did the US government not understand this? And most of all; why did the Federal Reserve not understand this?

It makes me wonder; why full throttle drive towards the big cliffs?

It makes me wonder so much...

(Source, look at the one before last column.) 

Dated 19 Sept 2008. 


Nice video, a tribute to the Baghdad snipers:
The Baghdad sniper


And here is nice pdf file for my fellow scientists stating we had hundreds of thousands so called 'excess death toll' inside Iraq compared to a non invasion model. (The so called Lancet file that says that on average we likely have 650 thousand excess civil death toll.) 


This is funny: on one of those lefty antiwar US websites I found a very small Java Script and from now on I can check my own website upon the number of dead US slime inside Iraq. Here's the counter: 



Some old math I wrote about 13 years ago, it is very simple to understand: you can differentiate and integrate all geometrical objects. And when you triangulate a landscape or a movie scene properly you can later in a computer change the position of the camera. Of course you need a new file format because the goody good mpg format won't work.
This might be of future interest for police or stuff like that (you can change the camera viewpoint to that of the victims or that of the criminals. Of course this is not a miracle; missing information can only be repaired at a certain level but anyway... The math is there and it is waiting to be used!
(Ok you also need geometrical integration but that's a cakewalk, some geometric projection theory, lots of self repairing codes and very very difficult: a good camera device. But if these conditions are met you can later change the camera viewpoint...)


(17 Oct 2008) This morning I finished a very simple and non technical article about statistical testing of poisons in food. It is so horrible non technical that even political leaders can understand it's content; only seldom I have sunken so low...

Here is the pdf file.


A very old (25 years old) booklet transformed to the pdf format about home made shaped explosives. I don't think it is of very much use to the Iraqis but it is fun reading. They even used a Martini glass to penetrate 3 inches of steel! And all home made... Have fun reading it (it has lousy graphics).


I found a very nice booklet named 'Explosives from common materials', it is field study from the Americans. It covers a lot:
How to make improvised detonators, high explosives, primary and secondary explosives. It is very good only the procedure for making alcohol is not handy in Iraq; if the Iraqis need pure alcohol they should use the wine method for making pre distillation alcohol and use sugar, some kilo's fruit (about 10% of total batch produced), yeast and a lot of water.  


Sayings from famous and unknown people that shed light on their insights and their emotional daily running system:

Phrase nr one (from Dubya or the present lame duck president of the USA):

"The reason we start a war is to fight a war, win a war, thereby causing no more war!"
--The first Presidential debate

Phrase nr two, also from Dubya but I have to pump it up from my memory so there might be some little faults in it (it was some weeks after the 911 attacks on the USA):

The enemy is so evil that most people in the USA do not know what they do why they do!

Phrase nr three from the former USA secretary of defense Donald Rumsfeld (if my memory is correct he spoke these words in the week from 16 to 21 October 2001, at that point in time we were on the height of the anthrax scares): 

And it makes you wonder; How does he do it? And we would like to ask this person to come on over to our side and together fight the war on terror.

Phrase nr four is from me myself & I:

To understand your own 'logical thinking' you must know that logical thinking is only the first derivate of emotion. That is why all attempts towards artificial intelligence have failed: computers do not have emotion build in but we humans, like all other animals,  do.
The above mentioned three phrases of my enemies only expose their emotional system, lets destroy that system...

Phrase nr five is from US celebrity Donald Trump. A few weeks before this the famous Lancet report was published calculating Iraqi civil death toll at 650 thousand (this with a relatively large but acceptable standard deviation):

For myself I use 400 thousand killed.

Phrase nr six is from CNN's Larry King (CNN is received in 200 countries so therefore the CNN management thinks it's wise that Larry King can parade every day one or more American celebrities). When King was asked why he did not use the internet he responded:

There are a billion things on the internet.

Phrase nr seven is one more from the former US secretary of defense. After a few years in the war on terror he was asked what it all boiled down to. He said:

Can we kill the terrorists in a faster rate than the massandra's spit them out?

Phrase nr eight is from Osama bin Laden. The phrase is very worthwhile mentioning because the US CIA folks were in the past very satisfied with 'Just a few weapon deliveries and we lured the Russians into Afghanistan'.

When America needed us to fight their proxy war against Russia they supported us. The moment the Russians left Afghanistan we were irrelevant. 

Phrase nr nine is from US four star general Peter Pace, he made it during a memorial speech on 11 Sept 2006 (exactly five years after the 9/11 attacks from 2001).
At that point in time total US military death toll already stood above the number of civilians killed on 9/11/2001.

Right now the total amount of killed US military members is approaching the civil death toll from nine September 2001.

Phrase nr 10 is again from me myself & I. It is around the rebuilding of the organization after the military campaign in Afghanistan.

Make sure to imitate the way the German army was organized after world war one; That is make sure that every member can function properly until up three hierarchical layers higher. If you do that you can grow with an enormous speed in the future when this is needed.

Phrase nr eleven is also from me myself & I. It is to proof that I can be stupid too. I do not know when I wrote it but it was a long time ago.
I asked the Iraqis the next:

Can you hold on one more year? After that things will get better, I promise.

You just don't imagine how much I have regretted those words, after that the US military came with bonuses of up to 70 thousand dollars for enlisting / reenlisting and how could I have been so stupid as to not have foreseen this?
I mean the Americans run their country on the greenback & why was I outside reality? Why?

Phrase number twelve is from a peace loving female neighbor of mine, her name is Geertruida.

We people we can speak, so we should not fight war but speak with each other until our differences are solved.

Of course I had to remark: Because we have speech we are much better in making war compared to other animal species. 

Phrase nr thirteen is from the present al Qaida leader in Iraq. I mention it because I think it was a very important detail, it was made in his first statement after he took over from Zarqawi.

We need help from scientists, let it be in the field of communications, chemistry, medics, biologicals or whatever what. You can live your dream and kill the Americans on a large scale inside their bases. You can fulfill your scientific dreams.

Phrase nr fourteen is from CNN's war whore Christiana Armanpour. Why do I call a whore where in fact she is a respected senior correspondent?
That is because she understands the difference between a 'commodity driven war' and one that is not driven by that.
In the entire Iraqi war no CNN reporter has emphasized that Iraq is very much 'commodity driven' (read stealing the oil) but when Tony Blair resigns she says:

He wanted military assistance in Bosnia although there are no commodities over there.

(Or words of similar phrasing, I do not recall her exact words but they boiled down to the above.)   


Not all my hobbies evolve around war, death and destruction, or financial markets. No, I also like to cook food and stuff. There will not be many recipes but here is the index to some food I made, it is just a small fraction of what I cook. A very small fraction but the goal is to come to a feast meal for the Iraqis and Afghanis. So it likely will take a few more years...

















Title: A 2008 condolences card to the US dollar.