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“One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them. “
                                    Thomas Sowell

Commentary & Analysis


It is sad to see how easily just one hubris-filled hack can so easily devastate a company. At least now we have a new term to add to the financial world’s expanding lexicon of ugliness.

Corzined [kor-zeen’d]

  1. to be completely fleeced of your money (as in US taxpayers, New Jersey taxpayers, MF Global investors, MF Global employees, and MF Global customers)
  2. to watch your hubris-filled “fleecer” be rewarded with a new opportunity to apply his trade (as in being thrown out of New Jersey for incompetence only to be considered the new Master of the Universe and make himself millions for producing the same degree of incompetence)
  3. to be screwed and you can’t do a damn thing about it because said “screwer” hides behind his sanctimonious political pals and high-priced lawyers paid for with the millions just taken from you (as in what John Corzine will now do in order to stay out of prison and move on to yet another high profile big money job somewhere once the dust settles and he is “rehabilitated” in the wilderness)
  4. to realize that life isn’t fair and the ones most publically complaining about that fact are the ones who are least fair (as in “compassionate” leftist so compassionate with other peoples’ money)
  5. to watch a clueless leader bet the firm on one ill thought-out trade that surprises no one except said clueless leader when it goes bad (as in John Corzine)

Yes, this definition could go on infinitum, but I think you get the picture. My special angst toward Corzine is because I have been fortunate enough to get to know some of the good people at MF Global in Chicago — very good people with integrity who worked hard to build their careers and the firm. They deserved better.

Shuffling the deck chairs on the Titanic!

I don’t know about you, but I’m heading out to my chiropractor today. I’m experiencing a nasty case of whipsaw following prices on my screens. Let’s see, only a few cross currents out there:

  1. Greece referendum–on, off, on, off…who the heck knows?
  2. Italy budget–yes, no, maybe, Berlusconi going, Berlusconi staying
  3. China – going to invest a bundle in the eurozone; well, maybe; no way; well, let’s talk about it a bit at the G-20 – maybe we can work something out …
  4. German taxpayers–very pissed, no doubt there
  5. Sarkozy–he saved the world, he didn’t save the world, he will save the world
  6. QE3 is on again, or maybe it’s off again
  7. US corporate earnings look good, but some are really awful
  8. Stocks are wagging the euro; the euro is wagging stocks

EUR/USD 30-min:

Do we turn off the trading screens for a while? Maybe! But then again, if we do that we could miss the mother of all trades…

No matter how the G-20 slices or dices or schmoozes or obfuscates, the world is awash in debt, the welfare state and the edifice of crony capitalism steadying this structure is in the process of toppling over, and there isn’t a darn thing they can do about it other than to prolong it a bit more by, you guessed it, throwing more of our money at the problem, which in turn adds more leverage to the system. [Had you penned a financial novel with the current economic backdrop which portrayed pols and financial elites as being such feckless beings, no publisher would have considered it. Yet we are living through this real-time experiment of how to destroy what once was a decent global financial system.]

Here is how it might play out from here unless there are some very serious coordinated policy changes–to say I’m bearish is an understatement of huge proportion:

  1. Greece defaults and exits the single currency experiment
  2. Italian bond yields spike to 15%
  3. Banks tumble
  4. France losses its Triple-A rating
  5. The EFSF structure crumbles
  6. Germany says no and really means it this time
  7. Single currency goes into the history books with rest of monetary union attempts
  8. Global growth crushes down
  9. China gets hammered accordingly and its real estate bubble, commodities bubble, social bubble pop all at once
  10. US enters deep recession and QE3 doesn’t matter just like the last two didn’t
  11. The Dow Jones Industrial Average heads toward 5,000
  12. US social unrest manifests in serious violence
  13. Global deflation ascends as all central banks are finally seen for what they are–useless at best, dangerous at worst–as all they do is screw up the market process
  14. Finally the world’s leverage is reduced as debts deflate
  15. Now real growth can resume

Okay. Sorry. Maybe 1-15 is too gloomy. And hopefully very wrong; but if you have been paying attention I think you have to admit there is at least some degree of plausibility in that sequence of events.