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2018-12-07 07:35 by Karl Denninger
in Federal Government , 318 references
[Comments enabled]  

So-cited the Daily Beast (which demands I let it run crazy-scam ads to view, so no linkey will be provided.)

The reference is to the debt at the federal level; Trump has been led to believe and has bought into the idea that "growth" can fix the problem.

He's not only wrong those telling him this are lying.  You need only look at the last fiscal year -- he got his "growth" but federal debt expanded at 6.2% of the economy, far beyond any rational target for GDP and also roughly double the actual realized GDP expansion.

Two exponentially-growing (that is, "x% per year" growth) things, where one exponent is larger than the other, will always blow up with the larger running away in a hockey-stick fashion.  This is trivially provable if you don't believe it in seconds using Excel or Google's Sheets.

It always happens -- exactly how quickly depends on the parameters, but that you will never get away with this is mathematical fact.

Sadly there is another fact in play, which is that the markets never let you actually hit the wall.  1929 was not the actual wall.  Neither was 2007.  Nor was 2000.  All three of these events occurred long before the actual mathematical wall was reached.  They happened because the market sussed out that all the game-playing was not going to be voluntarily curtailed, ever, and that the frauds embedded in that game-playing would continue forevermore.

In other words the inevitability of the outcome became apparent to the markets and it was that determination which, I remind you, is a purely psychological matter, that resulted in the crash.

If you remember the CEO of Citibank infamously said that while he knew the music would stop while it's playing you have to get up and dance.  The firm was nearly destroyed by doing this and many other banks were destroyed including Bear Stearns, Lehman, IndyMac, Washington Mutual, Wachovia and more.  General Motors only survived as a result of a massive, unfunded bailout by the US Government.  The market didn't go down "a bit" it lost roughly 2/3rds of it's value, a plunge only arrested when Congress literally threatened to legislate fraud and force it upon FASB, convincing them to allow fraud in accounting (specifically, asset "values") on a forward, permanent basis.

Absolutely nothing got actually fixed.  Nobody went to prison for said frauds.  The people who got reamed were the shareholders and, in some cases, bondholders.  They lost everything as a direct consequence of said frauds and there was no compensation for them.

There is a known, hard date out there of 2024.  I remind you from my previous article that by 2024 Medicare, which currently spends about $1,100 billion a year yet only takes in about $250 billion, will run out of Treasuries it can redeem with the US Treasury (and by doing so force the Treasury to issue same into the public market, since the US Treasury has no money and operates on a perpetual deficit.)  That this is going to happen, and when it does that Medicare will be short some 75% of what it is asked to pay, is a known fact.  That said event will occur approximately six years from now is also a known fact.  While the actual end date might move a year either direction or two that doesn't matter because once again the market never lets you actually hit the wall.

This specific problem is especially severe because unlike the housing market which was a few percent of the economy (and houses were not being sold at four times their value), and unlike the tech crash which was powered by a few dozen crazy stock market plays that had no real profit prospects this sector is 20% of the economy and the people over 65 really are spending the Medicare funds in hospitals, doctor offices and pharmacies.

It's not "loosey goosey" numbers on a screen as was the case in 1929 and 2000, and it's several times the size of the real economic impact from the housing mess.

There is no escaping this outcome -- a complete detonation of the federal budget and asset markets -- other than a dramatic and immediate reduction in the cost of health services and products.  Not "bending the curve", not tiny incremental changes worth a billion over 10 years or so (e.g. $100 million a year) but rather an across-the-board, immediate reduction in cost for everyone whether government or not in the health care space by about 80%!

In other words health care must be reset to be approximately 4% of the economy instead of the nearly-20% it is now and you cannot wait until the actual collapse in funding comes or you are going to kill at least ten million Americans when the checks bounce.

There are answers.  This sort of reduction in cost is not impossible and it doesn't mean throwing Granny down the stairs -- or in the hole.  However, it cannot happen if the collusive, monopolist practices now rampant are allowed to continue and are not met with proper sanction that has always existed under 100+ year old anti-trust law but that governments at the federal, state and local levels all refuse to enforce.

President Trump will not be "gone" before this all comes apart and destroys the economy and asset markets if he wins a second term.  He might manage to escape before it all goes to Hell should he be defeated in 2020 but even that is uncertain.  The problem with exponential explosions of this general sort is that very small changes in economic outcomes can accelerate the timeline dramatically because these timelines are always predicated on things continuing as they are -- that is, no recessions, no serious disruptions in the global economic environment and, quite-importantly, no wars that cut off resources or otherwise constrain commodities (like oil.)  For instance were we to have a recession in 2020 the odds of that causing an immediate acceleration such that Medicare blows up one or two years hence instead of four would be extremely high.  In turn the odds of the market deciding to not wait the two years to react would go to near-100% and what would otherwise be an ordinary market downturn and recession would likely turn into economic and market destruction worse than the 1930s.

No, Mr. President, you won't "not be here" when this happens.....


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2018-12-06 14:35 by Karl Denninger
in POTD , 184 references

It runs into the forest much like this.....and if you follow it looking for the source you may well get eaten by a 'yote, a wild boar or a bear -- especially a bear.


Email to hang this unique piece of art on your wall today!

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2018-12-06 09:37 by Karl Denninger
in Editorial , 1463 references
[Comments enabled]  

You said none of the caravan members will make it into the US.

Well, you lied.

Not only did you lie you let one of them drop an anchor baby in the US.

Well, at least one.

And by the way, does anyone believe a 2-year old climbed the fence?  Where were the many thousands of alleged border patrol folks that could have (if they wanted to) prevent that?

Now you've forced me, at gunpoint, to pay for this woman's birth expenses.  She has no money and thus the taxpayer will be forced to cover it.  I pay taxes, therefore you now have shoved a gun up my nose and forced me to pay for her hospital bill.

You will force me, and the rest of Americans, at gunpoint, to pay for her spawn -- to house that child, to feed it, to clothe it and to educate it.

Let's put a number on this -- $4,000 a month for the next 18 years is the average that these invading locusts consume.  That's north of $800,000 that she and her spawn are now going to steal and you can blow me if you think I'm going to willingly fork it up without consequence to you and everyone else involved for your political lies.

All of this happened because you did not keep your promise to build the ****ing wall.

You said you would veto not one but two budget resolutions which didn't include the funding for it or the construction.  You failed to veto either.  You have threatened a third veto but that's a lie too, and you know it.  You have in fact already told Congress you will sign a CR giving them "more time" with no wall funding.

In fact this woman is celebrating that she has now managed to rob America of nearly a million dollars.

Calling the birth in the U.S. a "big reward" for her family's journey....

big reward eh?  I'd say $800,000 is quite a "big reward."

She robbed us all with your help and explicit consent and she will continue to do so.

You're a lying sack of ****, Mr. President, and you will have no second term.

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2018-12-06 09:25 by Karl Denninger
in Company Specific , 163 references
[Comments enabled]  

This is damning:

(Reuters) - Facebook Inc (FB.O) gave some companies, including Netflix (NFLX.O) and Airbnb, preferential access to user data in 2015 as it limited services for most others, according to company emails and presentations released by a British lawmaker.

 Using a dominant market position (which Facebook has in online, social-media advertising) in concert with others with the intent or outcome of limiting competition is a felony under 15 USC Chapter 1.

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

It is undisputed that preferential access to user data, granted to some firms and not others in similar lines of business, which appears to have been intentional on the part of Facebook and undertaken with the knowledge of and at direction by Zuckerberg himself, appears to run afoul of this law.

Dating app Badoo and Lyft were among the other companies 'whitelisted' for access to data about users' friends, the documents here showed.

Collins also alleged that Facebook took aggressive positions against competitor apps by denying them access to any user data.


Assuming these allegations are proved as factual this must be brought forward and adjudicated.  There is simply no excuse for not doing so and every executive at Facesucker with knowledge and involvement must face the music.

At the point you obtain market power, which Facebook had established well before this date, this sort of preferential activity undertaken to assist one party while harming another for their and your mutual beneift is simply not permitted under US Federal Law -- period.

And it's not just a civil (you get sued) matter either -- it's not only properly the matter for a lawsuit it is also a criminal felony under which you can and damn well should be indicted and prosecuted.

Where are the handcuffs?

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2018-12-05 12:51 by Karl Denninger
in POTD , 124 references

but cool artwork does not!


Email to hang this on your wall -- or give it as a Christmas gift!

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