Centralized markets, or what is otherwise known as gamed, jigged, or rigged planned markets… fail. Simple. Someone, or some secret dark pool entity, ends up holding the proverbial bag in the end when the lights come back on, and the credits (finally) roll at the end of this movie. It is the way of Capitalism: money flows from hand to hand – until the third generation.
Knowing that reason alone, why would one think that the centralized planning Treasury Departments of quasi capital markets by anyone’s Finance Minister (US/China/Russia/Canada/France/Somalia) would work out positively over the medium – and long term? It likely won’t… and neither would ones investment policy statement if the free market is not permitted to exist. Has the Free Market indeed ever been really “free” of the overlord Oligarch’s ultimate control?
On a defensive note, one should expand one’s investment model horizon to include such high pole black swan events such as a United States Technical default in 2011.
Now that the $14.3T debt ceiling has been reached, Current and Back Issues: Daily Treasury Statement: Publications & Guidance: Financial Management Service , it is time to raid public pension funds and impair other assets as lien/collateral with rights of restitution and collateral confiscation. First you see those defined benefit pension “surplus assets” and then you “don’t”. All monies will be exchanged at the touch of a button once the debt ceiling is raised by a few more trillion you are all assured.
What if, by reason of intentional political theater, it is not raised “in time”, ….and what happens to the $300B of Onion and other worker pension surplus money that Mr. Getitoutohere spent between now and then with QE3? Notice the blackmail similarities? Give me a debt limit extension – or kiss your pension plan goodbye.
So in short, this is what could happen over the summer doldrums. Pensions and all other monies are securitized by Timmmay Getitoutohere to extend the debt ceiling game until mid July/11 when it will be announced that the bipartisan “Gangsters of
Six Five” have failed to reach an agreement on raising the debt limit. This will result in a technical default, setting off a repricing moment to the downside that the GSquid and the rest of the PD’s will no doubt fully benefit from shorting. Then just as quickly as the S&P, 30 year, and USD drop 20% on the default news, the gangsters happily re-appear after wee hours of negotiation with an immediate financial budget “fix” with a decade long middle-class solution. The headlines read “Unions have pressed Congress to agree…” and have forced them buggers to hold a budgetary vote approving more taxpayer middle class debt funding for the Banksters.
So in summary, it’s all about gamesmanship. Soft things, like share certificates that when dropped on your foot don’t hurt, will likely be looking up, up and away till mid-July; and then it should crash (5 days of default); with next a slow and steady bounce back to new, all-time highs. Once again proving quote stuffing success, and attempting to screw the Shorties with “The Trillion Dollar Debt Deal” at the same time. Technical Hint: Light and nimble feet allow for maximum torque at point of release:
Scoring 9.8 for Fancy Footwork and Follow Thru,