What’s Mine Is Yours

I see the 1:45 jam job is fifteen minutes or so early today. I guess one of the black boxes wanted to beat the crowd. Meantime, in the real world where people live, things got uglier. Apparently JPM has petitioned the court not to release any more money to customers of MF Global, on the grounds that MF Global’s big losing trade, a repo-to-maturity, is a derivative and therefore has preference over MF Global’s liability to customers. And this preference applies not just to futures brokers, but even to banks. This explains why B of A recently transferred a few trillion dollars worth of derivative exposure to its banking arm – let the depositors and the FDIC – ultimately the taxpayer – hold the bag. This is Ripley’s believe-it-or-not territory, if this position holds up any funds on deposit with a U.S. bank are essentially equity, except to the extent that there is a taxpayer (FDIC) guarantee. And remember that these banks are not bound by any law or regulation – even CBS’s 60 Minutes, as mainstream as you can get, now is starting to catch on to the extent of the free pass from regulation that these guys are buying from Congress. And did I mention that MF Global apparently had the Clintons on the payroll to the extent of $50,000 a month? Just in case, you know.

Anyway, I’m just sitting short waiting for the backward-looking data to roll over – looks like it has already started to – into the next recession. ECRI’s WLI continues its descent after a brief upward blip, and John Hussman does a more in-depth analysis.

The uniformity of recessionary evidence we observe today has never been seen except during or just prior to other historical recessions.

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