Tuesday, September 13, 2011

Happy Birthday To Us

Today is the fifth birthday of this Blog. Macro Man couldn’t have picked a more torrid 5 years and perhaps one day a lump of magnetic material will be dug up from a bog, analysed and found to contain the financial equivalent of the iridium that pointed to an explanation for the death of the dinosaurs. The Macro Man diaries could be pawed over by academics of the future to then be held up in business schools, philosophy, psychology and history classes as proof of how NOT to run an economy, financial institution, monetary system, political system, society or world.

Or, more likely, held up as an example of how in the past people had nothing better to do with their lives than invest man-years developing complex technologies so that they could waste more man-years filling them with complete rubbish, (if they don’t find Facebook and Twitter first).

In the past five years we have spectacularly seen the western hegemony go from boom to bust. The complexities of economic theory proved, E=MC2 like, to be nothing more complex than a meld of "live within your means" and "if someone else is willing to do your job for less, you are screwed", leaving us at this very moment unemployed with the debt collector at the door.

Today's story is once again that the debt will be paid off by a massive infusion of money from China, the type O universal money donor to all the type AB universal money recipients of Europe.

"Nothing changed there over the last 5 years."

Meanwhile the second wave banking crisis appears to have come to fruition. The mighty French banks that appeared unscathed by the 2007/8 sub-prime mortgage disaster are currently suffering from their own sub-prime sovereign disaster. To the point that the vigilantes are marking BNP's market cap at EUR29bio... This, for a company that has 50bil of tier one capital, made E7.8bio profit last year, had assets last year of 3.1 trillion and most importantly, is the pride of a government proved to be interventionist in the protection of its national treasures and whose demise would make Lehman Brothers look like a Buckingham Palace tea party, TMM think that it has all gone too far and refer you to Andy Haldane’s superb speech. Especially the part:

“Asset prices are guesses about the future. Faced with uncertainty about the future, market participants form these guesses using their own heuristics. One such heuristic is the “popular narrative” – a simple story that aims to make sense of reality. Risk on/risk off is precisely such a popular narrative. The effect of popular narratives is to increase psychological contagion in financial markets. Simple stories generate market mood swings. The greater the uncertainty, the more compelling the simple story and the greater the amplitude of these mood swings...

...All of these behavioural elements have come together in today’s financial markets – disaster myopia, intrinsic uncertainty and deep trauma. This may help explain why risk-takers have their foot poised on both brake and accelerator, why risk capital is in stop-start mode. That implies a risk of heavy and persistent financial congestion in the period ahead. With hindsight, Roosevelt’s fear (of fear) in 1933 was well-founded,
economically and psychologically. It may also be being repeated."

Roughly paraphrased as "MAN UP!".

This is particularly apt today where simple story 1, the “we are saved” FT story, has been replaced within a couple of hours by the “we are doomed” story written by a proven euro shock jock trying to whip up panic over BNP using the well known and innocuous ECB/FED swap lines.

TMM urge the market in true scouser style to please “CAAAAALM DOWN”. Which is really not their job as it should have been enforced by a stern hand and clip around the ear from the Eurocrats. But, like a ginger haired teacher in a Peckham Comprehensive school, they appear to have lost complete control of the class.

The rest of the world is steadily losing patience with the lack of European control too. The US’s Timmy G is being airlifted in to sit in on the EU finance ministers gathering in Poland on Friday which to TMM smacks of early 2010 when he taught the Eurostriches the one trick of STFU which worked so well throughout the summer of 2010. Unfortunately it is now completely inappropriate and is having the wrong effect. Now they urgently need to be taught how to speak again, but with one voice. So TMM are hoping that a new era of SWOV will be forthcoming.

That’s enough of the heavy stuff. Normally at school on your birthday you get a cake and are allowed to play games so to celebrate we would offer up the chance to expand TMM’s glossary of TMMisms and invite suggestions. The top 5 will be added. More if thought apt. We know this is pretty pathetic but as we don't have any TMM T-shirts, mugs or financial bailouts to hand out its the best we could come up with.


Anonymous said...

Congratulations. This blog has always been a must-read for me - thanks and well done guys ;-)

CV said...

And what a five years it has been, it is my first daily read and have been so for more than 3 years.

Oh and I agree about "calming down", basically, the contrarian portfolio seems to me to be:

1. EU and US Banks
2. US for profit education providers
3. US for profit health providers.

Buy, sit back and wait?

(will think about additions to the dictionary)


Big Daddy said...

New TMMism:

HWBF - He who blinks first

Relevant to both policymakers and traders.

Anonymous said...

Happy birthday TMM - looking forward to reading you for years to come!!!

Anonymous said...

TINA - There is no alternative

CV said...

Obviously, this is all LB, but

TWINE - The World is Not Ending

(or is it there already?)


Anonymous said...

BATOYS - Buy And Turn Off Your Screen

MoreLiver said...

Happy birthday to the team, keep up the good work for a minimum of five more years.

Manc Trader said...

Have really enjoyed the blog from its inception. If only I could write so well! sigh

Anonymous said...


Really enjoy your blog, gives insight about your side of the Atlantic. Plus you guys have a much more eloquent manner of speech.

Anonymous said...

'C f C' says'
Start from the premise that the majority of market particpants are simply stupid ,then forget it for day to day purposes because they are well able to remain sutpid longer than we could remain solvent.

Priced in is very large policial and economic event and if it happens they will be proven right and be well paid for it. If they are wrong however we are going to be in a very significant mispricing zone.Simple as that ,now you place your bets according to whatever fanciful rational you can come up with it. The latter is meant to imply that the rational makes no difference to what will remin unknown until the fateful time when it will be painful for the losing side.

I still see a lot of political gameplaying which is handing a free shot to the shortside,but how do we know that behind this there is a serious enough split/dissension that could turn this entire issue from possible crap to a crap reality?

Psychology would suggest surely they realise the outcomes in store and are not hellbent of mutual destruction? Then you consider a pillock who could resign a major post at such a crucial time and you wonder?

I have no idea as to the outcome here re the Eurozone,but I do have one comment that I think worthy. Is it my imagination ,or have the markets become much more a crapshoot since centralbanks/govts got more interactive with them trying to mould them to a particular economic outcome rather than taking a more laissez faire attitude? I mean it's hard enough trying to work out the economic enviroment and then spot the winners and losers,but as it stands all that thought/analysis seems to be worthless when the political/interventionist risk waiting on the sidelines to come in can render it worthless past the point at which one can stand by an economic theme.
Just something that occurred to me when I started to think when was the market 'free' from for any reasonable length of time from the machinations of politicains and their hired guns at the CB's?
Seems so long ago I can barely remember what it's like.

Secret--Sauce said...

Happy birtday!

imo, long French banks has the potential to leave a burning sensation in a certain orifice; they will be saved but shareholders, particularly fuzzy foreigners, may not be, at any rate in current size and form.

CV said...

Agreed Secret Sauce, I am mightly tempted to splurge on CA or BNP but I remain wearily aware of the probability of dirigiste outcome.


Secret--Sauce said...

In my book they're 100% going concerns, and I will take their credit risk, but equity? How do you say "recapitalization via dilutive share emission" in French?

Also, if national champion, tbtf etc. is your investment rationale, then take a punt on NBG, $0.77 last I looked. They're not going anywhere either. The Greek Orthodox Church is a shareholder for Christ's sake.

Nic said...


Anonymous said...

'C f C' says'
Secret -s...i so hope you are right on that because i have already done so albeit not French due to my patriotic streak

Anonymous said...

'C f C' sits idle and wonders..

When a really infrequent mega event happens it usually destroys because it's a sudden surprise to people in the market.They've ad no chance to prepare basically.

Now i am trying to work out how a market can be surprised if over the course of a year it has had the opportunity to prie in that outcome to be a virtual 100% reality?

Help me out here,where am I going wrong with the logic?

Anonymous said...

When I was earning in 1970s 80s & early 90s the top rate of income tax was 60% so perhaps some of these whingers should put up and shut up.
Now I'm a pensioner over 65, I receive a state pension of c£5K per annum and an increased personal tax allowance of c£9.5K. My personal pension takes me over c£19K per annum is therefore taxed at 50% even at that meagre level as I lose £1 of allowance for evey £2 of extra income over that sum (and that includes bank interest)!!! Then I pay 20% tax on top of that!!!
High earning whingers frankly make me sick, but not as sick as the Philip Greens and the assortment who kick footballs around a field for a living. They pay less than me even, on £millions!
Let us all park our wife in Monte Carlo and assign everything to her? Or let us all set up an offshore trust and draw income as borrowings? Why not?

Anonymous said...

Attack of the zerohedgers

Charles Butler said...

You've smacked it on the head, 'C from C'. The only possible anon-sourced revelation left would be someone finding a new EZ country that no one even knew existed. Makes the whole effort stink of bullshit - but we won't be staking much on that.

Anyone noticed that today's anon from the WSJ knocked 7% off BNP leaving the other French banks positive? There is hope.

Happy birthday, TMM.

Anonymous said...

TMMism: TDET - Tap Dancing European Technocrat; Seems to fit with the talk a lot and while saying little that comes from the bevy of daily speakers in the Eurozone, plus the mental image makes me smile.

Congrats on 5 yrs!

WellRed said...

CTD - Converging to default. Used to describe the lengthy process (Greek or otherwise) whereby an entity has been generally recognized as insolvent, but for any number of reasons, has been put on temporary life support by one official entity or another.

I know I know, same acronym as cheapest to deliver, but I figured you guys aren't technical enough for this to be much of an issue.

Bootvis said...


Skippy said...

MA - Modern Armor - inspired by the 2006 Darwin Award winner (see below) and the endless capacity for the EU leaders to test their mordern armor.

(26 August 2006, Leicester, England) Darren's death was a mystery. The 33-year-old was found slumped in the hallway of his house, bleeding from stab wounds to his chest. Police initially assumed that an assailant had attacked him, but they could find no supporting evidence. A year later, the inquest revealed why Darren can stake his claim to a place among the winners of the Darwin Award.
Darren had called a friend, but minutes after he hung up, rang back to ask for an ambulance. The front door was ajar, and Darren was found lying near a bloodstained lock-knife he had purchased whilst on holiday in Spain. Forensics investigators saw no indication of a struggle, and the coroner reported that the stab wounds seemed to be self-inflicted. However, Darren had shown no suicidal tendencies.

His wife, who was on holiday at the time of the incident, cleared up the mystery, and revealed why our subject will go down in history as a Darwin Award winner. As she was leaving for the holiday, she remembered Darren wondering whether his new jacket was 'stab-proof'.

That's right. Darren decided to find out if his jacket could withstand a knife attack. Did he choose to test his jacket while it was draped over the back of a chair? No, our man thought that the best approach would be to wear the garment and stab himself. Sadly, his choice of armor proved less resistant to a sharp blade than he had hoped.

The coroner reached a verdict of accidental death by 'misadventure'.

karen said...

Yes, you couldn't have picked a better 5 years to be alive! Thrilled you are still with us, sharing your brilliance and wit! May you never grow dim : )

abee crombie said...

happy b day

i think we need a TMMism for ZH... something like DGDF or ZHPF zero hedge pessimistic forever


high frequency gone wild. when conflicting news reports come out. what do the computers do?

take off their shirts of course

Tradebot said...

Happy birthday blog!

I think Macro Man might have a point about the French banks, given the excess liquidity in the marketplace and eager & willing central banks to fund wide variety of collateral - mind boggles that their equity has been hammered. Maybe an unforseen consequence from the short selling ban?

There must be eventually a point where risk/reward makes sense for long trade, but given my crap sense of timing it will probably be 30% off from my eventual entry to the trade!

Dublin Dundee Humberside said...

SNB = SAFE Newbies Board

Leftback said...

Happy Birthday, TMM, font of wisdom and source of wondrous financial acronyms. I have and always will learn an immense amount here on a daily basis, while not playing the role of agent provocateur and blog jester...

ZH = BTSNBN (blog that shall not be named)
Gold = ATCNGD (asset that can never go down)
Karen = TGWTBA (the girl with the beautiful ankles)
Crisis = EBKAM (Eurobllx Kredit Anstalt Moment)

Now, back to the markets.... Krugman says TEOTWAWKI...!! TEOTWAWKI...!!!

Agree with CV that the worst is over for now. Sit back and wait, and sell volatility?

Alen Mattich said...

Well done Mr Macro for founding something worth sustaining and the rest of you Macrlings for sustaining it so well. Here's to another five years (at least).

Leftback said...

We did note that said bank is trading at 0.23 x book value, and as such is probably a good substrate for a short term punt, of the type for which TMM readers have a fondness. Here's how to execute such a punt. GIGOSFA !

GIGOSFA - get in, get out, stop f*cking about.

Dublin Dundee Humberside said...

SNB = SAFE Newbies Board
ECB = ECho and the Bunnymen (and their great hit, "Nothing Lasts Forever"

abee crombie said...

PYSGBMM - pickup your skirt, grab your balls and make some money

Amplitudeinthehouse said...

Thanks T-MM! - its been an enlightening year.

Anonymous said...

Joyeux Anniversaire a vous mon amis!

Must read everyday. As you notice, especially during a crisis.

The Original said...

EURO Convergence Unravelling, Non-Taxpaying Spivs

Anonymous said...

TMM, Anyone.

Ever thought of Cdn banks? - Royal - yield(4.65%). Down from $60 to $46(C$) today.

Anonymous said...

'C f C' says'
Given the penchant on show today and this merkel interview..


Then I dedicate this one to dear Angela to pass along the chain of command... JSTFU ,trust no help needed deciphering that one.

Martin Ghoul said...

I am pretty sure TMM is technical enough to know what "CTD" stands for... Congrats to MM and long may it continue!

ntwsc said...

Happy birthday blogsters!
Hope it was sticky buns all round.

Well I dunno, PASOKing has long since burned a hole in the annals based on a previous discussion ;) Pimps and Stylemerchants Of Kingsizedf*ckups.

WellRed said...

Mr Ghoul,

Thanks for pointing out how insulting the addendum to my post may have come across. Clearly, TMM knows what CTD stands for in market parlance. What I meant was that I cannot recall it having come up on this blog, and therefore re-assigning the acronym as per my suggestion shouldn't be particularly problematic.

Anonymous said...

Vengabus - A trade/idea that has everyone jumping on board and becomes immensely popular but is destined to return to the obscurity from whence it came leaving everyone scratching their head as to how it ever got the amount of traction it did in the first place as it was so terrible.

As in

Is the driver of the Euro Vengabus falling asleep at the wheel?

The GGUF Vengabus seems to have gone into reverse gear


Corey in Maryland said...

OGMJ – Obama Gonna Make Jobs.  Latest US Fiscal Stimuls.
LBGP – LeftBack Gone Postal.  As he occasionally does on some poor unsuspecting anon.  Good indication that spooz have reached a temporary bottom and gold a temporary top.
SOAC – Swan Of Another Color.  Just when you think its all priced in, another 4+sigma event comes flocking to your door.
PTWD – Print Till We Die.  Oath that must be sworn before becoming a central banker.
RORO – Risk On Risk Off. 
PISN – Price IS News.
SWCOT – Sun Will Come Out Tomorrow.  Opposite of TEOTWAWKI.
ABATLT – Anon’s Boasting About Their Last Trade
2x ABATLT – 2x Anon’s Boasting About Their Last Trade.  Leveraged version of ABATLT. 
AAGFAT  - Angry Anon’s Gloating Forecasts A Turn.
TMMUAH – The Market Makes Us All Humble.  Or, TMM Makes Us All Humble. 
HFBTMM – Happy Fifth Birthday Team Macro Man

Vasastan said...

A very happy birthday to you all, including the original Macro Man. This is the first thing I read in the morning, since the consistent quality of the posts will brighten the daily slog a bit. A big thank you to the regular commentators as well, since the discussion is always a large part of the attraction.

Polemic said...

Thanks to everyone for your kind supportive comments and all the TMMisms which have seen a late splurge of entries from somewhere in Maryland.. Its going to be tight but some definite winners have been spotted already,

All will be very carefully considered by us over a nice cup of tea whilst we listen to Trichet fiddle and watch Rome burn.

thanks all .
Pol ..

Leftback said...

An entry for TMM's Tool Time. The Rabid Tiger:

Robertson Has Clearly Lost Remaining Marbles

Jools was last spotted frothing at the mouth about hyperinflation and predicting the demise of USTs with the 10y at about 3.60%. Puh-leeze. Retire before ruining any further hapless inwestors.

chancee said...

Great blog...

Dastro said...

You are living proof of quality being passed on. From the original MM to the entire team the high standards remain the same.Congrats to all of you.

meph said...

Many thanks TMM, some humble lae entries:

RIPPER - really ignorant p!ss poor economic research.

MBA - mindlessly bullish analyst

(To be used in the hushed tones of Test Match Special, "oooh thats a ripper from the mba's at banca indebta")

BOLIVIAN - balls out long, infinite var, its a nobrainer

as in "TMM going Bolivian, cant lose."

bcordischi said...

Happy Belated (Wooden) Anniversary

As for new TMMism's:

MTM (Mark to Market) or MTMB (Mark to Make Believe)?!

MTMB: an accounting technique perfected by French and other European banks during the sovereign debt crisis which ignores conservative accounting principles and market pricing by a range of obfuscation including "hold to maturity" accounts, secret internal valuation models, conveniently ignoring Greek Government bond holdings maturing later than 2020 from the hallucinogenic 21% haircut because they are excluded from the PSI, etc.