Denninger fires back at CNBC, propaganda division of zombie GE


For those of you who don’t pollute your minds with CNBC, Dennis Kneale (AKA Beaker) is a little MSM apparatchik who first achieved fame for crying on air while trying to go a week without his Blackberry, and for groping two women during a single cab ride, one of whom was a co-worker’s wife.

CNBC has become to financial TV what the Soviet Pravda was to print ‘journalism’ (the Pravda of today is at least as credible as any major US newspaper, and certainly more fun — Russia Today also offers a good perspective from outside the Empire). In contrast to GE TV, Bloomberg only seems to get more and more respectable, with actual journalists like Caroline Baum, Johnathan Weil, Matt Miller, Pimm Fox and Bernie Lo.

It is highly relevant that CNBC is owned by a publicly-traded financial behemoth with an upside down balance sheet, while Bloomberg is a private company owned mostly by a single person, an egotistical fascist IMO, but at least not a banker.

On the subject of unrecognized loan losses, Mish has an excellent post today on how extremely poorly capitalized the banking system remains.

Do P/E’s matter?

Source: Irrational Exuberance, Robert Shiller, 2000

The average 12 month earnings for the S&P 500 from June 2000 to June 2009 (10 years) is $49.84.  The index earned $14.88 in 2008 and $7.62 in the 12 months through June 30, 2009. The respective PE’s at a value of 1000 are roughly 20, 65 and 130.

Assuming earnings soon rise to $50 and are sustained, a tall order in my opinion, the expected 20-year annualized return on the S&P would still only be about 1%. Is that enough to justify the risk that earnings do not recover? Shiller’s method of smoothing earnings over 10 years makes good sense, but what if that 10 years encompassed the greatest credit bubble in history, and it has now been popped? What is the expected return then? To look at it another way, I would say that your expected return on T-bills is very, very high in terms of stock.

Congressman says debt = wealth, threatens to defenestrate reporter

Here’s a little glimpse into the attitude of our elected representatives.  In this video from the Clinton years, Congressman Pete Stark of California gets increasingly agitated, condescending and rude as a reporter challenges him on the wisdom of deficit spending:

Hat tip Zero Hedge.

I glanced at Mr. Stark’s wikipedia page, and he is an interesting congresscritter. He’s an MIT engineering grad, an atheist, and he voted against both Iraq wars and the Patriot Act — just knowing those facts, I wouldn’t have guessed he was such an arrogant, ignorant prick. Oh, and like so many Democrats, he spoke out against Bush’s deficits but has no problem with his own party’s spending, like the socialized health care he supports. Here’s a quote from the Bush years:

“Republicans sure don’t care about finding $200 billion to fight the illegal war in Iraq. Where are you going to get that money? Are you going to tell us lies like you’re telling us today? Is that how you’re going to fund the war? You don’t have money to fund the war or children. But you’re going to spend it to blow up innocent people if we can get enough kids to grow old enough for you to send to Iraq to get their heads blown off for the President’s amusement.”

That’s great — now if he’d just say the same about Obama’s Afghanistan efforts and deficits.

One more thing about this guy: he and Congressman Defazio were the geniuses behind the “Trader Tax” proposal to put a 0.25% tax on the notional value of all market transactions, as a way to “make Wall Street pay for Wall Street’s bailout.” He didn’t care that traders are not “Wall Street” and received no bailout.

The benefits of unemployment insurance

From comes this diary of a female 24-year-old New Yorker making the best of her 18 months of unemployment insurance:

Noon: Finally wake up and realize that it’s only noon. Automatically type into SeamlessWeb to order the usual brunch. It’s just too rainy to leave the apartment. Since getting laid off (okay it’s been six months now), life has been a cycle of drinking, boys, hangover, and Seamless.
4 p.m.: Attempts to go the gym prove futile as hangover from last night manifests itself in every way. Make plans for the night and convince another ex-banker to hit the bottle with me. Everyone used to work hard, play hard, but the ones still employed are too afraid of getting sacked to have late nights.

8 p.m.: Friend comes over to pregame with my bottles from Trader Joe’s (hey, I’m laid off), and we thank God for unemployment insurance because it pays us to live in our expensive luxury apartments with no income.
Midnight: We head to Greenhouse and there is a line down the block, but I know the door guy; coincidentally, he is also the manager of the café next to the investment bank I used to work for. Only in NYC. He promptly lets us in and gets us the first round.
4 a.m.: The night becomes fuzzy and I black out once again. You would think by 24 I would know the fine line between sober and blackout, but I haven’t figured that out yet.

Read on for days 2-7 of this tale of “approximately zero acts of intercourse (hard to tell); two dates to cover dinner costs, one with old man and one with vegetarian; approximately six hookups with six men; one aborted threesome.”

Yet another way in which government “safety nets” create moral hazard.

The attitude expressed here towards money and sex is fairly representative of this demographic (recent big name college grad investment bank / law firm employee living in Manhattan). I just wanted everyone to have a little more insight into where their tax money is going. Without your help the big banks would all be gone and their employees would be well on their way to becoming humble and productive members of society, like cab drivers.