For the Wine and Cheese Board Refugees

[creepycoug]

It’s a serious shiteshow, but not for the major banks and hedge funds so it won’t be a Lehman-type scenario. You’ll see some of the shady banks (looking at you Silvergate) and lots of these crypto companies/funds blow up, but the main banks got involved in just pitching the shite and taking the commissions…their money wasn’t at risk[/b]. You’ll see a few of the crazier retirement funds (*cough* Ontario looking at you *cough*) lose chunks of money as well, but the govts will just print more money to cover those folks. And all the shitecoins will be gone in a couple of years unless the govt starts the massive money printing again.

This economic mess is/will be very different than last time as they usually are…do think the Central Banks are screwed. They have to raise rates to kill inflation and demand (we are at the tip of the iceberg there), but the amount of debt piled up limits how long they can do that. But they also can’t go and massively cut rates/stimulate, because the woke idiots of the world have created a huge global energy supply problem and if/when the global economy takes off again there won’t be enough energy to go around and you’ll get another bout of global inflation real quick (one of the main reasons China is still locked down and building a shit-ton of coal power plants right now…they know it too and the ChiComs can’t afford the unrest that inflation would likely cause internally).

At least until everyone builds another magical windmill to fix the problem or tell these woke morons to go pound sand…

I do hope the Fed finally catches a clue and chooses never to go back to the insanity of 0% interest rates again…some people think they finally learned their lesson but I have my doubts.

@HoustonHusky I think it's starting to play out as you were predicting here. Agreed on your long-term take on crypto and where it moves relative to governments cheapening their currency.

Your second paragraph depressed into drink.

 

[Bob_C]

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

As much inefficiency and pain in the ass those things are, you are spot on. I'm guessing we're going to learn that part of the problem here is that the auditors aren't yet very sophisticated in this space, and so even if they're on it, they're not really on it because they're learning as they go.[/b]

In public company world, we all know that an auditor without a lot of industry experience is 1/2 an auditor.

Correct. Even good auditors can easily be fooled on something so esoteric. The whole ESG angle complicates all of this as well. The Big 4 have gone all in on ESG, which should alarm everyone as it's clouding their judgment. There's a reason that FTX pretended to care about social/environmental justice, makes you impervious to traditional rules.

 

[Sledog]

I'd bet a bunch of money that none of the Demonrats being paid from laundry lost a dime of illegal money. Not a fucking dime.

 

[Pitchfork51]

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

As much inefficiency and pain in the ass those things are, you are spot on. I'm guessing we're going to learn that part of the problem here is that the auditors aren't yet very sophisticated in this space, and so even if they're on it, they're not really on it because they're learning as they go.[/b]

In public company world, we all know that an auditor without a lot of industry experience is 1/2 an auditor.

Correct. Even good auditors can easily be fooled on something so esoteric. The whole ESG angle complicates all of this as well. The Big 4 have gone all in on ESG, which should alarm everyone as it's clouding their judgment. There's a reason that FTX pretended to care about social/environmental justice, makes you impervious to traditional rules.

They used quickbooks lol. There was no audit. I can't move past this. It's hilarious

 

[RoadTrip]

View attachment 54126

Although, if I understand this correctly, FTX is just a trading platform. But the guy running it also founded Alameda, which takes positions for its own account and which was being run by the Ellison girl, who was in the FTX guy's harem of noyds. So, if I have this straight, it would be as if the NYSE were itself part of a scandal in which your equity position in XYZ corp. just vanished because the exchange was fucking around. Of course, it's a little easier to track down shares, even those held in street name. But that's the idea as I understand it.

It's being described as a run on a bank. Ok, sure, banks loan out money, so if the algo fails because some externality causes a run and everyone withdraws on the same day, then that's a problem because deposit liability does not equal deposit reserves on hand.

But FTX is a trading platform. How do they have a liquidity crisis unless they are taking positions for their own account?

What's worse is billions of the hundreds of billions you and I gave to the Ukraine ended up in FTX which ended up in the dRAT party hands to steal elections. Are any of you awake yet? Now they want to play a new game in Africa. How did that old Aids game go in Africa? Fauci, Gates and the Clintons got rich but how are poor African kids doing? I hear this new game will bring them into the digital age. Obama phones for EVERYONE!

 

[Bob_C]

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

As much inefficiency and pain in the ass those things are, you are spot on. I'm guessing we're going to learn that part of the problem here is that the auditors aren't yet very sophisticated in this space, and so even if they're on it, they're not really on it because they're learning as they go.[/b]

In public company world, we all know that an auditor without a lot of industry experience is 1/2 an auditor.

Correct. Even good auditors can easily be fooled on something so esoteric. The whole ESG angle complicates all of this as well. The Big 4 have gone all in on ESG, which should alarm everyone as it's clouding their judgment. There's a reason that FTX pretended to care about social/environmental justice, makes you impervious to traditional rules.

They used quickbooks lol. There was no audit. I can't move past this. It's hilarious

Quickbooks doesn’t actually require a debit and a credit for every transaction. Fun fact.

 

[Pitchfork51]

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

As much inefficiency and pain in the ass those things are, you are spot on. I'm guessing we're going to learn that part of the problem here is that the auditors aren't yet very sophisticated in this space, and so even if they're on it, they're not really on it because they're learning as they go.[/b]

In public company world, we all know that an auditor without a lot of industry experience is 1/2 an auditor.

Correct. Even good auditors can easily be fooled on something so esoteric. The whole ESG angle complicates all of this as well. The Big 4 have gone all in on ESG, which should alarm everyone as it's clouding their judgment. There's a reason that FTX pretended to care about social/environmental justice, makes you impervious to traditional rules.

They used quickbooks lol. There was no audit. I can't move past this. It's hilarious

Quickbooks doesn’t actually require a debit and a credit for every transaction. Fun fact.

You can straight up just change or delete anything lol
I could go on for days

 

[WestlinnDuck]

Tldr version, this is a big scandal but won't be systemic.

That said, the economy has systemic issues and is going to suck anyways.

Agree. This is more about scandal and ridiculously smart children run amok and being drunk with power and getting caught with the dog.

Also, don't invest in something like FTX unless you have an audit from a Big 4 accounting firm and also an audit of the internal controls.

As much inefficiency and pain in the ass those things are, you are spot on. I'm guessing we're going to learn that part of the problem here is that the auditors aren't yet very sophisticated in this space, and so even if they're on it, they're not really on it because they're learning as they go.[/b]

In public company world, we all know that an auditor without a lot of industry experience is 1/2 an auditor.

Correct. Even good auditors can easily be fooled on something so esoteric. The whole ESG angle complicates all of this as well. The Big 4 have gone all in on ESG, which should alarm everyone as it's clouding their judgment. There's a reason that FTX pretended to care about social/environmental justice, makes you impervious to traditional rules.

FTX wasn't complicated. You ask them to buy Bitcoin for you. They are supposed to buy Bitcoin for you and have a deposit record showing the purchase. Not hard to do a stat sample and determine they were just making accounting entries and shoveling the money to Alameda. You do a bank audit and they can pull a sample of deposits and then verify that the money was deposited and that the cash asset exists and the deposit liability is properly recorded. Basic double entry accounting along with counting the beans. If the beans exist, you need to determine the value of the bean, and I agree in a speculative market with little liquidity, that can be a challenge. That was the problem with the sub prime mortgage market in 2008. You had the Feds buying significant amounts of these mortgages at face. Therefore, face was the value of the mortgage asset in the hands of investors like Lehman. Until the shear volume of the sub prime loans overloaded the system and they weren't worth face, but pennies on the dollar. Down goes Lehman,

 

[HoustonHusky]

This made me laugh @creepycoughttps://twitter.com/Hedgeye/status/1600920808251133954?s=20&t=i5sseDAGQYV2XjAFaGc-Ag

This made me laugh @creepycoughttps://twitter.com/Hedgeye/status/1600920808251133954?s=20&t=i5sseDAGQYV2XjAFaGc-Ag

"If there's ever a place I can be in and not get in trouble, it's FTX."

Lolz. When are they going to run that Canadian fuck off shark tank? Probably never because he and Cuban are the only really entertaining sharks.

@HoustonHusky did you see that SBF also made big loans to the Block, basically Crypto's Bloomberg? Loans to fund the management buyout, loans for operating capital and, finally, a loan to the CEO to buy property in the Bahamas.

I know a guy at Block, and he readily points out that it was isolated at the CEO level, no indication that he tried to direct how stories were written about FTX. And in all fairness, their writers were among the first to publicly ask questions about FTX and Alameda and among the first to suggest there was something rotten in Denmark. But still, a bad look to say the least.

I don't think it's going away any tim soon. But there will/should be a housecleaning.

The moral of the story for me isn't about the risk in alternative investments. The market handles that risk just fine IMHO. The real moral of the story is you don't put 20-something year olds in absolute charge of $billions of dollars anywhere anytime. I don't care if you have a PhD in math from MIT; there is no substitute or experience.

Hadn't seen the Block report...but Marc Cohodes took the FTX scam to Bloomberg a while back and they wouldn't touch it with a 10 foot pole, in part because of all the advertising revenue FTX was bringing in according to him. Its the entire reason people including and esp crooks throw the advertising and like $$$ around...same reason folks donate heavily into politics. You don't have to have a blatant quid-pro-quo bribe...you just throw enough money around and you magically and probably many times unconsciously get averted eyes, nobody asking questions from related parties because they don't want to rock the boat, and everyone pushing anything close to a 50/50 option your way.

I'd be shocked though if everyone at Block was oblivious to it all until recently...people were talking about it early this year.

 

[creepycoug]

This made me laugh @creepycoughttps://twitter.com/Hedgeye/status/1600920808251133954?s=20&t=i5sseDAGQYV2XjAFaGc-Ag

This made me laugh @creepycoughttps://twitter.com/Hedgeye/status/1600920808251133954?s=20&t=i5sseDAGQYV2XjAFaGc-Ag

"If there's ever a place I can be in and not get in trouble, it's FTX."

Lolz. When are they going to run that Canadian fuck off shark tank? Probably never because he and Cuban are the only really entertaining sharks.

@HoustonHusky did you see that SBF also made big loans to the Block, basically Crypto's Bloomberg? Loans to fund the management buyout, loans for operating capital and, finally, a loan to the CEO to buy property in the Bahamas.

I know a guy at Block, and he readily points out that it was isolated at the CEO level, no indication that he tried to direct how stories were written about FTX. And in all fairness, their writers were among the first to publicly ask questions about FTX and Alameda and among the first to suggest there was something rotten in Denmark. But still, a bad look to say the least.

I don't think it's going away any tim soon. But there will/should be a housecleaning.

The moral of the story for me isn't about the risk in alternative investments. The market handles that risk just fine IMHO. The real moral of the story is you don't put 20-something year olds in absolute charge of $billions of dollars anywhere anytime. I don't care if you have a PhD in math from MIT; there is no substitute or experience.

Hadn't seen the Block report...but Marc Cohodes took the FTX scam to Bloomberg a while back and they wouldn't touch it with a 10 foot pole, in part because of all the advertising revenue FTX was bringing in according to him. Its the entire reason people including and esp crooks throw the advertising and like $$$ around...same reason folks donate heavily into politics. You don't have to have a blatant quid-pro-quo bribe...you just throw enough money around and you magically and probably many times unconsciously get averted eyes, nobody asking questions from related parties because they don't want to rock the boat, and everyone pushing anything close to a 50/50 option your way. [/b]

I'd be shocked though if everyone at Block was oblivious to it all until recently...people were talking about it early this year.

Man isn't that the truth.

 

[HoustonHusky]

It’s a serious shiteshow, but not for the major banks and hedge funds so it won’t be a Lehman-type scenario. You’ll see some of the shady banks (looking at you Silvergate) and lots of these crypto companies/funds blow up, but the main banks got involved in just pitching the shite and taking the commissions…their money wasn’t at risk. You’ll see a few of the crazier retirement funds (*cough* Ontario looking at you *cough*) lose chunks of money as well, but the govts will just print more money to cover those folks. And all the shitecoins will be gone in a couple of years unless the govt starts the massive money printing again.

This economic mess is/will be very different than last time as they usually are…do think the Central Banks are screwed. They have to raise rates to kill inflation and demand (we are at the tip of the iceberg there), but the amount of debt piled up limits how long they can do that. But they also can’t go and massively cut rates/stimulate, because the woke idiots of the world have created a huge global energy supply problem and if/when the global economy takes off again there won’t be enough energy to go around and you’ll get another bout of global inflation real quick (one of the main reasons China is still locked down and building a shit-ton of coal power plants right now…they know it too and the ChiComs can’t afford the unrest that inflation would likely cause internally).

At least until everyone builds another magical windmill to fix the problem or tell these woke morons to go pound sand…

I do hope the Fed finally catches a clue and chooses never to go back to the insanity of 0% interest rates again…some people think they finally learned their lesson but I have my doubts.

How's Silvergate doing today? Still seems ~$11/share too high...

Watched an interesting discussion yesterday on what some folks expect. Blackrock curbed redemptions on its REIT a little while back, in part to be able to keep its book marked higher than reality by preventing enough redemptions to force them to actually sell anything and book it at market (much lower) value, which would force them to have to reprice a lot of their assets. They also took out a street-style loan from California as well...which doesn't bode well for either party...
https://www.reuters.com/business/finance/blackstone-limits-redemptions-69-billion-reit-2022-12-01/https://www.wsj.com/articles/univer...kstones-breit-real-estate-vehicle-11672723902

One argument is that a lot of the PE groups are trying to prevent the proper valuations on their non-publicly traded assets, and will be scrambling for funds from other sources in all sorts of ways to do it. And as the economy falters more and more people will be scrambling trying to get access to their tied up capital. Pretty interesting discussion...all goes back to the Fed pivot and everyone praying it happens soon because they will blow up if it doesn't. And TBH for everyone's sake I hope it doesn't happen soon.

 

[46XiJCAB]

The FTX collapse has caused one hedge fund to default on close to $40 million in debt. That's just what we know about because this is still new. Now, I'm not one who cries in his soup over the troubles of hedge funds; and have my own view about their role in a civilized society. But, I digress.

Could this be the beginning of a serious shit show? Like, when Lehman defaulted on its short term debt obligations - that it was raising at break neck pace to shore up its liquidity issues - that, in turn, caused the originators of the money market fund (the Reserve) to break the buck, with the larger shit show that followed.

Reading the background of this ... you have fucking children in charge of billions of dollars. What little I've learned in life includes the overwhelming importance of judgment obtained through years of experience. I don't care if this Binkman-Fried and Ellison chick are classic examples of Charles Murray's Super Zips; they both fucked the fuck up and neither is, I think, quite as bright as the world has suggested to them.

@godawgst @HoustonHusky @UW_Doog_Bot @anybodywithafuckingclue

@YellowSnow @DerekJohnson - this really belongs in the record shop, but Yella is a purist elitist snob.

Maybe a rebranding to Charcuterie Board bored and a relaunch? It’s 2023!

 

[HoustonHusky]

And there goes Silvergate…https://twitter.com/ft/status/1631087442869592064?s=46&t=BW54DDdRvMZ7AoDSXEli5w

 

[RaceBannon]

https://mercurynews.com/2023/03/01/southern-california-home-sales-fall-to-all-time-low-2/

Closed sales this past January — which reflect deals signed during the holiday season — fell to 9,938, the lowest number of transactions in records dating back 35 years, real estate data firm CoreLogic reported Tuesday, Feb. 28.

An average January has about 17,000 closings.

READ MORE: California home-price drops bigger than U.S. declines

“It’s always going to be slow (during the holidays). But not that slow,” Compass agent Ken Osborn said Sunday at an open house in Long Beach. “That’s why we go back to the basics. Meeting people. Talking to people. Holding open houses.”

January’s sales tally was down 42.8% from January 2022, when homes were selling twice as fast. Sales have dropped from year-ago levels for 14 consecutive months.

Prices also have been dropping on a monthly basis, falling for eight straight months, CoreLogic figures show.

The median price of a Southern California home — or the price at the midpoint of all sales — fell to $670,000 in January, CoreLogic reported.

That’s down $90,000 from the price peak reached last spring, and down $500 from January 2022.

It was the first year-over-year price drop in almost four years.

 

[RaceBannon]

The global housing market could be a bubble in danger of a correction, and U.S. home prices alone could drop by 19.5%, economists at the Dallas Federal Reserve warn.

Citing an affordability crisis, authors Lauren Black and Enrique Martinez-Garcia wrote in a Tuesday Dallas Fed report: “If the observed price-to-rent ratio grows at an explosive rate relative to its fundamental-based ratio estimated with long-term interest rate and rent growth data, the bubble hypothesis merits attention,” Business Insider reports.

The U.S. and German housing markets, in particular, face erratic real estate market activity and rising interest rates, and with that, rising mortgage rates, that are driving a “risk of a deep global housing slide,” the economists warned.

If U.S. home prices fell, or corrected, by 19.5%, the real estate market would be more in line “with its fundamentals” and become more affordable, the researchers said.
[/b]
Thirty-year mortgages topped 7% in October and are currently 6.62%. Case-Shiller data Tuesday shows that U.S. home prices have fallen for six months straight. Existing-home sales have declined for six straight months, according to the National Association of Realtors.

Home prices are now 4.1% below their June peak, and Goldman Sachs forecasts home prices will decline another 6.1% in 2023.

Painful but every bubble pops

 

[HoustonHusky]

Not BlackRock but...https://twitter.com/zerohedge/status/1631293666135351301?s=20
And as I mentioned previously a lot of these Real Estate groups are locking down their investments and preventing people from withdrawing their money to try and hide their losses...https://www.reuters.com/markets/us/...hdrawals-71-billion-reit-february-2023-03-01/

This clown show apparently paid its CEO an obscene amount last year...its amazing how non-zero interest rates start bringing reality back to the casino...

 

[RaceBannon]

I paid people to get out of their foreclosure for Blackstone. Good times. Hanging at auctions with a few million in cashier checks with sunshine and pretty girls

They bought their stock at a steep discount in California and only homes less than 10 years old. This was 2012

How they managed to fuck that up is a mystery

 

[PurpleThrobber]

I paid people to get out of their foreclosure for Blackstone. Good times. Hanging at auctions with a few million in cashier checks with sunshine and pretty girls

They bought their stock at a steep discount in California and only homes less than 10 years old. This was 2012

How they managed to fuck that up is a mystery

So when does Dementia Joe say Blackstone is too big to fail?

 

[HoustonHusky]

Silvergate shutting down, looks like SVB is next.

Didn’t have them on my bongo board. Looks like they had a top notch Risk guru…https://twitter.com/the_real_fly/status/1634035956188688385?s=46&t=BW54DDdRvMZ7AoDSXEli5w

 

[Bob_C]

Definetly didn’t have SVB.