a nerve struck

Shot by both sides
On the run to the outside of everything
Shot by both sides
They must have come to a secret understanding
-- Magazine

The world's biggest pusher of derivatives was complaining yesterday. JP Morgan stated:

“If the [Lincoln] amendment stands, you are going to have liquidity and credit provided by the US banks in the derivatives space contract and that cannot be good for the market,” he said. “It is a very troublesome situation.”

“We are on a dangerous path,” he added. “This change, for the US banks alone, will make the US financial system less competitive when compared to its international peers.”

Hmm, sounds like a nerve was struck. There's plenty of problems with Lincoln's amendment, the whole Senate finance industry bill is garbage, so too the House's, but not in the way this statement implies. The fact is the financial industry has to shrink, by at least 50%, which means there's going to be a lot less "liquidity". It's the only way you're going to tie money back to the real economy. Derivatives are the biggest fraud component of our last decades' Ponzi finance. How often have we heard all the derivatives cancel each other out? So no losses for anyone? That folks is the definition of Ponzi finance. Anyway this is a weak, nonetheless welcomed, statement by Morgan on a weak bill, if something was actually being done you couldn't get Jamie Dimon off television proclaiming the end of capitalism and a new dark ages, that's when you'll know the servants have turned against their masters.

As far as competition with our "international peers" look at the little brouhaha caused by the Deutsche Frau. Ms Merkel added today,

The German leader recalled that at the height of the global financial crisis that struck in 2008 powers in the Group of 20 rich and developing nations agreed "every product, every actor and every financial center must be regulated -- we promised people that."

"Now, after one and a half or two years, people are saying: what came of that?" she added. "At some point we have to provide the proof and say, 'come here, we've done it.' This point shouldn't be too far away."

She's an ex-commie, which means she probably understands much better than our Wall Street Ponzi operators what happens when you have a system that can no longer account, and a vast charade is conducted for one end only, keep those at the top secure. In the end of this Ponzi game, Ms Merkel has discovered there are indeed losses, and the financiers want to stick them on the government, that is, you the taxpayer. In the United States, the political class thinks that's just great. Ed Harrison of Credit Writedowns has a very succinct analysis:

But, you know and I know the predator state is alive and well; just look at so-called health care reform and the giveaway to healthcare insurers worked out in back rooms with no real cost adjustments. Clearly we need to be moving away from stimulus happy talk to focus on malinvestment. As long as the overleveraged and outsized financial sectors are being propped up in the UK and the U.S., I don’t see the point of talking about large deficit spending.

In a world in which stimulus is going to be used as an excuse to maintain excess consumption, prop up zombie companies and forestall an inevitable deleveraging, all the while increasing public sector debt, I say no thanks.

Call me when we are no longer living in a predator state. Then, you can talk about stimulus.

Comes the Jubilee.