The Donald Wins, Then What?

     Victory, followed immediately by taking on Yellen over nationalizing the Bond Market, China over currency manipulation, central bankers everywhere over ZIRP/NIRP/Whatever, Asians over getting our factories back, India and Bangladesh over shutting down our call centers there, and the rest of it, while he's fencing wetbacks out and keeping their jobs in, for Americans to have, and shutting down what has apparently become a major industry built around the inflow of Islamic infrastructure producing the murdering Muslim scum who kill Christians and Jews here on our own soil?  Ouch.  Stock market drops what, 50% overnight?  95%?  World economy ceases to function two weeks later?

     Or is there some gentle way to undo the evil done to this country by Washington elites, maybe this thing about knowing how to make a deal.

     What's up with that anyway?  How will it be applied?  Sometimes, one feels like we're watching this comic book superhero who showed up one day with these superpowers of his, a Master of at least the World Economy, if not the Universe, and we have no idea what these superpowers are, just that one is called making a deal and some day soon Superdonald will just kind of pull it out and the rest, and use them to save us all. 

     The choice is obvious.  Keep on slipping into the tightening grip of communist control, or tear down everything they've built to replace the American Dream with whatever it is we've been given a glimpse of by the Planet of the Apes White House.

     We'd just like to have an early warning damage assessment, a heads-up, is all.  Anybody have a clue?  Anybody at all?

Deutsche Bank - Fingering the Real Culprits Here

     As our valued subscribers know, prior to the Financial Apocalypse, Democrats all over Washington enabled financial institutions to basically give away mortgages to borrowers who couldn't afford them, and then the addle-brained politicians and complicit bureaucrats pushed lenders into changing business practices to start doing so, in part through vicious, scorched earth, political correctness initiatives, notably demanding the destruction of centuries-old credit standards and implementation of these brand new, crazy-ass policies of 1) low or no down payments 2) bait and switch interest charges, and 3) dumping the resulting worthless paper on blatantly misled investors through fraudulent securitization underwriting operations.

     A few years later, Democrats running the "Justice" Department started in extorting money from shareholders who had absolutely nothing to do with the resulting meltdown, some of whom didn't even hold stock in whatever financial institution was being looted.  We're told that shareholders at American banks have been made to cough up amounts between $3.2 billion and $16.7 billion.

   Yesterday, Deutsche Bank confirmed reports that it has been told to fork over $14 billion from Deutsche's equity balances.  The bank added it has "no intent to settle ... anywhere near the number cited."

     What they really need to do is sue Washington Democrats instead.  Pretty much all of them.  They're the ones who did this to us.  The crooks who really need to pay.  If $14 billion is the number "Justice" Department Democrats have settled on, then Democrats all over Washington should be called upon to come up with it.

The Big Picture

     We here at The MacDougal Post have been coming to grips with what strikes us as a nefariously mutating long term investment continuum by taking things in one parcel at a time.  The piece linked below, graciously passed along by a valued subscriber, is just Part 1 in what's already a comprehensive, sweeping view produced by some impressive broad-vista thinking.  It's well worth your time:

http://www.zerohedge.com/news/2016-09-10/time-get-real-part-1-central-banks

Wall Street and Donald Trump

     Expressed as a percentage of GDP, the U.S. debt burden has always risen dramatically during wartime, reaching 110% after WW II and around 25% at the end of our 3 previous wars.  Then these numbers would trace a long and healthy cyclical decline.  Recently however, what we see as sovereign financing used to buy votes by one of the political parties has exacerbated the math to the point where it looks like our debt burden is, at best, never going to get paid off, so central bankers went ahead and nationalized the U.S. Treasury bond markets with ZIRP and NIRP, acronyms for old-fashioned money printing, used in large part this time to support resultingly mispriced financial markets.  Central bankers can only step out onto a playing field established by fiscal policy, so the spotlight for the mess really needs to be turned on Congress and the Administration, but hasn't.

     Interest payments represent the cost of borrowing money.  With ZIRP and NIRP, that cost is set artificially low, and the economic theory these people follow says they can keep overspending as much as they want this way, so they will unless somebody comes along and stops them.

     Enter Donald Trump.

     To us, the problem here is twofold.  The nationalization has marked securities prices up to overextended levels as investor money that used to go into sovereign debt, can't - the return is way too low - so increasingly desperate market participants have been bidding up everything else that provides them with decent, but less safe, income.  Concurrently, for many years now a currency war has systemically altered the amount of foreign earnings American corporations report to shareholders while pretty much the entire world has been gimmicking U.S. Dollar exchange rates to undercut our prices on goods sold from here.  Both sides to the problem may have set the stage for some kind of global recession/depression if the trends get reversed.  

     Looks like President Trump will be reversing both of them too, given what the candidate has said so far.  To us, that's why Wall Street adamantly opposes The Donald.  They've got a good thing going under socialized financial markets.

     Getting back to capitalism would ruin everything.

Liberal Male Menstruation a Problem at Brown University

     We have no words, and this kind of thing left the WTF realm long, long ago:

http://dailycaller.com/2016/09/07/even-men-get-free-tampons-at-brown-university/

Negative Interest Rates and the Mafia Annuity

     Rocco "Quick Sauce" Corleone wants to set up a Mafia Annuity for five elderly capos, and he tells Vito "Beancounter" Borrellione to do the math.  The Mafia Annuity is the one where you have a capo depart, don't ask how, at the end of every five year period, but on the last day of each plan month all capos get a black satchel filled with cash for as long as they remain undeparted.  The final satchels delivered to the soon-to-be departeds (offed right then and there mostly) get returned to Quick Sauce, along with everything in the departed's pockets and his bling, so there's no need for management fees, especially with the bling.  Monthly satchels are tossed out a limo window by the largest of six or seven goons in a drive-by, tailed once every five years by a marinara delivery truck carrying the Corleone clean-up crew.

     Quick Sauce tells the capos they're putting up three big ones each as lump sum payment for their generous and affordable policies, and Beancounter spreads the numbers, showing up at The MacDougal Post for review by our in-house CPA, who gives the spreadsheet the kind of meticulous attention to detail accountants reserve for financials like this in trying to keep their shinbones from being attacked by baseball bats.

     The printout is correct.  $15 million gross lump sum payment, $3 million apiece from 5 annuitants, 900 total satchels out the limo window, 60 a year in years 1 through 5, 48 per in years 6-10, 36 per in years 11-15, 24 in years 16-20 and 12 in years 21-25.  Gross lump sum divided by total satchels equals $16,666.67 a satchel, or $200,000 a year.  

     Not bad, for everyone involved, overlooking an actuarial detail or two.  Okay, five actuarial details if you're following this closely.  CPA wonders what an annuitant would get if he didn't join the death pool and instead set up a $3 million 25 year plan like this for himself.  Answer is....$10,000 per satchel, or $120,000 each year.  Mafia Annuity turns out to be much better, aforementioned actuarial detail(s) overlooked.  Problem here begins in the 26th year, the geezer-outlives-his-money-thing that financial advisers occasionally place a distant second to their hands (both usually) in your aging pockets too.

     CPA notes that Quick Sauce isn't assuming any return on that gross lump sum.  Zilch.  No return at all.  The don has obviously considered the impact negative interest rates are likely to have on the insurance industry.  Quick Sauce ain't gonna pay no bank no money to buy no bond.  He'll hold up the joint first.

     Google "Mafia Annuity" and you might get googled yourself at the local FBI office, only they've got better google than you, so CPA decides not to do that.  Instead he compares that $3 million 25 year individual plan with no investment return with the same exact thing returning 7% a year - that is, each and every single year for 25 of them, you earn 7% on the principal.

     That $10,000 a month, or $120,000 a year with no investment return at all, more than doubles if you get 7% on your money, a number often cited as the historical return on common stock investments, becoming $21,203 a month, or 
$254,441 annually.

          Before the Financial Apocalypse of 2007-08, major insurance companies were held in the highest regard by Wall Street.  Industry leaders understood their books and backed prudently-calculated liability estimates with gilt-edged investments across the entire risk window, assuring that appropriate financing would be there whenever needed.  People had reason to believe that these operations would continue to run like clockwork for as far as a seer's eye could see.  The knowledgeable investor had at least a couple of life and/or property and casualty outfits in the portfolio, maybe a dash of reinsurance and broker/agency exposure as well.

     Then came the AIG bailout and, with it, this new thing called a derivative, throwing in some really scary counter-party risks through what struck us as the surprise emergence of seemingly thousands of crazy-ass speculators embedded inside our money markets, for goodness sakes, and the insurance business-model just seemed to blow up in The Street's face, like all of a sudden too.

     Since then, we've been watching another weapon of mass destruction creep silently into position for a second colossal smackdown: negative interest rates.  Only recently has the potential catastrophic impact of this central planning fiasco fallen into our intermediate term forecasts, so we're compelled to pass along our thoughts to you.

     And we just did.  The unknowns are formidable here, and the only numbers we can draw on come from that non-existent Mafia Annuity example.  It's clear to us the insurance industry may have to make some big changes, the nature of which we can only surmise, hence that's unpublishable for now.  Is a switch from bonds to direct real estate investments in the works?  How about buying up corporations to hold and manage them a la Warren Buffett.  Will policies become far more expensive in the future?  Will contracts have to be rewritten?  We don't pretend to know the questions here, let alone the answers.

     Finally, remember the Mafia Annuity structure?  You know, where Rocco "Quick Sauce" Corleone had an annuitant depart, don't ask how, at the end of every five year period.  That's an Ordinary Annuity, and for those of you who went ahead and asked how anyway, the don can just as easily draw up an Annuity Due, where an annuitant departs at the beginning of every five year period.

     Lets hope Quick Sauce didn't find out you asked.