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Category: Bears Chat

How Many Minskys can Dance on the Head of a Pin? Spock – Bears Chat

Anyone familiar with Hyman Minsky’s work, explained here:


…is aware of what is known as “The Minsky Moment”, whereby a Ponzi economic or financial system collapses of its own, bloated, weight.

In fact, among many other times throughout history, the world reached just such a moment in 2008. It began with the collapse of Bear Stearns in March, 2008; then cascaded through to engulf Fannie, Freddie, and the FHLBs.  And finally culminated in the vaporizing of the entire world’s rickety edifice of debt, securitization and derivatives, built over decades.

This “economic neutron bomb” destroyed thousands of banks, insurance companies, pension funds, money market funds, hedgies, and even traditional businesses such as McAuto manufacturers. Not to mention dragging down virtually every single stock market and crashing McMansion prices, to boot.

Of course, the Alpha Thug governments and central bank Pigmen swooped in and undertook the most massive, pervasive, nationalization/stimulation/monetization scheme the world has ever witnessed. This unprecedented, coordinated effort on the part of the AlphaPigs bought us an additional five years or so of time.  At a cost of approximately fifteen-trillion fiatscos pumped into rebuilding the destroyed Ponzi Monetary System, depending on which source one believes
Needless to report, these panicked actions on the part of TPTB incited the F12-punching crowd to run up even more-egregious bubbles in virtually all asset classes, as every speculative monkey and his brother dove into every risky speculation—while those with financial sobriety watched in abject horror.

But now time appears to be running out on Infinite QuantSleaze and Perpetual Deficit Duplicity, leading to not one, or two, but potentially dozens of “Minsky Moments”, all trying to dance on the head of the proverbial pin at once.

So, which of these imminent implosions will next drag us down into the abyss?:

1.    The bursting bond bubble?
2.    Synchronized stock market crashes?
3.    Yet-another McMansion price meltdown?
4.    Some soon-to-be-revealed derivatives “cascading cross default”?
5.    A sovereign debt default?
6.    The collapse of the EuroZone?
7.    All of the above?

(Spock Conclusion):  There are so many “Minsky Moments” waiting in the wings, it’s difficult to prognosticate which—or how many—will scroom us. But make no mistake about it: the clock is ticking on this latest round of “Borrow-and-Print-Our-Way-Back-to-Prosperity”.

However, while I’m not exactly sure when (or which of) these “MMs” will make their appearance, I am quite certain that the response from the A-Ps this time will be my long-lamented “Everybody Loses a Hand” program, to be discussed at length in another missive.

The one chart that keeps Bernanke up at night…Spock – Bears Chat

…nervously pacing the floor, popping Ambien and Lunesta like M&Ms, and muttering to himself:

“But my models SAID this would work…”

That chart, of course, being this one:


…whereby it is revealed that the “MOPS” (Masses of Proles) continue to refuse to further bury themselves in debt in order to keep the Ponzi Monetary System from imploding.

And this precipitous drop in MOPs borrowing has taken place DESPITE the fact that Bernanke and his fellow Fed Pigmen have pumped:


…into the moribund financial system over the past five years, and Uncle Thug has blown:


…by following the Keynesian “prescription” of fighting too much debt with…you guessed it…more deficit-spending/debt!!!

(Spock Conclusion): Bernanke is getting a real-world education, which is quite different than the cloistered, insulated, mathematically-constructed, life he lived as a college professor. For, as the graph above shows, “The best laid plans…” often completely disintegrate when they meet brutal reality.

Furthermore, this frustration that Bernanke is experiencing may indeed explain why he is “tiptoeing toward the exit”, and leaving the mess he created to the next Fed Head, should anybody be insane enough to want to be the fool who tries to lord over this nightmare.