The feisty British press, especially The Guardian, The Telegraph and The Independent, try their mainstream best to report the machinations of G20 leaders struggling with the European economic crisis. Meanwhile Zero Hedge is stating flatly that the problem is a “zombie economy.”
As someone who barely knew what sovereign debt was a few months ago, I admit how difficult it is to decode the barrage of daily posts from Zero Hedge’s chief contributor ‘Tyler Durden,’ an alias borrowed from the name for the lead character(s) in the movie Fight Club. Durden’s posts routinely keep multiple plates such as leverage and liquidity spinning alongside unexplained acronyms like EFSF (European Financial Stability Facility) and BTP’s (Buono del Tesoro Poliennale), which are either some kind of Italian bonds or a mushroom polenta.
Reading Zero Hedge requires keeping Google search open in a separate browser window. Even Rolling Stone’s resident gonzo Matt Taibbi, who relied on Durden for much of his analysis of Wall Street’s crimes, admits that at first, “I didn’t understand a word he was saying.”
But Taibbi also insists that learning to figure out what Zero Hedge is telling us is worth the effort. In his blog, Taibbi wrote, “I think there are a great many things about him that represent an enormous improvement over traditional media, and a real rebuke to the thinking of most traditional editors.”
A non-American original
I will now cherry-pick revelations about Durden that come primarily from the Joe Hagan’s profile in New York Magazine in 2009. In that piece, Hagan reveals that Zero Hedge’s blogging amanuensis Tyler Durden is actually Dan Ivandjiiski, a 30ish Bulgarian immigrant who lost his right to deal in stocks a few years ago because of insider trading who then became a hedge fund analyst.
An unreconstructed doomtard, the incredibly prolific Durden might have continued to blog in obscurity but then the 2008 meltdown persuaded people that the cracks in the financial system run deeper than the so-called experts are ever willing to admit.
Durden also identifies the enemy, assigning the role of the all-pervasive Illuminati in his contemporary doomsday conspiracy theory to the ubiquitous alumni of Goldman Sachs. After decoding Durden, Taibbi tagged ‘Golden Slacks’ as a prime example of our contemporary financial industry’s “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Hagan argues that Zero Hedge solidified its reputation when some of its theories about Goldman proved true. In 2009, Durden kept hammering Goldman with allegations that the firm was shaving illegal profits from high-speed trading. Traditional traders pooh-poohed the allegations. Someone on the financial cable channel CNBC reportedly said Zero Hedge lives in “dark and cowardly corners of the blogosphere.” Yet New York Senator Chuck Schumer asked the Security and Exchange Commission to investigate so-called flash trading based at least in part on Durden’s reporting.
Economics is not only the dismal science, but a dubious discipline. In his critique of the high church of finance, Durden was beginning to look a lot like Galileo.
Losing my taste for the ‘experts’
I already knew about Zero Hedge from monitoring the conspiracy forum Godlike Productions. The site’s quirky owner Trinity takes great pride in assembling a slurry of links that range from the latest about chemtrails and space aliens among us to occasional gems from sites like Zero Hedge. A posting there in the spring of 2008 sent me to the Federal Reserve charts that go back decades. The withdrawals of billions of dollars by unnamed financial institutions looked so dramatic that I scoured the business press for answers, but there was no mention anywhere of what was happening.
I asked a colleague who had been an executive at Dow Jones what the numbers meant. He called friends still working in the industry, and they didn’t know.
I was alarmed enough to take as much of my money as possible out of my TIAA-CREF retirement account and deposit it in CD’s in an IRA at my local credit union, thereby avoiding the drubbing that many of my faculty peers are still reeling from.
In his book Black Swan, Nassim Nicholas Taleb tells the story of the turkey (us) who loves its benevolent masters (the bankers) because of the wonderful food and water we are given each day. That is, until a few days before Thanksgiving when our monied overlords show us both their hatchets and their real intentions.
Reading outsider economic bloggers like Zero Hedge helped save me from having my head chopped off, so I began making the site part of my daily apocalyptic news fix. Its references may be arcane, but Wikipedia reports the site now attracts 330,000 unique visitors a month.
So what is Zero Hedge telling us now? In the two years since Hagan’s article appeared, Zero Hedge has continued to gain street cred with its twin themes that (1) we are fucked and that (2) Goldman Sachs is literally and figuratively behind most of our screwing.
If you are looking for signs today that Goldman Sachs is the root of all money evil, Zero Hedge reminds us that you need go no further than the recent collapse of the aptly named MF Global. When the firm nosedived into the ground last week with former U.S. Senator and Goldman Sachs alumnus Jon Corzine at the joystick, only $40 billion or so went poof, compared to $600 billion when Lehman Brothers evaporated in 2008. But adding assault to injury, the firm cannot seem to put its hands on $633 million of customer funds that were supposed to remain safely shielded from any risk.
Employing what some would call typical Goldman doublespeak, out of one side of his mouth Corzine was righteously warning government officials that 30-to-1 leverage was too risky. Out of the other, however, he had to admit that MF Global was leveraged at 33-to-1, with its investments concentrated primarily in European holdings.
Even cleaning up the mess will be difficult since our entire system is choked with former Goldman bloodsuckers. Gary Gensler, head of the Commodities Futures Trading Commission, had to recuse himself from investigating the MF Global debacle because he and Corzine worked together at Goldman years ago.
Burn, baby, burn
In Durden’s view, a system overrun with Goldman’s evil spawn requires a worldwide cleansing fire hot enough to fry the entire global financial casino so that it cannot rise again like a phoenix. Even a guest post by Charles Hugh Smith says the only positive thing that can be said about that zombie economy is that it will inevitably implode.
We are told that liquidating the overhang of bad debt, leverage and hedges would ‘destroy the world as we know it.’ The truth is that keeping the zombie system from expiring and covering up the corruption with propaganda is what’s actually destroying the world as we know it. Thus the collapse of the current financial system of central banks, pathological Wall Street and insolvent banks would be the greatest possible good and the greatest possible positive for the global economy and its participants.
Zero Hedge’s posters see the global financial system as Wile E. Coyote at the moment he is suspended next to the cliff, feet pedaling, just before he looks down.
Durden has no doubt we have already gone too far off the cliff to save ourselves. For him, the only question is when we will crash to earth, not if. Durden seems eager to end the suspense sooner rather than later because only then can we figure out how to create an economic system that is not fatally infected with both high risk and high debt.
It is easy to paint Durden and Zero Hedge as inherently conservative but perhaps not in the partisan sense. You don’t see anti-Obama screeds but you do sense a fundamental rejection of modern financial instruments as baroque excrescences so ornate that they cannot avoid collapsing under their own weight.
Zero Hedge might well be the perfect blogger for the 99 percenters. More than most, Durden piles up the proof that the system is rigged to bail out the wealthy and fail everyone else.
Like Durden, “Black Swan” author Taleb has refused to become a media darling, speaking instead through his writing. He recently co-wrote an article with Mark Spitznagel called The Great Bank Robbery in which he calculates that the executives who work for the banks that have filings with the SEC will pay themselves roughly $5 trillion by the time we reach the end of the decade where we now stand at midpoint.
That $5 trillion dollars is not money invested in building roads, schools, and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees. Such transfers represent as cunning a tax on everyone else as one can imagine. It feels quite iniquitous that bankers, having helped cause today’s financial and economic troubles, are the only class that is not suffering from them – and in many cases are actually benefiting.
Like Occupy Wall Street, Zero Hedge and the doomsayers are sounding the alarm that the system is corrupt. No matter which party is in power, it is designed to bail out the super-rich and leave everyone else in peril.
Durden and his ilk may be right that the only way to purge the system of its pervasive rot is by lighting the match that sends the entire global system up in flames. If so, let’s hope the Occupy movement has by then had the chance to mature enough so that it can build a better one in its place.