A Witch’s Brew

Elsewhere a systemically important bank
Now falling rapidly in rank
Credit Suisse - if you need proof
Credit default swaps through the roof -
As its share price to the bottom sank

Let’s review how we got in this mess
(It does get tedious, I must confess)
Greed rampant in the highest places
‘The Sin of the Calf’ in their besotted faces
How it all ends is anyone’s guess

Chinese developers Evergrande
In property made a grandstand
They leveraged without halt
Until they blew up in default
Sending shock waves throughout the land

Asset managers China Huarong
Thought they could do no wrong
When the market turned
They were badly burned
Their assets now on sale for a song

Chinese mortgagees told ‘get on their bike’
Organized a payment strike
And this hint of fraternity
Spooked leaders of the CCP
Not good for the Politburo’s psyche

How to say in Mandarin “Hey, man,
All this could be the Chinese Lehman”
Investors, creditors ragin’
As this reeks of contagion
(Another bailout by the common layman?)

This echoes events at Deutsche Bank
Into derivatives trillions they sank
Risk compliance was a joke
So they blew up in smoke
And became the ultimate Zombie Bank

Germans then headed to the polls
Few of them were happy souls
In no humour to be kind
Vengeance on their mind
Intent a CDU head rolls

German and Dutch creditors aghast
Aware the fantasy could not last
But moral fortitude is passé
Everyone now quite blasé
Thus the next financial crisis cast

Then, Super Mario sat on the fence
Soon lost a vote of confidence
Creditors tired of this bunk
Italian debt rated junk
No wonder the euro’s worth cents

The governor of the Bank of Japan
Says “For QE, I’m your man . . .
Need for bolder steps. . . heightening”
(Does anyone find this frightening?)
Just print money for prosperity? Yes we can!

The Holy Ghost of our Trinity
Jerome Powell minute by minute he
Carries on his will-o’-the-wisp caper
Of this catch-me-if-you-can taper
While US debt approaches infinity

The FOMC in very hushed tones
Wary of cameras and cellphones
Whispers ‘taper’ barely once
Awaits the Street’s response
Watching like a hawk the Dow Jones

If the markets wail and pout
Or threaten to unleash a rout
Maybe even go berserk
With the usual knee jerk
Will the Fed rush to bail them out?

Board Governors talk lots and lots
For real action they have not the guts
Not ones for a surgical suture
Defer acting to the future
Then bumble on with their dotty plots

‘Inflation is just transitory’ Powell spoke
Sure, Jerome! Tell us another joke!
Do you even know how to count
When all you buy is on expense account?
Don’t think you fool us common folk!

Senior Fed officials trade their accounts
Profiting from the latest market bounce
Inside information? Oh, such fallacy!
They only help set monetary policy
(And everyone knows that hardly counts)

Pelosi’s husband is not prevented
Hours before a CHIP bill is presented
From making a timely stock trade
(Thinks he’s operating in the shade)
Wonder why politicians are resented?

Bostic the latest to break the rules
“Off with their heads!” the useless tools
Who think they are above the law
And can laugh it off by eating crow
It’s time to sink this ship of fools!

Do not look to the Oval Office
To suggest anything might be amiss
Republican or Democratic
Spiralling debt is automatic
As we fall headlong towards the abyss

Always the opposition party to blame
In the high stakes debt ceiling game
All limits now an absolute joke
Sky high at a single pen stroke
And Congress without a shrivel of shame

Then came Janet Yellen’s confession
Let’s redefine what makes a recession
With their bafflegab and monetary tools
They take us for a shower of fools
Is it any wonder there’s talk of secession?

As volatility rockets to the moon
Traders have to work past noon
Mansions in the Hamptons, dears
Will have to wait a few more years
Wall Street now all in a swoon

We all should be quite leery
About Modern Monetary Theory
Its two biggest fantasies
Are that ‘money grows on trees’
And ‘inflation will be transitory’

But investors conditioned to buy the dip
Caught in Greed’s vice-like grip
Fodder for the Wall Street machine
Dangling The Great American Dream
Yet again let their defences slip

So, like Alice in Wonderland
We dwell in our Fantasy Land
With gobs of margin debt
Wagering bet after bet
To turn fifty into five hundred grand

Perhaps a shock video on Tik-Tok
Could show virtual reality run amok
While Joe Public digs the ditches
The one per cent skim the riches
And not a sinner convicted in the dock

To boost his party in mid-term elections
Biden begs the Saudis to boost production
Hard to distinguish friends from foes
But the public still pays through the nose
For an energy policy that lacks any gumption

Will these elections be the stage
For the public to turn from fool to sage?
You can only dupe them for a time
They know the value of their dime
Get ready now to feel their RAGE!

If to Central Bankers you fawn
Or respond with a stifled yawn
Remember the dominoes are all connected
Their bluff by now has been well detected
Black Swan will arise on a murky dawn

The ghosts of subprime
And 'The Big Short' come to mind
How greed and its seduction
Led to worldwide destruction
History does not repeat but it often rhymes

What is this vile and noxious broth
And why the silence from men of the cloth?
So many hands in others’ pockets
Hard to tell the sinners from the prophets
When everyone seems to be sold and bought

“For a charm of powerful trouble
Like a hell-broth boil and bubble”
We shall see before our eyes
This Witch’s Brew meet its demise
The evaporating Everything Bubble

Patrick Slater is the chief investment officer at SCION Canada (Scion Canada Investment Opportunity Network).

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