The Days of Ponzigeddon

Readers can do a search of Winter Watch using the term “Ponzi” or “Ponzi units” and see our persistent focus on this issue. Over the last week, we reached a point that can only be described as Ponzigeddon.

It’s especially acute in the cryptocurrency space. Losses from the highs are approaching $2 trillion. There are an estimated 1,900 cryptocurrency hedge funds, and most appear to use leverage to trade at higher volumes while putting up only a small amount of collateral.

A Ponzi exists to enrich kleptocrat insiders. There’s no actual value otherwise. Ponzis are also highly unstable. They’re either inflating or deflating (rapidly). They cannot exist in a state of equilibrium. On the way down, it goes fast.

They trade on emotion, they are volatile, and they create religious fervor, driving them to insane heights. The Crypto cowboys (aka Fukwitz) that speculate and leverage Ponzis using debt often gamble in multiple Ponzis at once. This causes them to defuse in tandem.

True believers in these cults tend to fight it out to the last man. Note intense bagholder buying right as cryptos rolled over for another leg in May. VandaTrack data shows that Fukwitz bought into crypto-related stocks and ETFs to the tune of $570 million over the past 10 trading days. This suggests true capitulation hasn’t occurred yet.

When pornstars were pumping shitcoins, when you’re taking financial advice from @miakhalifa, it’s late in the fraud of the Ponzi.

Crypto companies spent $100 million of now-precious cash — on Superbowl ads.

Read “Where Have All the Crypto-Shilling Celebs Gone?”

They rarely come back to old Ponzis but Fukwitz always try to make it back in a different Ponzi. Some people just are attracted to Ponzis. The market exists to separate them from their money.

The stock and bond market was definitely in Ponzi-land. It’s a Ponzi scheme with low interest rates and zombie companies. The following chart reflects conditions BEFORE an economic bust.

These are huge iceberg markets and the defusions are more deliberate, but damaging just the same.

The causa promixa that set up Ponzigeddon were negative interest rates (NIRP and ZIRP) on roughly 25% of global bonds. This can be gleaned in the chart below. Once the negative interest-rate punchbowl was removed, the Ponzis began to collapse. Last man standing with ZIRP is Japan and their currency is getting smoked.

The previous profitable trades of small option traders drove the stonk market higher from gamma. Now that’s diametrically reversed.

This margin debt liquidation is only through the end of May and before the latest wrecking ball noted in the chart above.

In the seven months since the peak in October, margin debt dropped by $183 billion, or 20%. Super-leverage is entwined in almost every sector. In both the 2000-2002 and 2007-2009 episodes, margin debt dropped 50%, right along with the markets.

Sub-zero behavior just continues on and on.

We aren’t in Kansas anymore, Toto. How does cattle die en mass in some summer heat?

The wags are claiming the cattle were stressed at night, but the truth is that temperature dropped considerably to 74 F overnight on the 16th.

Funkytown12.0™ (@0Funky11) June 15, 2022

Coal loads just derail going across flat Kansas farmland?

Food processing facility in Kentucky goes up in flames. That makes #98.

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