He just can’t help himself: disgraced sociopath, record-breaking fraudster and prolific Democratic donor – not necessarily in that order – Sam Bankman-Fried, has issued another apology to his staff in a letter that outlined a crash in “collateral” to less than $9 billion from $60 billion.
“I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again,” the corpulent 30-year-old who may or may not be in the Bahamas apologized yet again in the message sent to employees Tuesday, although he really should be apologizing to the millions of clients whom he wiped out. Alas, like the recurrent ramblings of a psychopath, Sam’s takeaway was that the implosion at FTX was the side-effect of an unfortunate bank run, and had nothing to do with SBF’s actions; that’s because SBF still refuses to take any responsibility for what happened and makes zero admission that the factors that led to this historic bankruptcy were in his control all along. Sam claims that he didn’t “realize the magnitude of risk.” His main remorse – like that of any pathological individual – is that he got caught.
Still don’t believe us he was a sociopath? Read this:
I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again. You were my family. I’ve lost that, and our old home is an empty warehouse of monitors. When I turn around, there’s no one left to talk to. I disappointed all of you, and when things broke down I failed to communicate. I froze up in the face of pressure and leaks and the Binance LOI and said nothing. I lost track of the most important things in the commotion of company growth. I care deeply about you all, and you were my family, and I’m sorry.
No he isn’t, and if it wasn’t his fault, whose fault was it? Well, as he “describes” the sequence of events, you see it was all the market’s fault as a slide in digital-asset markets in spring roughly halved collateral from $60 billion to $30 billion, while liabilities were $2 billion. A combination of a credit squeeze, a further selloff in virtual coins and a “run on the bank” left collateral at $9 billion ahead of FTX’s Nov. 11 bankruptcy, he wrote. The estimate for liabilities had reached $8 billion by then. Here is how, in his words, what was initially a $58 billion overcollateralized balance sheet ended up having more liabilities than assets.
“I did not realize the full extent of the margin position, nor did I realize the magnitude of the risk posed by a hyper-correlated crash,” Bankman-Fried said. He didn’t give exact details on the makeup of the collateral or the liabilities. If he did, it would look something like this chart from Morgan Stanley:
What happens next is what any sniveling sociopath posing as a CEO would say: I had no idea any of this could happen:
I did not realize the full extent of the margin position, nor did I realize the magnitude of the risk posed by a hyper-correlated crash.
And it is here, that we get the first admission that something nefarious happened: i.e., loans – to related parties, such as the $4 billion “given” from FTX to SBF – and the “secondary sales” which we now knows SBF pocketed some $300 million for personal use.
The loans and secondary sales were generally used to reinvest in the business—including buying out Binance—and not for large amounts of personal consumption.
And so, ladies and gents of the jury, would you consider a $40 million penthouse to be a “large amount of personal consumption.” And what about a private jet: in this day and age everyone needs one, how can one possibly define that as “large amount of personal consumption.” As for the meaning of “generally”, we are confident SBF’s close buddy Bill Clinton will give him the proper definition of that word.
Prudently, there was zero mention in Sam’s meandering word salad that FTX had illegally commingled and sent billions in customer funds to SBF’s personal hedge fund, Alameda, which despite frontrunning virtually every crypto transaction still lost $3.7 billion before 2022. That’s ok, Sam can discuss that in court.
There was, however, the usual lies, including SBF’s increasingly warped representation of reality, which is to be expected: as noted above, he is after all, a sociopath.
We likely could have raised significant funding; potential interest in billions of dollars of funding came in roughly eight minutes after I signed the Chapter 11 docs. Between those funds, the billions of dollars of collateral the company still held, and the interest we’d received from other parties, I think that we probably could have returned large value to customers and saved the business.
Narrator: none of this happened, and none of this will happen either:
Maybe there still is a chance to save the company. I believe that there are billions of dollars of genuine interest from new investors that could go to making customers whole. But I can’t promise you that anything will happen, because it’s not my choice.
That’s right: it is now all in the hands of the person who presided over the Enron bankruptcy and who thinks your fraud is way worse.
And speaking of fraud, there was one sentence in the whole letter where this pathological liar may have told the truth, if inadvertently:
… None of this changes the fact that this all sucks for you guys, and it’s not your fault, and I’m really sorry about that. I’m going to do what I can to make it up to you guys—and to the customers—even if that takes the rest of my life. But I’m worried that even then I won’t be able to.
No, you won’t be able to, but when it comes to “the rest of your life”, both the “guys” and the customers who you left with nothing because of your infinite greed, fraud and incompetence, they all have an idea where you can spend it.
Whether or not that happens will depend on just how broken the US legal system is, where a few million in donations to prominent democrats may be all it takes to get a lifetime “get out of jail” card.
SBF’s full letter to his now former employees is belowZero Hedge
Congressional Witness: Liberals Siding with Corporations to Keep Wages Down via Mass Immigration
Liberals are siding with corporate America over the nation’s workers.
Liberals are siding with corporate America over the nation’s workers in their promotion of mass immigration, a key tool in keeping wages down, Center for Immigration Studies Director of Research Steven Camarota told lawmakers this week.
During a hearing before the House Health, Employment, Labor, and Pensions Subcommittee, led by Chairman Bob Good (R-VA), Camarota said liberals — such as President Joe Biden — have broken with historical precedent in recent decades to defend the interests of corporations against American workers when it comes to national immigration policy.
“Historically, progressives from Eugene Debs to A. Philip Randolph, they got that if you have lots of immigration, you tend to push down wages,” Camarota said:
Unfortunately, a lot of progressives are lying with corporate America on this — they want low wages. And they’re perfectly happy to ignore this crisis of non-work among working-age people, particularly the U.S.-born. Immigrants haven’t suffered this same problem. It’s particularly U.S.-born men without a college degree and we know it’s a social disaster. [Emphasis added]
Even former President Obama, in his 2006 book The Audacity of Hope, admitted that illegal immigration threatened the wages of America’s working class:
"The number of immigrants added to the labor force every year is of a magnitude not seen in this country for over a century."— NumbersUSA (@NumbersUSA) August 30, 2020
— Barack Obama, The Audacity of Hope pic.twitter.com/R10Np1r2m1
As Breitbart News reported, Camarota estimates that more than 44 million native-born Americans remain on the labor market sidelines — not including the millions of native-born Americans counted in monthly unemployment figures.
“If we curtailed immigration and enforced our law, we would be forced to draw these people back which will not be easy … less immigration would be enormously helpful but it is not the only issue,” Camarota said:
One of the things immigration is doing is holding down wages, there’s some crowding out … it’s letting us ignore this problem [of non-work]. If we didn’t have access to all this immigrant labor, employers and the American people … would demand that we try to reinstill the value of work. Raising wages would be one of the most important things to make work more attractive. Immigration lets us not do any of that, including the current flow of massive illegal immigration. [Emphasis added]
‘Bidenomics’ Fail: Food Stamp Bonanza Sends Grocery Bills Soaring 15%, Study Finds
In a classic move by those on the left — democrats, socialists, and everyone in between with seemingly no grasp of what sparks inflation — championed the Biden administration’s move in 2021 to increase food stamp spending by the most in history, hiking benefits by an average of 27%.
In 2022, the Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP) spending hit a record high of $119 billion, a sixfold increase over the last two decades. In 2019, taxpayers were on the hook for $4.5 billion per month on food stamp benefits. By December 2022, monthly food stamp spending soared to $11 billion.
According to findings from the government watchdog Foundation for Government Accountability (FGA), previewed by Fox News, the administration’s massive expansion of food stamp benefits could be responsible for a 15% spike in grocery store prices.
FGA called Biden’s rush to increase SNAP benefits an “unlawful expansion—which bypassed Congress—will cost taxpayers $250 billion over the next decade and has heavily contributed to soaring grocery prices.”
“Congress should repeal President Biden’s unlawful food stamp expansion and ensure this type of executive overreach cannot happen again. In doing so, Congress could save taxpayers more than $193 billion over the next decade,” it added.
The good news is the emergency allotments expired earlier this year, but food stamp spending remains $8.6 billion in March. The Congressional Budget Office estimates SNAP spending will cost taxpayers nearly $1.1 trillion over the next decade.
“USDA cooked their books to hike food stamp benefits by 27% — the largest permanent increase in program history. And they bypassed Congress to do it,” said Jonathan Ingram, Vice President of Policy and Research at the Foundation for Government Accountability.
Ingram noted, “Data show the Biden administration’s overreach led to massive spikes in grocery prices. They’re feeding inflation, not stopping hunger.”
The index for food at home (groceries) has skyrocketed ever since Biden increased SNAP benefits.
As food inflation soared, Biden’s officials, seemingly detached from economic reality, pointed the finger at food companies for raging food inflation.
If FGA is correct, this is another sign that ‘Bidenomics’ has been a disaster for low/mid-tier consumers drowning in inflation.
It’s one giant EBT party…This post was originally published at Zero Hedge
Endgame: US Federal Debt Interest Payments About To Hit $1 Trillion
There was a shocking number in today’s latest monthly US Budget Deficit report. No, it wasn’t that US government outlays unexpectedly soared 15% to $646 billion in June, up almost $100 billion from a year ago…
… while tax receipts slumped 9.2% from $461 billion to $418 billion, resulting in a TTM government receipt drop of over 7.3%, the biggest since June 2020 when the US was reeling from the covid lockdown recession; in fact never have before tax receipts suffered such a big drop without the US entering a recession.
Needless to say, surging government outlays coupled with shrinking tax revenues meant that in June, the US budget deficit nearly tripled from $89 billion a year ago to $228 billion, far greater than the consensus estimate of $175 billion. One can only imagine which Ukrainian billionaire oligarch’s money laundering bank account is currently enjoying the benefits of that unexpected incremental $50 billion US deficit hole: we know for a fact that the FBI will never get to the bottom of that one, since they can’t even figure out who dumped a bunch of blow inside the White House – the most protected and surveilled structure in the entire world.
And with the monthly deficits coming in higher than expected and also far higher than a year ago, it is also not at all surprising that the cumulative deficit 9 months into the fiscal year is already the 3rd highest on record, surpassed only by the crisis years of 2020 and 2021: at $1.393 trillion, the fiscal 2022 YTD deficit is already up 170% compared to the same period last year.
Again, while sad, none of the above numbers are surprising: they merely confirm that the US is on an ever faster-track to fiscal death, but not before the Fed is forced to monetize the debt once again (one wonders what financial crisis the Jekyll Island folks will invoke this time to greenlight the next multi-trillion QE).
No, the one number that was truly shocking was found all the way on page 9, deep inside Table 3 of the latest Treasury Monthly Statement: the only highlighted below, and which shows that in the 9 months of the current fiscal year, the US has already accumulated a record $652 billion in gross debt interest.
This number was more than 25% higher compared to the Interest Expense payment for the comparable period a year ago, which amounted to $521 billion.
Soaring interest rates, driven by the panicked Fed’s scramble to undo its epic policy failure of 2020 and 2021 when the Fed kept rates at zero for far too long while injecting trillions into various asset bubbles, have been the key driver of the deficit, with the Federal Reserve boosting its benchmark rate by 5% since it began hiking in March last year. Five-year Treasury yields are now about 3.96%, versus 1.35% at the start of last year. As lower-yielding securities mature, the Treasury faces steady increases in the rates it pays on outstanding debt: that’s right – even when the Fed starts cutting rates, due to the delay of rolling over maturing debt, actual interest payments will keep rising for the foreseeable future.
For context, the weighted average interest for total outstanding debt at the end of June was only 2.76%, a level that’s not been surpassed since January 2012, according to the Treasury. That’s up from 1.80% a year before, the department’s data show, and if the Fed indeed keeps rates “higher for longer”, the blended rate on the debt will surpass 4% in one year.
That would be a complete disaster for the US, and it would mean that interest payments on total US debt of $32.3 trillion would hit $1.3 trillion within 12 months, potentially making interest on the debt the single biggest US government expenditure and surpassing social security!
But we don’t even have to wait that long until the exploding interest on US government debt becomes a major talking point ahead of the coming presidential elections. According to the St Louis Fed’s FRED and the BEA, the interest payments by the Federal Government have now surpassed $900 billion for the first time ever, and within a quarter will hit probably rise above $1 trillion, a historic benchmark that will probably begin the countdown to the US Minsky Moment.
One of the most incompetent puppets in the Biden admin (and there are countless), Treasury Secretary Janet Yellen, has played down concerns about higher rates. She has instead flagged that the ratio of interest payments to GDP, after adjustment for inflation, remains historically low. The problem with Yellen’s argument is that GDP will crater after the next recession (which will also spark the next financial crisis, one which Yellen will not live to see), but US debt will never again drop in either absolute or relative terms, as the good folks at the CBO have been so kind to make clear to even such intellectual midgets as the former Fed chairwoman.
In short, the endgame has now arrived, and all the US can do now is rearrange the deck chairs.This post was originally published at Zero Hedge
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