“If it doesn’t pass, then heaven help us all.”

Allow me to teach you what a credit default swap is and why it’s so important to what is happening to the economy today.

Virgle Kent borrows $50 from me. I want to get insurance on his debt in case he goes broke. I go to Roissy and say, “Hey, Virgle Kent owes me $50. Can you insure that debt?”

“I’ll insure it if you pay me $4 a year,” Roissy says.

“Done!”

Roissy is betting that VK will pay me back, especially since he did his homework by looking at VK’s credit rating and saw it was superb. Roissy wrote me a credit default swap, an unregulated derivative invented in 1995 by JP Morgan.

Unfortunately Roissy has some problems with his business, and he no longer even has $50 to pay me in case VK goes broke. The premiums I gave him are long gone. Credit agencies notice this and tell Roissy to find some cash or his credit rating goes down. Roissy is fucked because if his credit rating goes down then he won’t be able to raise cash at good rates to keep his business open (today’s large businesses need a constant flow of credit to maintain operations). Sure enough his rating gets killed and Roissy goes bankrupt.

Now I’m in trouble. The debt I had on my books that was insured is now uninsured. The agencies look at my books and see I have this exposed debt and they downgrade my ass. I have no choice but to enter bankruptcy as well. But I happened to be knee deep in the CDS game too. I wrote a ton of them for Arjewtino, insuring the debt owed to him by other parties. When I go down it puts pressure on him. Like dominoes we fall.

In the carnage it turned out that the ratings we used to judge each other’s debt worthiness was bogus from the start. Essentially we all gambled like we would at a blackjack table, but we did it while drunk. And blind.

The insurance company AIG wrote $78 billion worth of swaps.

Ivy League MBA’s turned the CDS into an even more insidious device. In ways that I will not begin to understand, swaps were used not just to insure against debt but to speculate if companies would fail or not. It turned out that while VK only owed me $50, there were swaps written worth $500 between parties that VK didn’t even know about! The swaps became a means to make money instead of a simple insurance policy. This was enabled by a government run by politicians whose treasure chests were stocked full of kind donations from the big bankers. They did not hesitate to look the other way.

A lot of swaps were written by banks and businesses that are now very sick from making bad bets and possibly outright fraud in the housing boom. (Who would have thought that giving no money down / no-doc loans was a bad idea?)

Here’s the bad news:

…there are $45 trillion of credit default swaps out there. A default on a mere 10% would cause an economic disaster. Unfortunately, it’s guaranteed to happen.

Actually that was the good news. Here’s the real bad news:

The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars – that’s 1,000 trillion dollars. How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want.

The quote up top was said by Henry Paulson.

“I had an nice apartment in Southwest DC. This was in the 70’s. The apartment had a great view and I lived a short walk away from a row of clubs. I’d get off work every day at three and by four I was drinking.

“In short time my place became the party spot. Girls would call other girls, who came with other guys and girls. There were always women, in and out. It was just one woman after the other I was taking to bed. Man, some of them were so beautiful.”

A big grin formed on his face as described one particular girl, using his hands to shape her body.

“But after nine months I had to get out of there. I moved to the suburbs, not far from here but before it was developed.”

“Why did you move?” I asked.

“I wasn’t respecting women. They meant nothing. They were great girls, very good girls, but after a few days I’d move on to the next one.”

“You’re a stronger man that me,” I said.

“No, look. There was one guy there who was a decade older than me, and I was already older than most people so he was that much older than everyone. I’d see him all the time at my favorite club and he was always surrounded by people. You can tell how happy he was when there was a crowd around him. In this club he was respected and known, but that’s all he had. That’s all he lived for. I looked at him and knew that’s not where I wanted to go.

“That type of lifestyle, it’s shallow. Very shallow.”

Previously: Thoughts On Ejaculating Inside A Girl

There are two questions I ask a girl when it’s time to ditch the condom.

First Question: “Are you on the pill?”

What’s the point of having a main squeeze if you can’t have unprotected sex? If she wasn’t on the pill and were to start it the next day, remember it takes at least a month for the infertility to kick in. Unfortunately the percent of casual dating relationships that reach the one month mark is something like 20%. (American “dating” has become such a joke.)

The second question is a little more involved, and I try to find a moment when she’s likely to answer truthfully because my future well-being may depend on it.

Second Question: “If you got pregnant right now, what would you do?”

Note the phrasing of the question. I don’t want to lead the witness with my desired answer. I’m searching for the truth here.

There’s two components to her answer that you must take care to note: her actual words and the time it takes for her to answer. You probably guessed that the less important part of the answer are her words, which most of the time will be along the lines of “I’d take care of it.” Sure, at that moment in space time when she’s talking to you she wouldn’t consider having the baby, but a real pregnancy can change a woman’s mind. Flashbacks of teenage years spent babysitting, thoughts of baby showers and shopping for baby clothes, and ongoing nagging from mom have strong effects on a woman.

The least she could say is she’d take care of it. If a girl says she would “think about it” then she might as well be planning to have a baby with you. The best possible answer for me is when a girl describes how an unexpected little Rooshy would ruin her plans for a more successful career, future travel plans, better furniture, a larger condominium, and sexier shoes.

The time it takes for her to answer your question tells you if she has given serious thought about getting pregnant or not. If she answers quickly with something that feels like a prepared statement then you can place strong weight into her answer. But if she takes just a couple seconds to reply that means she is searching not for the real answer but probably the one you want to hear. Or it could be one of the girls that I recently dated, who said she’s keep the baby and not tell me. She said it would be “none of your business.” I kid you not.

Even if you never ejaculate inside a woman go ahead and ask her anyway because how about if your pre-jizz is so potent that it has enough sperm to create life? I think that’s a myth, by the way, but I don’t really have any scientific evidence to prove it (i.e. please don’t take my word for it).

“I totally want to get a tattoo. I know it has become a trend but I designed one on my own and feel like it would make me unique and not just another face in the crowd and it would even motivate me to keep my body in shape because if I get fat then the tattoo would probably look different you know? I’m a sexual person, definitely spiritual, a lover of nature, and I even write poems. I mean like guys always listen carefully when I read my poems to them and they compliment me on how good they are written. So now I read them my poems on the first date so they can get to know me faster and we can skip all that lame dating bullshit and go right into knowing each other. God I made the best design ever. I can only imagine the faces of the guys who make love to me from behind when they see it, and I’m sure they will love it and realize that I’m a prize as a woman and not all those other boring girls who are even too scared of a needle and who just want to fit in with their boring sun dresses and flip flops. I’m not like them at all because I’m an individual.”

The checkpoint in this video was nearly 50 miles north of the Mexican border, so it would have been utterly pointless in stopping illegal immigration.

The real purpose of these checkpoints is to condition Americans to get used to the police state.

You can read the guy’s blog here, which has other videos as well. Reading the comments though you get the feeling that he’s fighting a cause that most Americans don’t care about. Example:

I just have to give cuddos to the work that is being done by our Men and Women of Law Enforcement and Homeland Security. Where would be without them protecting us. The problem that people fail to remember is that without these people, immigration/drug smuggling/terrorists would be running our beautiful country. As a Homeland Police Officer myself we deal with the things others don’t want to and better yet, if some Hippie Scumbag has a problem with the work we do then move back to Mexico/Canada/or live on a deserted Island and get out of this Country that I love.

Whatever rights are being eroded, remember it can’t be done unless normal Americans like the border agents above or the bureaucrats with a law degree go along with it for a paycheck and a feeling of importance and power.

“I was just doing my job.”

The authority / spying business is now too big to be stopped. The next twenty years is pretty much already set, regardless if you’re a Hillary or Obama fanboy (sorry Hillary fans).

If you’re stopped by police, here’s what to do. Note the article may be dated depending on whatever court decision or executive order is declared in upcoming weeks.

Did you know that if you leave the country with a laptop, border agents can randomly examine and search the contents of your hard drive and download files? If you resist then they can supposedly deny you entry back into the country. I don’t know if I have the balls to find out if that’s true or not. Courts ruled this legal on the defense that the data on your computer is the same as something you’d carry in your suitcase.

“Sir the girl in this Dirty But Innocent porn clip sure looks young. Can you verify she is 18 years of age?”

I took pictures of Rio’s beaches and in one of the picture was a four-year-old boy laying on the sand. He had a speedo on like many of the adults. How about if an agent saw that picture, what would he think? I deleted the picture before I hopped on the plane home. I lose, terrorists win, etc.

Yeah I know what you’re thinking. I’m being too “paranoid.” Hey, it’s not paranoia if they’re scanning your emails and telephone calls. But who cares as long as we can fill up our cars with cheap g…

How come no one is talking of the staggering outflow of money leaving the country every month to finance a society built around the automobile? South American cities like Santiago and Rio de Janeiro put Washington DC’s public transportation to shame. Sure in Rio your chances of being robbed on a bus at night is 100 times greater, but at least there is a bus at night. The Metro is a joke with buses that come ever 30 or 40 (!) minutes on main arteries with no Sunday service.

Spend the next ten minutes of your life reading this fascinating article, by the author of a book that just came out called Reinventing Collapse. It paints the case how the collapse of the USSR will be benign compared to the US collapse. And please no “The United States will never collapse” wishful thinking. Every empire collapses (a book I’m reading now is in fact called Collapse). It probably won’t happen in our lifetimes but it will happen.

Or will it?

I have 30% of my net worth in foreign currencies, the Yen, Franc, and Krohn. The end game for every fiat currency is hyperinflation, but which currency will bust first? I’m betting it’s not Japan (this is a little arguable), Switzerland, or Norway. Are you prepared if the dollar falls through the floor and your hard-earned savings is wiped out? Most people in Argentina weren’t prepared.

The Communist party offered just one bitter pill. The two Capitalist parties offer a choice of two placebos. The latest innovation is the photo finish election, where each party buys 50% of the vote, and the result is pulled out of statistical noise, like a rabbit out of a hat.

“If voting could change anything they’d make it illegal.”

There is nothing on the horizon that gives me hope about where this country, or the world, is headed. I watch my back and believe nothing my government tells me.