Whitney Webb: “They only want to keep the discussion at sex trafficking, because it’s wider than sex...Epstein was doing a lot of really shady arms trafficking & financial criminality, and they have no interest in getting deep in the weeds there because that exposes others...”

Detective Lester Freamon: "You follow drugs, you get drug addicts and drug dealers. But you start to follow the money, and you don't know where the f**k it's gonna take you."

Charles Ferguson: “Why do you think there isn’t a more systematic investigation being undertaken?”

Nouriel Roubini: “Because then you’d find the culprits.”

Kevin Muir

“If Trump does what he says he wants about the trade deficit, it’s going to mean that the stock market goes down. The trouble is, I don’t think he’s actually going to do what he says he’s going to do. And this is the problem, right? We’ve become very political. We get Trump saying one thing, and if he followed through on it, it would actually be easy to trade. But he does the tariffs, and next thing you know, he’s TACO-ing. He doesn’t really want the trade deficit to go down. He wants the stock market to go up.”

Cem Karsan

• “Focus on companies that increase their profit margins as interest rates go higher, because we know that as interest rates go higher, multiple contraction is an issue for equities…There are a sub subset of about 25% - a significant minority - that do the opposite. What are those companies? Think about companies with negative working capital. What do I mean by that? Warren Buffett and insurance comes to mind, right? Insurance is an incredible negative working capital business. Why does it do well when interest rates go up? Well, they get the money up front at scale. They get the inflation on that money, and then they pay out afterwards…Lastly, they also it’s a capital intensive business, so if the cost of money goes up, there are less participants and risk premium tend to go up, and they tend to collect more margin as well. So, it’s a very good business in this environment. Right?”

• “The Federal Reserve in starting in 1971 became the most powerful entity in the world when gold was unpinned from the dollar. The world is about incentives. If you have a government that is forced in the situation into a political problem, and there’s there’s only a couple ways out - they’re going to avoid crisis for long-term pain. And that’s what inflation is.”1

• “This indoctrination that 60/40 is how we invest is an artifact of recency bias.”

• “The correlation of stocks and bonds over the long run is more positively

  correlated than negative. There is zero - I want to reiterate, zero diversification benefit, over 125 years - of stocks versus bonds.”

Gold/Silver Ratio

Apollo cuts risk and stockpiles cash in preparation for market turmoil

Apollo Global is building up cash, cutting leverage and selling out of riskier corners of debt markets as top executives gird the firm for what they expect to be market turbulence.

The $908bn-in-assets company’s chief executive, Marc Rowan, believes the defensive posture will prepare Apollo for more challenging credit and equity markets and put it in a better position to invest heavily during any turmoil…

Rowan has also warned of “contagion risk” in some areas of the insurance marketplace where private capital groups have grown quickly with little regulatory oversight.

He has warned of looming bankruptcies among private capital-backed insurers that have moved their assets to the Cayman Islands, an offshore jurisdiction.

“What people are doing is they’re taking business offshore to Cayman, where there are fewer rules and fewer capital requirements …We’ve now seen three bankruptcies in Cayman. We will see more. I do not believe that Cayman will be a viable US jurisdiction over 24 months,” he said in public comments at the same Goldman conference.

Apollo believes that defaults could be contagious for the insurance industry given that assets moving offshore have been ceded by US insurers who ultimately would be on the hook to cover losses because they have no federal backstop.

He has also said that returns in many debt markets have fallen to the point of being unattractive.

“CLO spreads have completely and totally compressed,” said Rowan at the Goldman conference, referring to bundles of low-rated loans used to finance private equity takeovers.

“Once Wall Street’s High Flyer, Private Equity Loses Its Luster”

Many recent attempts by private equity firms to sell companies or take them public have stalled.

The private equity firm Thoma Bravo has failed repeatedly over the past several years to sell two companies it owns for an acceptable price. Thoma Bravo bought J.D. Power, the consumer analytics company, and ConnectWise, a software company, in 2019 and hasn’t found a buyer for either. This year, in light of the tough market, the private equity firm did not attempt another sale, according to two people briefed on the matter.

Roark Capital, the private equity owner of Dunkin’, Arby’s, Jimmy John’s and other fast food chains, has been preparing a public offering for the restaurants’ parent company since 2024, but Roark still hasn’t moved forward with the plans, one person familiar with the matter said.

The sluggish deal activity has led to the once unimaginable: For the past several years, private equity’s annual returns have been lower than the S&P 500’s…

The industry has had little incentive to sell in the recent conditions because firms would be forced to mark down the value of their investments, Sunaina Sinha Haldea, the global head of private capital advisory at Raymond James, said in an interview.

“There are so many companies that are stuck,” she said…

Until the companies are actually sold or taken public, a private equity firm’s returns are only estimates of how their companies should be valued. Some investors are growing concerned that they are being left in the dark about the true value of their investments with these firms…

The dark joke circling around the industry is that many private-equity firms have already raised their last fund but don’t know it yet.

Private credit firms pile into consumer debt as risk-taking mounts

Private credit firms snapped up nearly 14 times as much consumer debt this year as in 2024, piling into riskier areas such as credit cards and buy now, pay later debt.

In 2025, private credit groups, including the likes of KKR, Blue Owl and Sixth Street, either purchased or struck so-called forward flow agreements to purchase $136bn of consumer loans, according to figures compiled by KBW analysts. That number compared with just $10bn in the previous year.

The rush of deals — such as KKR’s agreement to purchase a multibillion-dollar credit card portfolio from New Day, a private equity-backed company in Europe — raises concerns about underwriting standards and risk management by Wall Street firms that are quickly expanding their empires.

“There are no signs out there that piling into consumer debt at this point of the economic cycle would be advisable,” said Josephson, citing rising delinquencies in auto and student loans.

“Maybe [private credit firms] feel like they need to do it because they don’t have other options, but that doesn’t make it a good idea,” he added.

Can’t wait to bail all these billionaires out.

The world’s top financial regulators have admitted they are blind to dangers lurking in the shadow banking sector.

On Tuesday, the Financial Stability Board (FSB), a network of global watchdogs, said “severe limitations” on the availability of data from the $250tn (£190tn) industry made it more difficult to spot the seeds of another global financial crash.

Satyajit Das: The Shadow of Financial Instability

Das was one of the most prescient prophets of the 2008 “GFC” (or, what I call, Great Depression II). In particular, his 2006 book, “Traders, Guns and Money,” was quite a useful read at the time.

In the 2008 crash, unregulated financial institutions (structured investment vehicles, asset backed commercial paper issuers, securitisation structures, money market and hedge funds) contributed to financial instability. In the aftermath, regulators promised to control ‘shadow banks’ (they prefer the less pejorative ‘market-based finance’ or ‘non-bank financial institutions). But it didn’t happen.

Shadow banks’ share of global financial assets has, in fact, increased since 2008 (see graph below). The value of assets held by insurers, private credit providers, hedge funds and other non-bank financial groups totalled around $257 trillion, growing ate 9.4 percent in 2024. In contrast, banks’ assets rose 4.7 percent to just over $191tn in 2024.

As of 2024, shadow banks total financial assets were 225 percent of global GDP up from 150 percent in 2008. In comparison bank assets, which have grown more slowly are 175 percent. Since 2008, hedge funds have doubled to 8 percent of GDP.

U.S. Household Income vs Median Home Price

Sellers need to lower their prices

“There were an estimated 37.2% more home sellers than buyers in the U.S. housing market in November (or 529,770 more, in numerical terms)—the largest gap in records dating back to 2013 aside from this summer. That’s up from 35.6% a month earlier and 17% a year earlier. The gap has been hovering above 35% since April.”

“You can’t go anywhere without hearing people talk about “the real estate bubble.” Such talk drives me to distraction, and I’ll tell you why. It’s because there is no real estate bubble. Bubbles are for bathtubs. Despite a thousand articles in Sunday newspaper real estate sections, the bubble is a myth.”

Kendra Todd, the winner of season 3 of NBC's The Apprentice, September 26, 2006. Home prices nationally - according to Case-Shiller - had peaked three months earlier.

U.S. Home Prices Ticked Up 0.2% in November - Redfin

Sorry, kids.

“The biggest year-over-year price gains were in Chicago (11%), Pittsburgh (10.1%) and New York (9.5%). The biggest declines were in Austin (-3.8%), Dallas (-2.8%) and Oakland (-2.5%).”

"$208 million wiped out: Yieldstreet investors rack up more losses as firm rebrands to Willow Wealth

"A chart on the company’s website showing annualized returns of negative 2% for real estate investments from 2015 to 2025...has been taken down."

Survivor bias strikes again.

I mentioned Yieldstreet here back in August.

Imagine losing 2% a year in real estate during the 2015-2025 boom years.

GMO Buzzkill via Grant’s

As GMO’s asset allocation team relayed late last week, more than 30% of the S&P 500 changes hands at above 10 times sales on a market capitalization-weighted basis, topping the dot.com era peak to mark the highest share on record in the data series dating to 1965. On an equal-weighted basis, just under 8% of the blue-chip gauge sports that double digit revenue multiple, a share surpassed only in 2000 and the Covid-era everything bubble. “History suggests that such extremes rarely exist without painful corrections,” the GMO team warns.

Satyajit Das on A.I.

Cheerleaders miss that LLMs do not reason but are probabilistic prediction engines. A system which trawls existing data, even assuming that is correct, cannot create anything new. Once existing data sources are devoured, scaling produces diminishing returns. Rather than fully generalisable intelligence, generative models are regurgitation engines struggling with truth, hallucinations and reasoning.

AI models can take over certain labour-intensive tasks like data driven research, journalism and writing, travel planning, computer coding, certain medical diagnostics, testing and routine administrative tasks like handling standard customer service queries. Its loftier aims may prove elusive. Predictions of medical breakthroughs have disappointed although pre- OpenAI machine learning models, pattern recognition engines and classifiers, used for years, continue to be useful.

For the moment, GenAI, an ill-defined marketing rather than technical term, remains a costly parlour trick for some low-level applications, making memes and allowing scammers to deceive and defraud – the “unfathomable in pursuit of the indefinable”…

Revenues would have to grow over 20 times from the current $15-20 billion per annum to just cover current annual investment in land, building, rapidly depreciating chips and power and water operating expenses. Revenues totalling more than $1 trillion may be required to earn an adequate return. Microsoft’s Windows and Office, among the world’s most used software, generates less than $100 billion in commercial and consumer revenue. Around 5 percent of its 800 million users currently pay to use ChatGPT. Microsoft’s CEO drew the ire of true believers when he argued that AI had yet to produce a profitable killer application to match the impact of email or Excel…

In the meantime, AI firms remain a cash burning furnace. In the first half of 2025, OpenAI, owner of ChatGPT, generated $4.3 billion in revenue but spent $2 billion on sales and marketing and nearly $2.5 billion on stock-based equity compensation, posting an operating loss of $7.8 billion…

The AI bubble, with its growing gap between expectations, investment and revenue potential, eerily resembles the 1990s. But it is much larger. Investment may be 17 times that of the 2000 dot com and four times the 2008 sub-prime housing bubble.

AI’s acolytes deny any excess and argue that this time it is different because it is financed by equity capital. In fact, a large proportion is funded by debt with the amount tied to AI totalling around $1.2 trillion, 14 percent of all investment-grade debt…

When the dot com boom ended, Microsoft, Apple, Oracle and Amazon fell 65, 80, 88 percent, and 94 percent respectively taking 16, 5, 14 and 7 years to recover their 2000 peaks. The economy slowed requiring government support and historically low interest rates, at the time, to sustain economy activity which set off the housing boom which resulted in the 2008 crisis.

Consensual Tolkien-esque hallucinations notwithstanding, it would be surprising if the ending is different this time.

Jack Gamble

We were in the tech wreck of 2022 amid the Fed hiking cycle. All the MAG 7 names were selling off brutally. We were in a bear market very briefly there, and then all of a sudden, here’s the shiny new thing - A.I.

They launched a giant experiment. They took the Google attention white paper and they gave it all the information they could steal, and all the computing power money could possibly buy, and they launched the largest accounting fraud in history2 to finance it - that grand experiment to see if they could achieve artificial general intelligence, basically A.I. smarter than a person.

That experiment has been a failure for the last three years. It has not worked. These models have gotten marginally better, nowhere near as better as they needed to get in order to justify the expense. So now we are left after the biggest incineration of capital in history, which is still ongoing. Where do we go from here?

…The entire AI bubble is nothing more than a circular accounting gimmick. It’s a scheme called round tripping where you give money to your customers so your customers can afford to buy your product. And every participant in the A.I. bubble has done this.

Altman gives off an almost Jeff Skilling vibe here.

Italy and Spain shake off ‘periphery’ tag as borrowing premiums hit 16-year low

“Government borrowing costs paid by Italy and Spain have fallen to their lowest level relative to Germany in 16 years, as investors reward Rome and Madrid for belt-tightening and grow more worried about surging debt elsewhere in the Eurozone.”

The above article goes well with this podcast:

Robin Brooks Warns the End of the Euro is Coming

• “The political elite in these countries has every incentive to make a Euro breakup, an end of the system, look as catastrophic as possible. This is just negotiating tactic.”

• “The basic design flaw in the Euro is that low debt countries like the Netherlands and Germany are outnumbered by high debt countries. There are many more countries with bad fiscal policy than with good fiscal policy. That means that on the governing council of the ECB, the representatives from Northern Europe are completely outvoted always.”

• “The gold and precious metals rally started on August 22nd. That was the Fed’s Jackson Hole meeting at which chair Powell, the head of the Fed, gave a very dovish speech, and it basically signaled that the Federal Reserve would resume interest rate cuts and start easing. And so after that speech through mid-October, gold was up 30%, like in a straight line - basically no pullbacks - and it was amazing. I wrote about it back then and something really different was happening. And then we just had another Fed meeting on December 10th, which again sparked a massive rally in precious metals. So, to me, I don’t know exactly what’s going on with precious metals, but I do know watching the screens that the Fed is clearly a catalyst.”

Barrett Brown

This is how bad it gets. There’s no red line. No matter how many people die or go to prison to expose this, no matter how many sex trafficking victims come up, and manage to survive the persecution and blackmail by companies like Black Cube and Palantir that specialize in suppressing victims, whatever we do, it won’t amount to anything, because our institutions, including our press, are unable or unwilling to hold people to account, even when they’re found to do the most monstrous things possible. I think that’s a lesson that people need to think about in the years to come…

I don’t think a lot of people are serious about doing anything that involves self-sacrifice, no matter how bad it gets…

In my lifetime alone, the U.S. and the U.K. and its allies have, in the Middle East, without much debate, and generally by excuses which end up being retracted due to their being false, we’ve killed a lot of people, killed a lot of children…the centrists, the mainstream of the press and politics, don’t seem bothered by that, so I guess in the greater scheme of things, a couple hundred children being molested isn’t that big of a deal, is it?

“What kind of person - who is not just any person, he’s the President of the freaking United States of America - what kind of person writes that crap? What kind of person sees the world that way?” - Ben Hunt

King Curtis, Cornell Dupree, Little Esther Phillips & Jimi Hendrix

May 5, 1966.

See y’all next year!

I know that this world exists.

That I am placed in it like my eye in its visual field.

That something about it is problematic, which we call its meaning.

That this meaning does not lie in it but outside it.

That life is the world.

That my will penetrates the world.

That my will is good or evil.

Therefore that good and evil are somehow connected with the meaning of the world…

To pray is to think about the meaning of life.

I cannot bend the happenings of the world to my will: I am completely powerless.

I can only make myself independent of the world—and so in a certain sense master it—by renouncing any influence on happenings.

- Ludwig Wittgenstein

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