It has been the habit of the United States, in its capacity as a nation of investors and consumers with a highly developed sense of entitlement when it comes to returns and little or no tolerance for corrections of any kind, to sate the appetite of the cult of buoyancy by inflating various bubbles. This is particularly so when it appears the national vessel is beginning to sit low in the water. Loyal readers will know that finem respice does not go so far as to call for the abolition of the Federal Reserve, or make bleating noises about fiat currencies, but, without a doubt, it is worth looking at the role of various institutions as we confront the next gas-filled, surface-tension-bound, expanding topography. That sort of reflection, culminating in exactly nothing, is about all we can expect. The tools of the Federal Reserve and the Treasury are a grant of immense power to the executive, and he or she is unlikely to relinquish it without the sort of battle that resembles a protracted land war in Asia. So serial-bubbology will prevail. Junk Bonds to Dot-Com to Real Estate, for instance. Of course, this means we don't exactly have a large sample size with which to draw conclusions (n=3 perhaps) but it stands to reason that the longer we delay correction and manipulate markets with bloody sacrifice to the minions of buoyancy, the worse the wrath of the deleveraging.

Having taken great pains to ignore this lesson, and to obfuscate it completely no matter form with which it attempts to make its presence felt, it is pretty obvious that the present administration intends to bubble its way out of the latest opportunity to reset prices and moderate debt. Moreover, our leaders intend to do so via massive borrowing to pay for about every government program of any size ever conceived going all the way back to that one that crossed the kickback-addled mind of some flaccid congressman while waiting in line at Disney World back in 1972.

Small sample size or not, it is so clear that the next bubble is on the horizon, or, perhaps, already upon us, that a great deal of time and effort is spent speculating as to which asset class will be next. Oil or energy in general is a popular theory. Gold has its advocates. James Simons likely points to high beta stocks when asked. A few clever commentators have suggested Treasuries. This last is closest to the mark.

Of course, the next bubble (and perhaps the last for a while) is government. The state government bubble is beginning to burst even as you read this. The federal government bubble is next. You might want to open your mouth and plug your ears.

These pages have commanded a great deal of attention (not all of it positive or constructive) for relating the recollections of a lone hedge fund manager alleging acts by the present administration that, to these eyes at least, at least flirt with if not outright cross the line between hard negotiation and coercion or, perhaps, even extortion. As has become somewhat routine, attacks directed at finem respice in this connection tend to include references to the reliability (or lack thereof) of anonymous speech. It takes very little analysis to boil down the complaints of such detractors to a basic and simple premise: anonymous speech is prima facie less reliable than what I will call "credited speech." This is a patently absurd and dangerous premise.

One of the problems with using Kafka to point out how surreal things have become in the United States is the fact that channeling Kafka in this way has become so commonplace as to make the analogy trite. For outsiders, this presents many opportunities for light entertainment and amusement as laughter is repeatedly triggered not just from the "just desserts" discomfiture the United States, champion of free markets, is subjected to during a financial crisis of its own making, but also from the absurdist screenplay that passes for political discourse in such times. Insiders and quasi-insiders have only two choices when living through Kafkaesque times- the inexorable slow downward spiral of post-empire decline finally punctuated by the mob's assault on "the rich,"1 or flight to join the outsider class.

1. 1. This, of course, is the classic harbinger of empire-death historically.

Secrets have their place, no doubt. So do anonymous sources. Both need mechanisms to promote and preserve them. Fortunately, technology has many answers in this respect. One of which, cryptography, is an ages old equalizer, threatening primarily to a state that is threatened by citizen secrets. I cannot think of a more apt time for its use. So, by request, please find attached below, finem respice's public PGP key, permitting readers to submit secrets secretly to finem twenty four hours a day, seven days a week.

In the wake of the Napoleonic Wars, and after the conclusion of the Treaty of Chaumont by the Quadruple Alliance1 the Congress of Vienna sought to reorganize Europe in the face of Napoleonic consolidation. Depending on where your sentiments lie, Tsar Alexander I was either an enlightened sovereign of these times, or an expansionist opportunist. Our contemporary understanding of the Polish-Saxon Crisis- a Russian-Prussian grab for large parts of Poland for Russia and effectively all of Saxony for Prussia- suggests that the latter interpretation is closer to the mark.

Charles Maurice de Talleyrand-Périgord, the First Sovereign Prince of Beneventum and noted French diplomat of the times, managed to persuade the Austrians, British and the French to conclude a secret treaty vowing war if necessary to frustrate the Russo-Prussian plans. In the interim, attempting to lend authority to the Russian and Prussian claims, Tsar Alexander I is remembered to have implied Saxony's sovereign, King Frederick Augustus, a traitor to the cause of Europe for having rejoined Napoleon in the middle of 1813. Talleyrand, doubtless referring to the fact that Frederick William II of Prussia, Francis I Emperor of Austria, and even Alexander himself via the Treaty of Tilsit, would likely have failed the same standard, is said to have commented, "That, Sire, is a question of dates." While this exact quote is almost obviously apocryphal, what is certain is that Talleyrand, often referred to as the "Six Headed Diplomat," was well-known for his ability to play all sides, even France itself, against the middle. Standing in a room with the man is said to have been a lesson in multifaceted reflection and refraction. It is not entirely impossible, for instance, that he played a personal role the kidnapping and execution of the Duke of Enghien in 1804, but it is nearly certain that he was a shameless womanizer and the attribution for his more cynical quip "La parole nous a été donnée pour déguiser notre pensée,"2 is above reproach. He stands as a reminder that nothing is as it appears when powers clash. Reflecting on this, sage readers of finem respice might find a return to old treatments somewhat useful.

In this connection one might see that it has been easy to spend a lot of time focusing on Chrysler's Non-TARP lenders. This, I think, unduly takes the focus away from those wards of the Executive Branch, Chrysler's TARP lenders. In particular, JP Morgan as the lead secured creditor. A careful look at the timeline of Chrysler's BataanU.S. Bankruptcy Court for the Southern District of New York Deathmarch over the last 48 hours has brought up some interesting questions likely to see treatment in several entries in the days to come. Initially, however, it is interesting to step back a little bit and recognize exactly how well the likes of JP Morgan made out in this process.

1. 1. Britain, Russia, Austria, and Prussia's 1813 pact opposing France in the final phase of the Napoleonic Wars.
2. 2. "We were given speech to hide our thoughts."

It should be obvious to most observers that, recent allegations of strong-arm tactics in negotiations with Chrysler creditors notwithstanding, given the current situation the White House shouldn't need to resort to anything so openly thuggish as naked threats issued by the likes of Steven Rattner. Assuming for a moment, and for the purposes of conversation, that the allegations are substantially true (and I believe they are), the fact that a bit of Chicago-style thuggery seems to have been required- and seems to have failed- says a lot about this White House. It also says quite a bit about the wild overconfidence intrinsic in the administration and how entirely unused to being denied their will are the senior members thereof. A more deft executive need not have pushed so hard, or rattled the saber of class warfare so loudly, but then a more deft executive would not have expected so much.

A few entries ago, I described the rather unfortunate tale of a supposed confrontation between one of Chrysler's secured lenders and Obama "Car Czar" Steven Rattner. The response has been quite entertaining, particularly the rather uneducated histrionics emanating from those who ignored my warning to treat with something approaching academic detachment the use of the word "fascism." I took great pains to define my terms in this instance, citing no less than Welch, Griffin and Paxton in the process. Ironic, isn't it, that even given the large number of reactionary howls insisting my use of the term was some kind of karmic attack, most of which issued forth from authors with fairly developed vocabularies, no one bothered to actually map the definitions I cited against the actual political climate of the moment? It is also interesting to notice that none of these critics bothered to examine incidents outside of the present Rattner nonsense. By way of reminder, on May 2, 2009 I published this:

This (as yet unproven) yarn goes exactly like this:

Confronting the head of a non-TARP fund holding Chrysler debt and unwilling to release it for any sum less than that to which it was legally entitled without compelling cause, this country's "Car Czar" berated the manager of said fund with an outburst of prose substantially resembling this:

Who the fuck do you think you're dealing with? We'll have the IRS audit your fund. Every one of your employees. Your investors. Then we will have the Securities and Exchange Commission rip through your books looking for anything and everything and nothing we find to destroy you with.1

Several commentators, including the likes of DealBook erroneously assumed that the confrontation I referred to was merely a second description of the now famous "never happened, seriously" dispute between Steven Rattner and Perella Weinberg.

It was not.

What I failed to make clear was that, unlike the supposed experience of Tom Lauria's client, the tale of woe that has been passed to me does not have as its agent of malice the White House Press Corps, which, while certainly annoying, lacks a certain killer instinct and terror inducing reputation. Instead, the creditors to which I refer were purportedly threatened with the Securities and Exchange Commission and the Internal Revenue Service. Moreover, the fund whose tale I am privy to is allegedly not the only entity that was subject to such inducements. There are, according to my source, two others.

Of course, in the present climate it would take a rather courageous witness to come forward and confirm these allegations. Let's hope that comes to pass.

No, scratch that. Let's hope that the entire thing turns out to be a fabrication. While I doubt this, it would be much easier to sleep if it were.

1. 1. "I Can Only Hope This Proves To Be Inflammatory Nonsense," finem respice (May 2, 2009).

Sometime blogging colleague of finem respice and Going Private before, "The Epicurean Dealmaker" (hereinafter "TED") takes a number of exceptions to a number of issues surrounding Chrysler's bankruptcy and a number of related events occurring over the last few weeks. TED elucidates in the recent entry "You Realithe, Of Courth, Thith Meanth War." To wit:

But now that the patient has been wheeled into the operating theater, where a bankruptcy judge will soon commence the drawn-out and delicate procedure of reconstituting Chrysler into a viable new company which will magically produce vehicles irresistible to all those consumers previously inured to their temptations, I have begun to take notice of a certain strain of commentary which I feel compelled to address.

This commentary seems to issue primarily from Chrysler's secured creditors and their supporters, apologists, and fellow travelers. I believe one can fairly characterize the essence of this commentary as

"Waaah! The Government is Picking on Me!"

One of the great pleasures of writing finem respice relates to the wide variety of surprises that one finds in one's inbox as a consequence of having an audience of any size at all. Write about finance long enough with the same electronic mail address and a number of interesting anecdotes will flutter your way. Write just a little bit longer and a shocking tale will pass under your eyes once or twice. Stick it out for two and half a hundred weeks and one is like to hear something quite disturbing. Hang in for more than a pair of years and a truly horrifying, bone chilling narrative will eventually confront you. Today, I have the distinctly unpleasant distinction of being on the receiving end of exactly this sort of recollection. That is, a bit of dialogue so genuinely awful that- were it not from a source I consider impeccable, and unimpeachable- I would not dare to credit at all. Unfortunately, I must do precisely this, and personally believe it to be totally, frightfully accurate. I take no pleasure in relaying it, instead hoping that someone more directly in the business of running such matters down and printing them will carefully document it and- if true- expose it, or- if not- discredit it quickly and finally. This (as yet unproven) yarn goes exactly like this:

Confronting the head of a non-TARP fund holding Chrysler debt and unwilling to release it for any sum less than that to which it was legally entitled without compelling cause, this country's "Car Czar" berated the manager of said fund with an outburst of prose substantially resembling this:

Who the fuck do you think you're dealing with? We'll have the IRS audit your fund. Every one of your employees. Your investors. Then we will have the Securities and Exchange Commission rip through your books looking for anything and everything and nothing we find to destroy you with.

Examining "The Cult of Buoyancy," a dangerous following dedicated to the ceaseless, ignorance-based worship of upward pressure on all equities and other select securities in Western markets, is a new, but significant theme for finem respice. After almost thirty years of infiltration, indoctrination and integration, the Cult's connection to other prominent themes explored on finem respice, and, indeed, all of economics and finance, has spun an intricate and pervasive web with this sharp, dull gray threading woven coarsely into any market relevant enough to examine. These are the kind of jagged threads that might draw blood should you try to pull them bare-handed from the patchwork fabric they presently bind. But this, after a fashion, is less concerning than the realization that markets are not the most daunting institution "in the thrall" of the Cult of Buoyancy. This last distinction almost certainly now belongs to the financial regulatory apparatus of the United States.