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A further discussion on the prices of gold

CategoriesSite Updates_

Anon contributes:

Re: the graph above. A slight correction to yesterday’s chart of gold prices, because I was like, wait, what? Did it really happen that way, that the price of gold was flat until 1971? So I looked up the gold price for 100 years, you can see it at https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart This graph looks accurate, I cross-checked against several sources.

The thickest gray vertical line is the Great Depression of 1929. Gold is a hedge (“insurance”) against the apocalypse itself – when everything is collapsing, gold remains a valuable rare commodity that is also necessary in production of electronics. As the Great Depression unfolded in 1930’s, people used gold to store value, and its price went up. A decade later, as people’s faith in government was slowly restored, they reduced their usage of gold as container of value, by half. In 5 more years, the shock of the Great Depression wore off and gold price returned to its then-balance of $400/oz. This seems reasonable. Gold also has its own economics: the largest gold mine sets the price worldwide.

But yeah, it appepars that the price of gold was indeed flat (excluding that one catastrophic exception) until the 70’s. Importantly, the first graph from yesterday seems to be gold price indexed to the nominal dollar. The graph from today is the gold price indexed to the real dollar (accounting for inflation). Observe the difference.

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Lest We Forget: Why We Had [the 2008] Financial Crisis

CategoriesIssue 2023Q2, Site Updates_

Generously pasted from: https://archive.ph/n3plH

Steve Denning

Senior Contributor to Forbes
 
It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it. More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.
How then could the Mayor of New York, Michael Bloomberg say the following at a business breakfast in mid-town Manhattan on November 1, 2011?
It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that. But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”
Barry Ritholtz in the Washington Post calls the notion that the US Congress was behind the financial crisis of 2008 “the Big Lie”. As we have seen in other contexts, if a lie is big enough, people begin to believe it.
Even this morning, November 22, 2011, a seemingly smart guy like Joe Kernan was saying on CNBC’s Squawkbox, “When the losses at Fannie and Freddie reach $200 billion… how can the ‘deniers’ say that Fannie and Freddie were enablers for a lot of the housing crisis. When it gets up to that levels, how can they say that they were only into sub-prime late, and they were only in it a little bit?”
The reason that people can say that is because it is true. The $200 billion was a mere drop in the ocean of derivatives which in 2007 amounted to three times the size of the entire global economy.
When the country’s leaders start promulgating obvious nonsense as the truth, and the Big Lie starts to go viral, then we know that we are laying the groundwork for yet another, even-bigger financial crisis.

The story of the 2008 financial crisis

So let’s recap the basic facts: why did we have a financial crisis in 2008? Barry Ritholtz fills us in on the history with an excellent series of articles in the Washington Post:
  • In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business.
  • Low interest rates fueled an apparent boom: Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).
  • Asset managers sought new ways to make money:  Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities.
  • The credit rating agencies gave their blessing: The credit ratings agencies — Moody’s, S&P and Fitch had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.
  • Fund managers didn’t do their homework: Fund managers relied on the ratings of the credit rating agencies and failed to do adequate due diligence before buying them and did not understand these instruments or the risk involved.
  • Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.
  • The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase–[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error.  By 2008, only two of the five banks had survived, and those two did so with the help of the bailout.
  • The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly.
  • Compensation schemes encouraged gambling: Wall Street’s compensation system was—and still is—based on short-term performance, all upside and no downside. This creates incentives to take excessive risks. The bonuses are extraordinarily large and they continue–$135 billion in 2010 for the 25 largest institutions and that is after the meltdown.
  • Wall Street became “creative”: The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations.
  • Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.
  • Financial gadgets milked the market: “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.
  • Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality.
  • Derivatives exploded uncontrollably: CDOs provided the first “infinite market”; at height of crash, derivatives accounted for 3 times global economy.
  • The boom and bust went global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust. A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”
  • Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.
  • Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.
  • It was primarily private lenders who relaxed standards: Private lenders not subject to congressional regulations collapsed lending standards. the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006.

The driving force behind the crisis was the private sector

Looking at these events it is absurd to suggest, as Bloomberg did, that “Congress forced everybody to go and give mortgages to people who were on the cusp.”
Many actors obviously played a role in this story. Some of the actors were in the public sector and some of them were in the private sector. But the public sector agencies were acting at behest of the private sector. It’s not as though Congress woke up one morning and thought to itself, “Let’s abolish the Glass-Steagall Act!” Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers. These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits.

Why didn’t anyone say anything?

As one surveys the events in this sorry tale, it is tempting to consider it like a Shakespearean tragedy, and wonder: what if things had happened differently? What would have occurred if someone in the central bank or the supervisory agencies had blown the whistle on the emerging disaster?
The answer is clear: nothing. Nothing would have been different. This is not a speculation. We know it because an interesting new book describes what did happen to the people who did speak out and try to blow the whistle on what was going on. They were ignored or sidelined in the rush for the money.
The book is Masters of Nothing: How the Crash Will Happen Again Unless We Understand Human Nature by Matthew Hancock and Nadhim Zahawi (published in 2011 in the UK by Biteback Publishing and available on pre-order in the US).
In 2004, the book explains, the deputy governor of the Bank of England (the UK central bank), Sir Andrew Large, gave a powerful and eloquent warning about the coming crash at the London School of Economics. The speech was published on the bank’s website but it received no notice. There were no seminars called. No research was commissioned. No newspaper referred to the speech. Sir Andrew continued to make similar speeches and argue for another two years that the system was unsustainable. His speeches infuriated the then Chancellor, Gordon Brown, because they warned of the dangers of excessive borrowing. In January 2006, Sir Andrew gave up: he quietly retired before his term was up.
In 2005, the chief economist of the International Monetary Fund, Raghuram Rajan, made a speech at Jackson Hole Wyoming in front of the world’s most important bankers and financiers, including Alan Greenspan and Larry Summers. He argued that technical change, institutional moves and deregulation had made the financial system unstable. Incentives to make short-term profits were encouraging the taking of risks, which if they materialized would have catastrophic consequences. The speech did not go down well. Among the first to speak was Larry Summers who said the speech was “largely misguided”.
In 2006, Nouriel Roubini issued a similar warning at an IMF gathering of financiers in New York. The audience reaction? Dismissive. Roubini was “non-rigorous” in his arguments. The central bankers “knew what they were doing.”
The drive for short-term profit crushed all opposition in its path, until the inevitable meltdown in 2008.

Why didn’t anyone listen?

On his blog, Barry Ritholtz puts the truth-deniers into three groups:
1) Those suffering from Cognitive Dissonance — the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility.
2) The Innumerates, the people who truly disrespect a legitimate process of looking at the data and making intelligent assessments. They are mathematical illiterates who embarrassingly revel in their own ignorance.
3) The Political Manipulators, who cynically know what they peddle is nonsense, but nonetheless push the stuff because it is effective. These folks are more committed to their ideology and bonuses than the good of the nation.
He is too polite to mention:
4) The Paid Hacks, who are being paid to hold a certain view. As Upton Sinclair has noted, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
Barry Ritholtz  concludes: “The denying of reality has been an issue, from Galileo to Columbus to modern times. Reality always triumphs eventually, but there are very real costs to it occurring later versus sooner .”

The social utility of the financial sector

Behind all this is the reality that the massive expansion of the financial sector is not contributing to growing the real economic pie. As Gerald Epstein, an economist at the University of Massachusetts has said: “These types of things don’t add to the pie. They redistribute it—often from taxpayers to banks and other financial institutions.” Yet in the expansion of the GDP, the expansion of the financial sector counts as increase in output. As Tom Friedman writes in the New York Times:
Wall Street, which was originally designed to finance “creative destruction” (the creation of new industries and products to replace old ones), fell into the habit in the last decade of financing too much “destructive creation” (inventing leveraged financial products with no more societal value than betting on whether Lindy’s sold more cheesecake than strudel). When those products blew up, they almost took the whole economy with them.

Do we want another financial crisis?

The current period of artificially low interest rates mirrors eerily the period ten years ago when Alan Greenspan held down interest rates at very low levels for an extended period of time. It was this that set off the creative juices of the financial sector to find “creative” new ways of getting higher returns. Why should we not expect the financial sector to be dreaming up the successor to  sub-prime mortgages and credit-default swaps? What is to stop them? The regulations of the Dodd-Frank are still being written. Efforts to undermine the Volcker Rule are well advanced. Even its original author, Paul Volcker, says it has become unworkable. And now front men like Bloomberg are busily rewriting history to enable the bonuses to continue.
The question is very simple. Do we want to deny reality and go down the same path as we went down in 2008, pursuing short-term profits until we encounter yet another, even-worse financial disaster? Or are we prepared to face up to reality and undergo the phase change involved in refocusing the private sector in general, and the financial sector in particular, on providing genuine value to the economy ahead of short-term profit?
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From the war room: reiterating on the battle of humanity vs capital

CategoriesIssue 2023Q2, Site Updates_

Anon writes:

👋👋 Hello everyone! Y’all know how much I like to talk about this graph:

The very important question is: how come humans became a commodity, and what can we do about it?

Anyway, I just found another very interesting related graph:

^ that’s a graph of USA inequality. Higher means more inequality. Somehow as if by magic, in 1970’s inequality (in USA) started exploding, and hasn’t stopped. Yeah something happened in 1970’s, some battle was lost by the people.

If anyone has the time to read into it, how come humans are a commodity now, here is a good resource: https://economics.stackexchange.com/questions/15558/productivity-vs-real-earnings-in-the-us-what-happened-ca-1974

Disclaimer: I don’t know the answer. Neither how it happened, nor what to do about it now.

~ * ~ * ~ * ~

Yea, the main operating hypothesis remains that when the gold standard was abandoned in 1971, that’s when the battle of humans vs capital was lost.

( People are scared of AI and a terminator-style Skynet? The battle was already lost in the 70’s, but not against AI, against money itself! )

The solution would be to re-establish the gold standard. This battle is ongoing. The gold nowadays goes under the names of: Bitcoin and Ethereum.

And if you think that the claim that “money destroys humanity” is silly, consider this. The gross product of the world is $100T [1]. Banks hold $200T in derivatives [2], unregulated and unreported. That’s enough to run the world two times over. Total derivative notional value is estimated at $600T nowadays [3] – enough to run the world over, six times. A mortgage is commonly issued for 30 years. And derivatives can be continuously rolled for decades, forever.

References:
* [1] https://en.wikipedia.org/wiki/World_economy
* [2] https://www.usbanklocations.com/bank-rank/derivatives.html
* [3] https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2022/

I believe that these derivatives hold the stolen wealth of dead 70’s people. Central banks have infinite liquidity, so bankers only had to stash the stolen wealth in a promise, and pay out the promise to themselves (using a swap).

Blockbuster, as an example, is our favorite bankrupt company. They went bankrupt in 2010, that was 13 years ago. So is it over? No, the promise still needs to be held on the books, for operational reasons. And would you look at that – Blockbuster is still being traded, at a quarter-cent per share: https://finance.yahoo.com/quote/BLIAQ And there are thousands of such un-dead companies. (Of course, it’s easier with people and mortgages, because people simply die.) 😢😡

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Commentary on Credit Suisse takeover by Swiss authorities

CategoriesGamestop_, Issue 2023Q2

The deal is not yet set in stone..

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via u/ Wurmholz

Today: Risks for taxpayers could continue

Keller-Sutter: “Risks for taxpayers could continue” In an interview with Swiss radio SRF, Federal Councilor Karin Keller-Sutter discusses the extraordinary bank rescue and potential consequences for the general public. The Swiss government is supporting a major banking merger with an unprecedented 250 billion CHF, causing outrage among citizens as the state guarantees astronomical sums for a large bank that has steered itself towards disaster.

Keller-Sutter acknowledges the public’s concerns and emphasizes that the government is not providing cash, but guarantees. Already, a significant amount in billions has been claimed under the guarantee granted by the government and the National Bank. The exact figures are unknown to her.

Toxic legacy assets within the bank present a high risk. The first 5 billion CHF is borne by UBS as the acquirer, while the state guarantees the next 9 billion CHF. Keller-Sutter admits that the risks for taxpayers could extend further, and the government is discussing the possibility of recouping future costs through profit-sharing with the merged bank.

Keller-Sutter believes the current solution is the best among bad options, as the risks for taxpayers would have been greater if the bank had been nationalized or declared bankrupt. She also criticizes Credit Suisse’s management for putting the country, the Federal Council, and all authorities in an impossible situation. The Swiss government’s rescue plan has met with criticism from political parties, with some calling for the healthy Swiss business of Credit Suisse to be separated from the new “banking monster.”

https://www.srf.ch/news/schweiz/finanzministerin-zu-cs-rettung-keller-sutter-risiken-fuer-die-steuerzahler-koennten-weitergehen

Will add two more links
Edit:

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Swiss Voters’ Opinion on the CS Takeover According to an SRG survey, the majority of eligible voters are angry and disagree with how the CS takeover was carried out.

Article about polling: SRF 4 News, 24.03.2023, 17:00 Uhr

Last Sunday, federal authorities and the heads of the two major banks held an extraordinary press conference to inform Switzerland and the world that UBS would be taking over troubled Credit Suisse. A representative survey by the GFS Bern research institute on behalf of SRG reveals that the Swiss are predominantly angry and uncertain about this forced merger.

Over half of Swiss voters disagree with how UBS took over CS with federal assistance, and almost no one fully supports the decision. Voters who sympathize with political extremes (Greens, SP, SVP) are more critical than those in the political center (GLP, FDP, Center).

Swiss National Bank (SNB) is considered the most credible actor in the past week, while trust in the Swiss Financial Market Supervisory Authority (Finma) is significantly lower. Notably, UBS management ranks second, appearing more credible than the Federal Council.

Among the parties, SP is perceived as the most credible, while less trust is attributed to SVP, the Green Liberals, and especially FDP, which all represent economic interests. Most surveyed voters believe that CS officials should now be held accountable (96%) and that more effective measures against exploitation in the banking sector are needed (93%).

The survey results show a broad perception of SP as a credible actor and unanimous criticism directed at management and those responsible for the crisis. The impact of these numbers on the election year remains to be seen.

https://www.srf.ch/news/schweiz/srg-umfrage-zur-cs-uebernahme-das-haelt-das-schweizer-stimmvolk-von-der-uebernahme-der-cs

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Credit Suisse Shouldn’t Completely Disappear

FDP President Thierry Burkart now demands that the Swiss part of Credit Suisse be separated and made independent, arguing that it would be the best solution for Switzerland.

10vor10, 22.03.2023, 21:50 Uhr

The major bank should become much smaller, Burkart says, in order to preserve as many jobs as possible and create a better competitive situation in the Swiss banking sector for the benefit of Swiss customers, particularly SMEs. Additionally, this step would minimize risk for Switzerland if UBS were to falter.

The SVP also wants to prevent the complete downfall of CS. SVP sets conditions for approving the CHF 109 billion loan, according to Thomas Aeschi. “We need to think about how to restore competition,” he says. The SVP parliamentary group president is confident that Burkart’s proposal would restore competition in the Swiss banking sector.

This idea is not new and is provided for in the Too-Big-To-Fail law, which uses the separation banking system as a model. The individual areas of a bank are independent of each other, so if one area, such as investment banking, gets into trouble, it doesn’t drag down the rest of the bank.

Today, the Greens criticize that the opportunity was missed to take preventative action in time. Gerhard Andrey, a National Council member for the Greens, says something like a separation banking system is needed now, and blames conservative politics for failing to implement it.

The SP goes even further: SP President Cédric Wermuth considers the introduction of a separation banking system but concludes that “Switzerland is too small for such large banks. We need to find a way to minimize the risk in the medium term.”

The big question remains whether the political will for reform will still be present once the initial shock has subsided.

https://www.srf.ch/news/schweiz/cs-uebernahme-durch-ubs-die-credit-suisse-soll-doch-nicht-ganz-sterben

​

These are ChatGPT4 summaries

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Who is on the other end of the Swaps?

CategoriesGamestop_, Issue 2023Q2

u/ Exceedingly writes:

Pretty sure Criand showed it’s the large banks / prime brokers acting as the counterparties, so Bank of America, JP Morgan, Goldman Sachs, Citibank and all the other ones who are DTCC members and have trillions in derivatives.

Plus there’s something I didn’t realise, in basic accounting principles you follow the equation Assets = liabilities + equity. This basically means any money into your company has to be transferred into some form of asset, if not it comes straight off equity. If equity goes negative, it’s a huge red flag that will prevent investment and the business would probably go under. Shorts are liabilities on a balance sheet, you take money in and keep an open debt, so Ken would have to use that money to buy some form of asset. But swaps mean his GME shorts can become assets, as it’s the prime brokers holding the short position. Ken has no short exposure from swapped GME shorts and they actually go up in value on assets if GME’s price drops.

And the banks holding the swaps have trillions to weather out a price rise in GME. But that’s why the bank collapses are actually bullish for MOASS, since last year $600b has been pulled out of bank deposits. If that trend keeps up and gets worse, then the FED won’t actually be able to print money to bailout banks. Just say for example bank deposits drops from the current $17.5t to just $7.5t. The Fed would have to print $10t just for banks to be able to keep all their current asset positions open, but printing 200% of the money supply just leads to hyperinflation which bankrupts the US. It just isn’t feasible or sustainable.

It sucks, but bank collapses might be the one true catalyst in this saga (other than DRS).

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[R] Hello Dolly: Democratizing the magic of ChatGPT with open models

CategoriesAI-ML_, Issue 2023Q2, Site Updates_

Databricks shows that anyone can take a dated off-the-shelf open source large language model (LLM) and give it magical ChatGPT-like instruction following ability by training it in less than three hours on one machine, using high-quality training data.

They fine tuned GPT-J using the Alpaca dataset.

Blog: https://www.databricks.com/blog/2023/03/24/hello-dolly-democratizing-magic-chatgpt-open-models.html
Github: https://github.com/databrickslabs/dolly

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[R] Reflexion: an autonomous agent with dynamic memory and self-reflection – Noah Shinn et al 2023 Northeastern University Boston – Outperforms GPT-4 on HumanEval accuracy (0.67 –> 0.88)!

CategoriesAI-ML_, Issue 2023Q2, Site Updates_

Paper: https://arxiv.org/abs/2303.11366

Blog: https://nanothoughts.substack.com/p/reflecting-on-reflexion

Github: https://github.com/noahshinn024/reflexion-human-eval

Twitter: https://twitter.com/johnjnay/status/1639362071807549446?s=20

Abstract:

Recent advancements in decision-making large language model (LLM) agents have demonstrated impressive performance across various benchmarks. However, these state-of-the-art approaches typically necessitate internal model fine-tuning, external model fine-tuning, or policy optimization over a defined state space. Implementing these methods can prove challenging due to the scarcity of high-quality training data or the lack of well-defined state space. Moreover, these agents do not possess certain qualities inherent to human decision-making processes, specifically the ability to learn from mistakes. Self-reflection allows humans to efficiently solve novel problems through a process of trial and error. Building on recent research, we propose Reflexion, an approach that endows an agent with dynamic memory and self-reflection capabilities to enhance its existing reasoning trace and task-specific action choice abilities. To achieve full automation, we introduce a straightforward yet effective heuristic that enables the agent to pinpoint hallucination instances, avoid repetition in action sequences, and, in some environments, construct an internal memory map of the given environment. To assess our approach, we evaluate the agent’s ability to complete decision-making tasks in AlfWorld environments and knowledge-intensive, search-based question-and-answer tasks in HotPotQA environments. We observe success rates of 97% and 51%, respectively, and provide a discussion on the emergent property of self-reflection.

r/MachineLearning - [R] Reflexion: an autonomous agent with dynamic memory and self-reflection - Noah Shinn et al 2023 Northeastern University Boston - Outperforms GPT-4 on HumanEval accuracy (0.67 --> 0.88)!
r/MachineLearning - [R] Reflexion: an autonomous agent with dynamic memory and self-reflection - Noah Shinn et al 2023 Northeastern University Boston - Outperforms GPT-4 on HumanEval accuracy (0.67 --> 0.88)!
r/MachineLearning - [R] Reflexion: an autonomous agent with dynamic memory and self-reflection - Noah Shinn et al 2023 Northeastern University Boston - Outperforms GPT-4 on HumanEval accuracy (0.67 --> 0.88)!
r/MachineLearning - [R] Reflexion: an autonomous agent with dynamic memory and self-reflection - Noah Shinn et al 2023 Northeastern University Boston - Outperforms GPT-4 on HumanEval accuracy (0.67 --> 0.88)!
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I’ve found two Regional Spanish banks that I’m suspicious are holding gme swaps

CategoriesGamestop_, Issue 2023Q2

The honorable u/  itsabittricky writes:

Tl;dr I suspect Unicaja and Evo Banco (Bankinter) are holding gme short swaps due to strange and dramatic fluctuations on their balance sheets, similar annual cash flows, proximity to Granada (which mayoman keeps visiting), Evo Banco being owned by Apollo Global Management.

NOTE there is no smoking gun definitive proof, I just want to post this prediction publicly so if I end up being right I got a receipt for the call.

Lately I’ve been trying to educate myself on income statements/balance sheets/cash flow statements for banks and companies, with a blossoming global banking crisis I figure now is a great time to test my understanding by making predictions on which banks are likely to collapse based on their annual statements. If anyone considers themselves good at reading these kinds of reports please let me know if I got anything fucked up or if there’s other points of information I should review.

I’ve been looking at Unicaja bank annual data and noticed some pretty weird data fluctuations, they had a massive pump in earnings in 2021. So massive the total earnings actually eclipsed their total revenue (for people new to this terminology, earnings is revenue minus expenses, so actual company profit). Here is their 2021 earnings visualized courtesy of yahoo finance:

Ordinarily its impossible to make money in a year in excess of what a bank manages to make in revenue (obviously), this can only occur if the bank receives money from somewhere other than its revenue stream, either it makes extra money off of previous years operations / it sells a bunch of assets / it receives an external cash injection. As you can see from that graph, Unicaja with a 900mil revenue manages to make 1,100mil profit in 2021.

Even more interesting, they seemed to have spent all of that money to the point of losing money in Q4 2022.

Quarterly earnings 2022:

You could attribute this earnings loss on the 100mil drop in revenue for the quarter from the previous month.

Cash flow: <image missing>

Some impressive cash burning. Cash position at start of 2021 6.6bil, end of 2021/start of 2022 21.3bil +223%. Cash position at end of 2022 4.6bil – 78%. So it looks to me like Unicaja received a cash of injection of 10-15bil which was spent in a year.

Here is another bank that had a similar boom in earnings 2021 Evo Banco aka Bankinter.

Approx 1.3bil in earnings off 1.55bil in revenue.

What do these banks have in common, apart from similar annual cash booms and declines? Both banks are headquartered in the South of Spain Andalucia (Unicaja in Malaga and Evo Banco in Madrid) which Mayoman has been visiting a lot these past few weeks, check u Bellweirboy posts on Mayoforce track, Mayoman is there right now, was there Tuesday last week March 14, Saturday 25 Feb, and has visited on many other occasions these past two years. It’s possible its a favorite holiday destination Granada is a beautiful city and he just wants to go nuts before the boom but I do not believe he would visit this often these past months, the finance world is too crazy for anyone to be on holiday and my impression of Mayoman is he will struggle until the very end.

Another interesting point of note, Evo Banco is owned by Apollo Global Management. If you’re curious about their involvement in this whole saga I recommend having a read through u BadassTrader’s Billionaire Boys Club series, specifically the Apollo Missions entries. Its a fascinating glimpse into that big old club we’re not apart of (fuck they club the people in it are trash).

The following is straight data from Annual Statements for Unicaja. I’m focusing on 2021 Q2 to Q3 as that’s when the dramatic fluctuations occurred, and 2022 Q4 to give you an idea of where they’re at on these data points today. Note that there wasn’t any huge movement in these balance sheet entries prior to Q3 2021.

Cash and balances at Central banks: 8,855mil (21Q2) to 15,376mil (21Q3) +74%. Now 4,662 (22Q4) -70%

Financial Assets at Amortized Cost (Loans and advances to customers): 27,939mil (21Q2) to 55,386mil (21Q3) +98%. Now 55,316mil -0.1%.

If you’re wondering what amortized cost means I’m also wondering. “You can say that the total cost a business has recorded on its balance for the purchase of a particular asset is the amortized cost of the asset.” https://incorporated.zone/amortized-cost/

So, the price at purchase. Reminds me of this fair value shit. “Fuck our clients are going to skin us alive if they find out these assets we bought with their money is down 90%, lets just record it at amortized cost which just so happens to be the price that doesn’t reflect -90%.” Or “holy fucking shit we shorted this asset at $1 and now its fucking $80 shit fuck shit.”

Investments in joint ventures and associates: 368mil (21Q2) to 1,030mil (21Q3) +180%. Now 976mil -5%.

Tax assets: 2,770mil (21Q2) to 4,760mil (21Q3) +71%. Now 5,063mil +6%.

Financial liabilities held for trading & at fair value through P&L: 24mil (21Q2) to 29mil (21Q3) +20%. Now 53mil +82%.

This fair value price could be $1 for a market value of $100.

Financial liabilities held at amortized cost: 59,916mil (21Q2) to 99,616mil (21Q3) +66%. Now 88,937mil -11%.

Customer deposits: 48,691mil (21Q2) to 82,041mil (21Q3) +68%.

Customer deposits and Loans and advances to customers sections really got me scratching my head, cos retail has barely moved. Retail deposits 91,652mil (21Q2) to 94,726mil (21Q3) now 90,081mil (22Q4). Same lack of movement for retail loans and credit. So all this balance sheet movement was completely unrelated to retail. Wonder who these customer deposits and loans represent.

Other issued securities: 366mil (21Q2) to 1,916mil (21Q3) to 3,329mil (22Q4) +810% over the 18 month period. This is a huge jump.

What do all these numbers mean? I got no idea. The annual reports do not detail exactly what securities/assets/derivatives/liabilities are being traded or held, it could be anything. Maybe these movements are nothing out of the ordinary and I’m just regarded.

I’m pretty confident when I say that something big hit Unicaja’s books in Q3 2021 unrelated to retail and it made big waves.

Some data for Evo Banco aka Bankinter, 2020 Q4 to 2021 Q1:

Financial Assets held for trading: 2.1bil (20Q4) to 4.5bil (21Q1) +110%.

Financial Liabilities held for trading: 1.3bil (20Q4) to 3.4bil (21Q1) +146%.

Derivatives Hedge Accounting ASSETS: 406mil (20Q4) to 303mil (21Q1) -25%.

Derivatives Hedge Accounting LIABILITIES: 520mil (20Q4) to 320mil (21Q1) -38%.

2021Q4 to 2022Q4 (now)

Derivatives Hedge Accounting ASSETS: 216mil to 479mil +122%

Derivatives Hedge Accounting LIABILITIES: 277mil to 421mil + 51%

Non-current assets and disposal groups classified as held for sale 106mil to 262mil +147%

Other financial liabilities 2.1bil to 3.4bil +61%

Accumulated other comprehensive income 115mil to -129mil -212%

Again, no dramatic movements for Evo Banco retail numbers for the periods.

These banks are making crazy moves. Maybe it ain’t related to gme, but these do not look like healthy balance sheet decisions to me. But then again, who the fuck am I but a humble ape?

Unicaja finance reports: https://www.unicajabanco.com/en/inversores-y-accionistas/informacion-economico-financiera/informes-financieros Bankinter finance reports: https://www.bankinter.com/webcorporativa/en/shareholders-investors/financial-information/quarterly-reports/2022