The one month T-Bill is now trading negative (-0.01%). Year end window dressing is either woefully early or late. Flight to safety is woefully right on time. Lehman redux.
December new homes sales come in at 342,000, down 7.6% from in November, and a resounding miss of expectations of 366,000. The double dip is here.
With Bernanke at the FOMC meeting, one wonders where the Chairman finds all the time to deal with these assorted "distractions." In other news, Bernanke claims he was not directly involved in counterparty talks... So Geither was not, Paulson was not, Bernanke was not...Uh, did anyone at all authorize the biggest bailout in American history? Or was Goldman Sachs given a proxy exclusion on this one "very rare" occasion? To wit:
"I was not directly involved in the negotiations with the counterparties."
"I was not directly involved in the discussions with AIG related to this decision."
"I was not involved in discussions with the SEC about any disclosure issues involving AIG."
Remember how that "massively" oversubscribed Greek bond deal (at HY spreads) was supposed to bring peace and prosperity to the gyro makers? Well, oops... Today, the spread between Greek 10 Years and Bunds just hit a record wide of 406 bps, as CDS also hit another all time wide at 370 bps. The chart below shows how Bund spread has moved over time: basically the funding problem in Greece just got worse despite of the bond sale, and now the Greek finance ministry has entered desperation mode. Just how desperate? The latest development which is precipitating this move (which of course involved Goldman Sachs), is the rumor that Greece has hired GS to sell €25 billion of Greek bonds to... Beijing. Welcome to the new lender of last resort: China has just become the world's Federal Reserve.
Readers seeking a live webcast (interrupted by an occasional Goldman Sachs commercial) of the Committee on Oversight and Government Default can find it at the Committee's website here.
The link also includes the full schedule and opening statements from all participants.
As a reminder, here is the lineup for today's grilling
More death and destruction, this time from Hank Paulson: "The decision to rescue AIG was correct, and I strongly supported it. An AIG failure would have been devastating to the financial system and the economy. We could not have anticipated the magnitude of AIG’s problems; and we had no way of letting it fail without disastrous collateral consequences" but "I was not involved in any of the decisions made with respect to those payments, nor was I involved in any of the decisions about AIG’s public disclosure of those payments. Those matters were handled by the Federal Reserve Bank of New York and the Federal Reserve Board." And Tim wasn't in charge... So who the hell was it?
- Main Street vs Wall Street battle lines getting clearer: Bankers unite against Barack Obama and Gordon Brown in call for world regulation (Evening Standard)
- Geithner AIG recusal was "After the fact" Issa says (Bloomberg)
- Throw Bernanke and Congress overboard (Portfolio)
- Blocking Bernanke is smart economics, smart politics for democrats (The Nation)
- Split in the UK: Mervyn King rubbishes Gordon Brown's Tobin plan, allies himself with Obama (Telegraph)
- As long expected, sovereign CDS trading is the new black (and FX): Swap trading surges as national deficits rise (Bloomberg)
- CBO pegged the 2010 US budget deficit at $1.35 trillion.
- China’s stocks fell, sending Shanghai Composite Index briefly below 3,000 - first time since Oct. 30
- Commodities stocks, metal prices drop as China curbs growth.
- Japan exports rise for first time in 15 months, beating estimates on China.
- Oil falls to near $74 a barrel in Asia amid concerns over weak recovery in oil demand.
- Several Chinese banks have ordered some branches to suspend lending for this month.
"The steps the government took to rescue AIG were motivated solely by what we believed to be in the best interests of the American people. We did not act because AIG asked for assistance. We did not act to protect the financial interests of individual institutions. We did not act to help foreign banks. We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses." Secretary of The Treasury, long-time TurboTax customer, and resume polisher extraordinaire, Timothy Franz Geithner
We are currently going through the recently released Special Report by Darrell Issa: "Public Disclosure As A Last Resort:
How the Federal Reserve Fought to Cover Up the Details of the AIG Counterparties Bailout From the American People," and a cursory perusal indicates that this could be proverbial end for Tim Geithner...and Sarah Dahlgren is, not surprisingly, mentioned rather prominently...as is Davis Polk. The report's conclusion bears repeating: "The fact that a quasi-government agency, unaccountable to the American people, likely wasted billions of taxpayer dollars and went to great lengths to prevent Congress and the American people from learning about these actions demonstrates the threat that the Federal Reserve poses to basic principles of American democracy."
What Does Senator Bunning Know, And, More Relevantly, What Does The Just Disclosed Fed Whistleblower Know?Submitted by Tyler Durden on 01/26/2010 - 20:59
Some intriguing details released by Senator Bunning and Congressman Issa earlier, indicate that the Fed has finally produced a whistleblower. What will be revealed? And how deep will the rabbit hole go? Or does Bunning already know something. Will Tim Geithner's number one fan pull something out of his sleeve to hopefully derail the destruction of America (aka Bernanke reconfirmation), or is it just more smoke and mirrors?
Talk about a market that breaks your heart when you trust it. This is so not 2010. It is a lot more like 2008 when the gains can't be held and those who buy high are obliterated by the end of the day.
And, like 2008, we don't even know what the silent killer is. New taxes? A new assault on capital by the president? More votes against Bernanke? A sense that the State of the Union will be about how rich people need to pay more? Robin Hood in Chief? Could Bob Prechter have done this with his bearish interview on CNBC? That would be amazing, since he has been bearish for ages.
ABC Consumer Confidence Misses Estimates, Stays Near Record Lows, Divergence With Conference Board Is Now CompleteSubmitted by Tyler Durden on 01/26/2010 - 19:11
What a difference two presumably unmanipulated data series show. Earlier, the Conference Board showed that its index had hit the highest since September 2008, based on "improved economic conditions" (god bless them, and here we were thinking that 17.3% unemployment is indicative of just slight deterioration). However, after the close, ABC Consumer Comfort came out, and, lo and behold, demonstrates that another index of so-called consumer confidence in the current "economic improvement" is at an all time low. So seriously, who should we believe anymore? And is it time the Census bureau released an index that keeps track of lies, manipulation and discrepancies between reality and "economic index indicators?"
Presenting The BlackRock-AIG Presentation In Which It Becomes Clear That Soc Gen Had Pledged Sub-50 Cent Securities To The Fed's Discount WindowSubmitted by Tyler Durden on 01/26/2010 - 18:17
As expected, Goldman did approach AIG about contract tear downs of its CDS contracts, and "Goldman would likely accept a small concession." This makes sense due to the draconian collateral margin demands that Goldman had previously extracted from AIG (12% positive haircut), and also due to spurious collateral demands made by Goldman ($1.3 billion more than BlackRock's estimated fair value). This is all as Zero Hedge reported yesterday. Yet another smoking gun emerges, this time not from Goldman, but from French bank Societe Generale...
You read it here first:
Hearing bank selloff fueled by a competitor 's bank analyst relaying details of his conversation w/ Volker- which had a very hawkish tone. Chatter of a block of citi to trade post close.