Judging by Ben Bernanke's recent abnormal behavior, we are quite confident the Fed forgot to add at least three zeroes to the latest version of the Benjamins. Here is how the government is spending money to recreate old money, just so it can print even more money.
Many of you have asked questions in the past few days about Paulson & Co.'s ("Paulson") participation as an investor in mortgage securities from 2005 through early 2007, and specifically about our investment in a synthetic collateralized debt obligation ("CDO") which is the subject of a civil complaint by the Securities and Exchange Commission ("SEC") against Goldman Sachs. We wanted to provide you with accurate information and context regarding the decisions we made during this time to preserve and enhance our clients' capital.
There is at least one person left who isn't afraid to speak the truth. We only wish the camera would have panned to Dick Fuld's face as Mr. Black was delivering his testimony.
Probably not the best words to use when trying to diffuse a ticking time bomb.
SCHAEUBLE SAYS WOULD REGRET LETTING EURO COUNTRY DEFAULT
SCHAEUBLE SAYS EURO FOUNDERS COULDN'T IMAGINE SOVEREIGN DEFAULT
The market should dutifully ignore this if it knows what's good for it.
PIIGS investors are following closely the rapidly deteriorating developments in Greece: the latest indication that the EU's botched bluff attempt with Greece is likely to have adverse implications on not just the Mediterranean country but on all other highly leveraged countries are the CDS spreads of Portugal. After blowing out to all time wides in early February, about the same time we first heard that Greece was in essence insolvent, the country's credit risk has been once again slowly creeping higher and today hit a level of 235bps: for all intents and purposes a record. As the risk posture reasserts itself in Europe, America has not looked back even once since the market lows of 2010, which were caused by just these European fallout considerations. Is Europe slowly coming to the same conclusion that Dylan Grice did today? What will take for the US to emerge from its bubble trance of a utopia in which any and every problem can be solved with just more money printing, and a steeper yield curve. For now, the answer is nothing, as consumers get their second wind on mortgage payment and credit card bill defections.
With the US increasingly locked up in its own liquidity bubble, even as its traditional trading partner China moves to a trade deficit stance for the first time in years, the key question of how that other critical trading counterparty, Europe, will survive the tensions in its periphery have been persistently unaddressed. As rumors of a Greek credit restructuring become ever louder, the next question becomes not whether it is "constitutional" to bail out Greece, but whether a EMU member can impair the balance sheets of its investors in a pre-packaged bankruptcy, the bulk of whom just happen to be other Union members. And all of this is occurring even as concerns about the viability of the euro as a currency have become a mainstream topic. Below is the latest essayistic observation on the future of the euro and the eurozone from SocGen's Dylan Grice, who as usual shows more foresight on all matters sovereign than most. His conclusion: the euro could very well soon become the short-lived barbarous relic of the 21st century.
Things did not improve in Greece yesterday but they seemed to calm down a little bit. That kept the U.S. dollar below Monday and Friday’s highs. That, in turn, allowed the Troika (gold, oil and stocks) to move higher in lockstep. The techs continue to stand out. Many are long cash and had no real exposure to the financial meltdown. The upbeat Intel report suggested that a round of technology upgrading may be evolving. The buying tended to be broad. Advances beat declines better than 4 to 1. Advancing volume outpaced declining volume by a similar ratio. New highs swamped new lows 295 to 4. Net/Net it was a walk in the park for the bulls. As just stated, the lockstep coordination of stocks, gold and oil strongly hinted the influence of a calming in currency markets. The dip in volume was the only miss by the bulls. - Art Cashin
- AIG said to insure Goldman's board against investor suits (Bloomberg)
- UK unemployment hits 16 year high - they need to subcontract the BLS (FT)
- Earnings update: Boeing says health costs cut outlook (Bloomberg), AT&T hit by charge (Reuters), Wells misses revenue estimate (Bloomberg), Morgan Stanley posts profit on CDS and bond trading (Bloomberg)
- V-shaped explosion: an eventual inflationary collapse into a "double dip " Greater Recession (Asia Times)
- Richard Rahn: could the US become Argentina (Washington Times)
- Paulson reassures on Goldman role (Reuters, WSJ)
- Goldman says SEC case hinges on actions of one employee (Bloomberg)
- Greece says to agree joint text with IMF, EU by May 15, claims "restructuring talks are nonsense" (Reuters)
- Airlines lost over $1.7 billion from ash cloud disruptions over Europe, industry says.
- Americans see US autos topping Asian competitors.
- Asian stock markets gain on US corporate earnings, jump in oil price.
- Chinese bank watchdog orders quarterly tests on property loans.
- IMF proposes bank tax to fund bail-outs.
- Oil jumps above $84 in Asia as stocks rally on earnings.
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 21/04/10
As was reported first on Zero Hedge yesterday, Greece may now be considering a restructuring. Full press accounts of what is going on in the absence of the usual Greek rumor mill are murky. Reuters is claiming that the IMF portion of Greek aid would amount to €12 billion. In the meantime the market has spoken: the spread is now a fresh new record 522 bps. At this point every single rating agency is expected to downgrade the country.
Guest Post: Fred Hickey - If We Continue Down This Path, the Outlook is General Impoverishment for the CountrySubmitted by Tyler Durden on 04/21/2010 - 02:05
A few weeks ago, I asked Fred Hickey what he would do as chairman of the Federal Reserve. In the remainder of our interview, I asked Fred whether we can avoid recessions in a business cycle, what will happen to the US Dollar, how our creditors are behaving, and what advice he can offer given the new economic environment.
CalPers Joins Everyone Else Who Has Lost Money Or Stands For Reelection, In Reevaluating Goldman RelationshipSubmitted by Tyler Durden on 04/20/2010 - 19:37
Today's Casablanca moment of the day is brought to you by CalPers. The latest entity to be shocked, SHOCKED, at just what Goldman's standard operating procedure has been for many, many years is none other than the world's largest pension fund, the California Public Employees' Retirement System (and repeat Goldman client), which itself has been having quiet a few problems recently, and not just ethical ones, but more importantly performance related ones. The irony is that were Goldman to close tomorrow, the outcry from all these same hypocritical bandwagoneers would have been ten times louder.
Dear Attorney General Holder:
While the SEC lacks the authority to act beyond civil actions, the U.S. Department of Justice (DOJ) has the power to file criminal actions against those who commit financial fraud. We ask assurance from you that the U.S. Department of Justice is closely looking at this case and similar cases to further investigate and prosecute the criminals involved in this, and other financially fraudulent acts. Furthermore, if the DOJ is not currently looking into this particular case, we respectfully ask you to ensure that the U.S. Department of Justice immediately open a case on this matter and investigate it with the full authority and power that your agency holds. The American people both demand and deserve justice in the matter of Wall Street banks whom the American taxpayers bailed out, only to see unemployment and housing foreclosures rise.