Archive - Oct 10, 2009
Radio Zero: "They Live"
Submitted by Marla Singer on 10/10/2009 23:06 -0500Radio Zero: "We watched 'they live,' last night. Felt like the comment section on Daily Kos."
Listen here: http://cdo.zerohedge.com:8000/listen.pls
Or pick up our West Coast Mirror (with 1000 slots) here: http://216.218.252.88:8000/listen.pls thanks to the mind-blowing generosity of EGI Hosting.
Chat up the DJ (send your .mp3 files) here: radiozh.
Or... #radiozh on EFNet (for the real chat nerds).
€300 Million Later: Deutsche Bank's Invoice On The Remains Of The Jefferson Smurfit Group
Submitted by Tyler Durden on 10/10/2009 17:10 -0500In January, Zero Hedge wrote about the bankruptcy of paperboard and packaging company Smurfit Stone Container Corp. As this occurred at the peak of the post Lehman crunch it was not very surprising. However, what is somewhat surprising is our recent encounter with a case study of the Jefferson Smurfit Group LBO by Morgan Stanley, in which Madison Dearborn acquired JSG for €2.3 billion, and subsequently spun off SSCC to the public. What caught our attention was the fees and expenses that the advisors charged MDP to facilitate a deal which ultimately cashed out the investor group by spinning off the eventual toxic assets of SSCC to a hapless public: Deutsche Bank and Merrill Lynch pocketed a whopping €248.5 million (yes, that's Euros). And for what: presumably for M&A fees, Loan fees, HY Bridge and Bond Fees and FX/Hedging Revenues. What they missed to point out is the primary reason for MD's generosity: extracting all the relevant assets out of a formerly stable and growing, operation, spinning off all the shitty ones (eventually attempting to arrange restructuring fees and/or DIP financing on the remaining SSCC husk), leveraging the company with a massive debt load, and subsequently IPOing into the next bull market.
The New Yorker On Martin Armstrong
Submitted by Tyler Durden on 10/10/2009 14:12 -0500Genius or madman, at least his thoughts are getting prominence. (Also, another example of stretching a $0 marketing and advertising budget.)
So You Want To Replicate Julian Robertson's Constant Maturity Swap Trade. Just Call Morgan Stanley
Submitted by Tyler Durden on 10/10/2009 13:32 -0500It is no secret that Julian Robertson is not a huge fan of long-dated bonds. In his recent CNBC interview he had some downright nasty words about the back-end of the UST curve, especially if the "downside contingency" case of foreign purchases ceasing, were to pass. However, while many have known about his propensity for the bond steepener trade, his latest trade position is the so called Constant Maturity Swap trade. Moving away from an outright steepener makes sense as it can now only profit from a tail end widening, since the front end of the curve is at zero. Unless Bernanke follows Sweden into negative rates territory, the steepener upside potential has just been mechanically limited by 50%. As for his current preferred iteration of expressing Treasury bearishness, CMS, here is some recent commentary from JR on the topic:
"The insurance policy I would buy is called a CMS Rate Cap, which is the equivalent of buying puts on long-term
Treasuries. If inflation happens the way it could, long-term Treasuries
are just going to explode. Less than 30 years ago, long-term interest
rates got to 20%. I can envision that seeming like a very low interest
rate compared to what might occur in the future."
No surprise then, that Morgan Stanley's Govvy desk has started pimping this trade (including some hedged and Knock Out variants) to anyone who wants to immitate that original Tiger.
Merrill's Contra-Bear Argument
Submitted by Tyler Durden on 10/10/2009 11:53 -0500Merrill Lynch (excuse me, BofA/ML as they like to put on the lead left side of REIT prospectuses), presents its case for why optimism dominates and all theories voices by perma-bears "have little founding in economic theory or history." What is notable from the below multi-pronged perspective on the definition of the term "recession" is that BofA/ML's entire argument rests on the premise of a fiat currency as taken for granted. Eliminate that, and the construct of imminent recovery from any and every economic cataclysm becomes immediately flawed. Ironically, the only reason there is no mass violence and civil uprisings right now (which would have been the case had RBS and HBOS gone under, an event which according to Bloomberg was mere hours away), is because printing presses the world over went into overdrive with wanton monopoly money (or nightcrawlers as they have been penned elsewhere in the blogosphere) creation (or destruction, depending on your perspective).
Simon Johnson and Robert Reich: Use Antitrust Laws to Break Up Too Big to Fails
Submitted by George Washington on 10/10/2009 10:27 -0500Break 'em up.
The Ongoing Plight of the U.S. "Nightcrawler" - Part 2
Submitted by RobotTrader on 10/10/2009 08:39 -0500Any doubt that the Fed is in a box, and has no choice but to remain being the lender of first and last resort to keep the Ponzi scam going???
Rasputin sums it all up, this should eliminate any confusion about the Fed's intentions in the future, despite the relentless jawboning, lecturing, and assurances about the "safety and soundness" of the U.S. Dollar as the global reserve currency.





