Archive - Dec 2, 2009
The Dubai File: Is Venezuela Headed for a Default?
Submitted by rc whalen on 12/02/2009 21:39 -0500"We would not be surprised to see more sovereign debtors make unilateral announcement of debt moratoriums and/or restructurings, perhaps including even oil rich Venezuela. We notice in that regard that Venezuela’s lider maximo, Hugo Chavez, is preparing to nationalize the few remaining private banks of that nation, usually a good indicator of an approaching sovereign debt default."
New York Takes a Bite Out of Pensions?
Submitted by Leo Kolivakis on 12/02/2009 21:15 -0500$48 billion over 30 years, and it's just the beginning. Don't say I didn't warn you...
79 Protons Meltup Counter: $1,224/Oz
Submitted by Tyler Durden on 12/02/2009 20:14 -0500
Gold is now the primary beneficiary of any and all dollar weakness (much more so than stocks or any other asset class) and any and all incremental excess liquidity. We hope members of Senate who read this post present the charts below and ask the Fed Chairman at what point will his debasement of America end.
Matt Taibbi Exposes Obama's Wall Street's Inner Circle, Pays Particular Homage To Robert Rubin
Submitted by Tyler Durden on 12/02/2009 19:44 -0500Matt Taibbi gives an in-depth presentation unmasking the Wall Street crony advisors that whisper in the President's ear daily, the political push-pull that ended up gifting Tim Geithner his current job, as well as an analysis of the brains behind it all- former Goldmanite, Robert Rubin.
Senator Sanders To Place "Hold" On Bernanke Reconfirmation, Chairman Will Need 60 Senate Votes To Override
Submitted by Tyler Durden on 12/02/2009 18:09 -0500Tomorrow's Bernanke reconfirmation hearing just got more interesting, courtesy of Vermont Senator Bernie Sanders who has stated he will put a "hold" on the Bernanke confirmation process, meaning the Senate will need to amass 60 votes in order to override and proceed with the confirmation process. Yet as the NYT notes: "though the Senate has been paralyzed by similar blocking tactics on countless other issues, Mr. Bernanke probably has enough support in both parties to clear the 60-vote hurdle." It is time to call your Senators and remind them that at best only 21% of Americans favor Bernanke's reappointment.
Former Managing Director of Goldman Sachs: Accounting Fraud of the Too Big to Fails May Be Worse Than Enron
Submitted by George Washington on 12/02/2009 17:32 -0500Robert Reich Confirms Permanent Destruction of Jobs in America
Submitted by George Washington on 12/02/2009 17:27 -0500Heck of a job, Larry, Tim and Ben...
Bank Of America To Repay TARP, Greg Curl Allegedly New CEO
Submitted by Tyler Durden on 12/02/2009 17:21 -0500In addition to paying back its $45 billion portion of TARP, the Bank, in what will be Ken Lewis' last act, will also raise incremental capital. $18.8 billion of new "common equivalent securities" to be issued, or the equivalent of 1.2 billion shares. And even as the firm is set to payout humongous bonuses ala Goldman, the firm will not touch its $44.5 billion in TLGP backed issues.
Rosie On $2,600 Gold
Submitted by Tyler Durden on 12/02/2009 17:10 -0500Rosie makes the case for double gold, emphasizing foreign CB purchases and peak gold. And as the race for the currency bottom accelerates, Rosie discloses the production of global fiat currency "up by 150%" coupled with no incremental dollar production, he expects gold to explode. Also is somewhat skeptical on the dollar carry trade, which due to being the most crowded trade in the room, will likely not see an orderly unwind when such unwind finally occurs.
Guest Post: On Allocation
Submitted by Tyler Durden on 12/02/2009 16:48 -0500A while back in on our subscriber site, we penned a discussion trying to put the whole “mountain of money” thesis into perspective. The bottom line is that there is less than meets the eye, especially as that applies to households and corporations. Simply put, the private sector does not appear to have meaningful cash resources when the data is looked at relative to both current asset values (of equities) and relative to historical behavior of households and corporations to be a hugely powerful force in terms of moving financial asset prices. Yes, this is the same US private sector now engaged in deleveraging of a magnitude whereby the year over year change in private sector credit balances has entered negative territory - a first in the sixty years of available data! Of course we all know that at the moment, the mountain of money that is influencing markets and the economy is coming from none other than the Fed/Treasury/Administration. And quite the mountain it is.
Only one little problem though. Once you’ve “taught” investors you’ll provide the money, and keep on providing it in spades at even the first sign of trouble, how do you stop doing that at ever increasing rates without risking market values themselves in big way? Start to take away the money candy and the terrorist banks (commercial and investment) will tell the Fed the world is about to come to an end. They’ll pull the pin on themselves and supposedly take everyone else with them unless the Fed comes across. It will be fascinating to watch the Fed ultimately be forced to stop the free money game. But that’s a story for “tomorrow”. Unfortunately, at least as per the numbers we see, there will be no mountain of money at the household or corporate level to pick up the slack when that day arrives.
Mapping The Divergence In Credit And Equity
Submitted by Tyler Durden on 12/02/2009 16:00 -0500
Another side effect of excess liquidity and computerized stock markets has been the divergence between stock and credit indices. As the chart attached demonstrates, since the beginning of August we have seen a very rangebound market in roll-adjusted Investment Grade spreads, represented by the CDX IG (inverted axis to keep it apples to apples with stock moves), while the equity market in turn has been on a unstoppable tear ever higher, as captured by the SPY. In fact, even as the IG has been making higher "lows", the SPY has gotten completely detached from the underlying economic reality of which credit seems to be at least partially cognizant, and ploughs ever higher on nothing else than goodwill and excess liquidity. Now, not only has the S&P bubble diverged with the Nikkei as presented earlier, but with underlying US credit metrics themselves.
A Glitch In The Matrix
Submitted by RobotTrader on 12/02/2009 15:45 -0500Everyone knows how traders have been chasing or selling stocks based exclusively on the action in the EUR/USD. Today, banks and oils were selling off most of the day as the EUR/USD was grinding back down to 1.50. However, there were a lot of greyhounds running today chasing the momentum meatball, signaling a slight "glitch" in The Matrix, meaning that we might be on the verge of breaking out to new highs, which may force many to jump back into the pool for the year end print.
The Big Thinkers: The Brainy Awards
Submitted by Econophile on 12/02/2009 15:04 -0500Foreign Policy magazine has just come out with its list, “The FP Top 100 Global Thinkers." They rate the intellectual giants, the Big Thinkers, the Big Brains of our current world. It is the most pompous fluff piece that I have seen in, well, quite a while. It just brims with a lack of intellectual rigor, reason, and good scholarship. It is a kind of Parade magazine feel-good fluff that we see in many of these types of lists. And it is grist for my vitriolic mill. You will be sadly disappointed.
Nobel Prize Winner And Stimulus Bull Extraordinaire Krugman Shifts Into Asset (De)Allocation
Submitted by Tyler Durden on 12/02/2009 14:44 -0500Reading anything by Krugman these days is all about getting an understanding of why drowning in infinite debt within a decade to finance stimulus after stimulus is really a pretty swell thing. Well, today the Nobel-prize winner has decided to go on pro-stimulus hiatus and instead is focusing on providing asset allocation advice. According to Bloomberg, "Nobel Prize-winning economist Paul Krugman said he plans to sell some of his investments in Brazil, Latin America’s biggest economy, on concerns that asset prices are over-valued."
Like Sands Through the Hourglass, So Are the Days of Our Lives: Today's Episode - Mystery of the Iraqi Gold Purchase
Submitted by Marla Singer on 12/02/2009 14:14 -0500
Perhaps you might not expect to find much interesting in data published by the Central Bank of Iraq. In fact, it is a treasure trove of interesting mysteries right smack in the middle of the nexus between international economic relations and nation building. For example: Between October 22nd and October 29th of this year Iraq's central bank appears to have acquired IQD 1.874 trillion ($1.6 billion) in "Gold and SDRs," adding to their existing stash of IQD 726 billion (or about $620.5 million). This wouldn't normally be unusual. SDR's are often the unit of choice for countries accepting loans from the IMF, for example. But after just a little bit of digging, one thing seems pretty apparent: they ain't SDRs. Around this time gold peaked at $1061 an ounce. If it was, in fact, gold that Iraq bought, that's around 1.5 million ounces (or more depending on the actual clearing price).








