Archive - Dec 24, 2009

The Obama administration is on the case, don't you worry. Given that expanding the balance sheets of Government Sponsored Entities, increasing their regulatory caps on assets, and then, when caps could rise no further, permitting them to resort to securitization to move underpriced real estate loans off their balance sheets didn't work, let's relax caps even more, and, while we are at it, give them a blank check drawn on the Treasury.

Yet another reason these things need to be reined in a tad ...

Eric Sprott's most recent report has generated serious ripples within financial circles due to his unique interpretation of some rather nebulous data in the latest December Treasury Bulletin. Sprott raises a major question mark as to the constituency of the "Other Investors" as defined on page 48, which in his calculations, has accounted for $510 billion of Treasuries in the first three quarters of 2009. Could this be a "phantom purchaser" that is the Federal Reserve in all but name? Or is it something far more innocuous?

Dancing through the aisles this morning at TCO's Beverly Center and Westfield's Westfield Century City. (A photo essay sans javascript click-whoreish "slide show.")

In the "Everything Old is New Again" category, Tim Geithner inadvertently (we hope) invokes classic (and classically fitting) political satire in the form of Peter Sellers' cinemagraphically immortal "Chauncey Gardner," introduced to an unwitting American public in Hal Ashby's 1979 piece "Being There."  It is fitting that on the film's 30th anniversary real life political characters should so perfectly resemble the lumbering incompetence and "form over function" sketched so comically by Sellers.

Tim Geithner and Ben Bernanke can both sleep well - the Great American Ponzi ("GAP") can continue for at least one more month, courtesy of Senate Democrats who all, with the exception of Evan Bayh, voted to raise the debt ceiling by $290 billion to $12.4 trillion. 59 Democrats all did their job in pretending that an exploding budget deficit is nothing to write home about, as there is this thing "called the printing press" yet with 60 votes needed America could have been on the verge of its first ever technical default. The savior: Republican George Voinovich of Ohio, who voted against party lines, and 39 other Republicans, and voted "for" unlimited printer cartridges.

• No Christmas cheer for Goldman. Bear takes up the slack. (In Bailout Nation alumnus of bankrupt firms party harder than employees of the profitable) [bloomberg]
• Ford to sell Volvo to Chinese.  (Part of strategy to eliminate non-core auto manufacturing activities to concentrate on defined benefit and health care management units) [freep]
• Fannie and Freddie throw millions to politically connected senior execs. (Largest fiscal black holes emit Bekenstein-Hawking radiation in the form of salary. Perhaps evaporation will finally result?) [reuters]
• Obama sneaks COBRA extension into defense bill. (G.I. Joe shocked. "The More You Know" segment in the works). [washington post]

More and more top hedge funds are reportedly betting on a big rise in bond yields. Are they right? Sort of, but the bond bears are mistaken if they think this is the beginning of a secular bear market in bonds.