Archive - Jun 2009

Some afternoon levity: now that Madoff is set to spend the remainder of his life behind bars, the public's attention is shifting to whatever other scandal will fill the pages of the yellow press. And as this summer has progressed very slowly, with the SEC cowering in its cave, afraid to do anything about the unprecedented market manipulation evident to anyone but the market regulator, the general public likely will have to make do with the tryst of Gov. Mark Sanford and his Argentinian beau as the topic de jour.

As Larry Levin pointed out earlier, there is no volume as usual, a perfect opportunity for the SPARCs and the (In)visible hands to wreak havoc with all the shorts, as per the running script. Volume runrated to end silly low.

Even as Six Flags' OCC (Official Credit Committee) was being formed in Delaware last Friday, with naive participants such as BoNY, HSBC, Esopus Creek Capital, Schottenfeld Associates, John Gorman, Whirley Drink Works and Coca-Cola (the last two must be royally pissed as all their advance profits on $9.95 small cups of soda have just become General Unsecured Claims) all hoping for some meager recoveries, and financial advisors (Broadpoint, Chanin, Moelis, Mesirow, BDO and Peter J Solomon, all of which are now overnight specialists in the amusement park business) trying to bedazzle the committee with their pretty charts and glass beads (and in the case of some, expansive dinners at Tao, where engagement letters were hoped to be signed on the naked backs of blonde, barely legal, Ukranian imports), the ad hocs were preparing for war according to Debtwire.

Everyone speaking about inflation these days. Many seeing it mostly in commodity prices and the insane printing of money. Yet with oil heading steadily back to the range from last summer, there is no bottom anywhere for home prices. Also, banks can hoard up all the cash they want: nobody wants it. Consumer are firmly retrenching into thrift mode, and cutting up credit cards or simply maxing out and not paying them. To say inflation is guaranteed in light of trillions and trillions of consumer wealth destroyed, is very shortsighted.

As expected last week, the tide in credit is turning. The average loan was 5 bps wider, while toxic bonds, just like that scene in Indiana Jones and the Temple of Doom, are starting their descent back into hell, wider by 78 bps on average, and just 23 bps away from the critical 1,000 bps threshold (after being at 895 bps last week).

Amusing to see the biggest propaganda voice for the administration and General Electric let this one slip. At 2:22 in the video below, Larry Levin discloses the truth about ongoing flagrant market manipulation. That's why CNBC needs a 15 second delay, although Freudian slips among all the noise are why watching the channel can be so rewarding at the end of the day.

Today we officially launch our new website, which will serve as the scaffold for much additional expansion in the months ahead. Blogger has been useful, however it has reached its limitations and it is time to move on. This is especially true as daily traffic has grown to a level far beyond what was envisioned possible when Zero Hedge was started.

Marshall Huebner is a person Zero Hedge has great respect and admiration for. The Davis Polk lawyer, in addition to having an impressive work ethic with many successful bankruptcies under his belt (Delta's 2007 emergence being a case in point: in fact, he will likely be making a repeat appearance there quite soon now that Goldman has envisioned another ramp to $200/barrel of crude), volunteers 13 hours every Sunday night as an Emergency Medical Technician - a noble dedication to his community. Marshall's dedication however is not only to his immediate community, but to American taxpayers in general: a little known fact is that Davis Polk is the official yet still formally unannounced legal advisor for the Federal Reserve.

Complete collapse in foreign interest for GSE debt: North American holdings of the latter have increased from 50% to 80% of total notional in one year!

The Porsche drama has morphed into a full blown tragedy: Porsche has until Monday to decide whether it is willing to accept what is essentially a firesale bid by Volkswagen and Lower Saxony for 49% of the company in exchange for €3-4 billion. As a result of the transaction, the two companies would merge, with the Piech and Porsche controlling a 40% stake, Lower Saxony owning 20%, Qatar 15%, and a separate state fund having a 5% stake.

Zero Hedge thrives on its proactive readers, yet I never expected a barrage of information such as the one I received since posting this. In the hundreds of emails received over the past several hours, much of it from current industry insiders, a substantial portion is likely actionable, and upon further refinement, enforceable. Going through it all will take time, however I take this opportunity to welcome any and all readers to provide information they believe captures wrongdoing in the financial system.

"We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance of being a force for good."