Archive - Jan 7, 2010

"We now have a financial system that is completely based on moral hazard...Crazy things happen when you have financial system like that... The conventional wisdom is you can't have back to back major financial crises. I think we're going to push that, we're going to have a look and see whether that's true. The next 12 months could really be exciting... But we are setting ourselves up for an enormous catastrophe." - Simon Johnson

Presented without commentary. Just don't call it a bubble.

Do SunSPARC workstations colocated at the NSYE have a preference as to what day they gap up the market? We attempt to answer this question, in addition to pointing out a very strong pattern on Employment Situation Fridays.

The latest observation on our depressing economic reality, behind the glitzy headlines and the 3D TV screens, comes from Bloomberg's Jonathan Weil who rightfully asks "if AIG executives repeatedly claimed the stock was worthless, how do the executives, auditors, regulators, and, ultimately, the government, still have the balls to indicate the company's stock has any intrinsic value, both its publicly traded version and its book equity." Weil also joins the long list of people who wonder, just what the hell is the SEC's function in this day and age, when publicly-traded companies, many of them government backstopped, can disclose anything and everything they desire, even when such disclosure is flawed and purposefully misleading (see Bank of America and the earlier piece on a lying Tim Geithner and the very same AIG) with absolutely no repercussions. It is all really getting just far too depressing for US taxpayers to even be indignant. Maybe that has been the point all along...

Next week's Treasury auction schedule has been announced: next week will see a total of $159 billion in new gross issuance, consisting of $74 Billion in 3, 10 and 30 year Bonds, with two reopenings (10 year and 30 year).

It is pretty clear that officials and the likes of Tim Geithner were directly involved in editing documents that would eventually become public disclosures by AIG in the form of SEC filings.  To the extent these filings were knowing material omissions or misstatements of fact Tim, along with executives at AIG, should be heading to jail, right?  Well, not necessarily.  As we wrote two months ago, there is at least one little hitch that permits firms to cook the books and skate off after the fact.

RANsquawk 7th January US Morning Briefing - Stocks, Bonds, FX etc.

The price action around these key levels needs to be followed closely as we are in an area where new trends develop.

As investors of all stripes continue to go gaga for the Cult of Cupertino (snap, crackle, AAPL), what can we actually learn from Apple, Inc.?

An Insurrection to dump two thirds majority rule in California. Searching for fiscal restraint in the Land of Fruits and Nuts. Is Washington sucking the lifeblood out of the Golden State? Time to load the boat with the state’s bonds.

In a pathological example of nearly clinical hypocrisy, PIMCO's Bill Gross yesterday dedicated 4 meandering essay pages full of polemical ramblings to the characterization of America's sad political and financial hybrid reality. Yet the billionaire's saddest message is precisely the self-deluded aggrandizement that Gross decries yet willfully takes advantage of every single day. Because after bemoaning the fate of America's broken political system, and ridiculing the Federal Reserve's kleptocratic-friendly ways, it is precisely people like the PIMCO chairman that are most guilty of taking advantage of every single loophole presented to them, even as they criticize just this activity. This, beyond all the petty trivialities that Gross discusses, is precisely what is most wrong with America - at this point everyone, and especially Mr. Gross, knows too well that the wealth transfer from the middle class to the elite 1% of society will not end until such time as America itself defaults. Yet having the very people that benefit the most from this, write non-apologetic letters in which they criticize the very system that lets them walk home every day with an extra zero in their bank account simply due to their special connections within this very broken system, is beyond reproach.

• Asian stocks rise, led by carmakers, banks; Copper gains, bond risk falls.
• Australian retail sales rose 1.8% in November - the most in eight months.
• China’s central bank said it will target “moderate” loan growth in 2010.
• Dollar near 3-week low on signs global rebound gaining momentum.
• Oil pulls back below $83 in Asia after cold weather sparks 20 percent rally since December.
• Spot iron ore delivered to China rose to the highest in more than a year amid “panic buying” by steel mills.

It's going to be pretty hard extracting your metatarsus from your anus this time around. I mean, everyone makes mistakes with taxes, but the multi-billion dollar back door bailout that you tried to hide via EMAIL???!!! Come on, guys. If you're not smarter than that then you definitely won't be able to solve this financial situation thingy... Unless he knew absolutely nothing about the biggest bailout in the history of his country - under his watch, that is.

Just the other day I stated "Why does everyone confuse a bubble with economic progress" in a post about a very probable bubble in China (see "It Doesn't Take a Genius to Figure Out How This Will End" then get your chuckles on with "Goldman Seems to Trust the Chinese Economic Reporting a Tad Bit More Than I Do!"). Well, as if on cue, Stocks, Metals Decline Around World After China Curbs Lending; Yen Weakens...