Archive - Mar 13, 2010
Guest Post: The Big Dead-Cat Bounce
Submitted by Tyler Durden on 03/13/2010 21:28 -0500"Virtually no one was calling for this kind of rally a year ago. But it happened. So investors are either seeing the “green shoots” supposedly sprouting from the moribund economy or believe that they’re about to break ground any day now. That sentiment is continually reinforced by government officials and media talking heads who almost universally proclaim that “the worst is past,” “we’re back from the brink,” or other words to that effect. It’s often said that stock market action is a leading indicator, reflecting what investors think the economy will be like six or nine months down the road. Are they right? Will good times soon be here again? Or is this just a big dead?cat bounce?" - Doug Hornig
We Demand The Fed Be The Financial Uber-Regulator... The Australia Fed That Is
Submitted by Tyler Durden on 03/13/2010 21:00 -0500We already know that the Federal Reserve System was blind, mute, dumb, and frankly, retarded when it came to Lehman's Repo 105, and pretty much every other aspect of the Lehman collapse. As the Examiner discloses: "Secretary Geithner “did not recall being aware of” Lehman’s Repo 105 program", "Jan Voigts, who was an Examining Officer in FRBNY’s Bank Supervision Department, had no knowledge of Lehman removing assets from its balance sheet at or near quarter?end via a repo trade", "Arthur Angulo, who was a Senior Vice President in FRBNY’s Bank Supervision department, likewise was unaware that Lehman engaged in repo transactions at quarter?end" although the latter did point out that "the described repo transactions appeared to go “beyond other types of [permissible] balance sheet management.” And lastly, "Thomas Baxter, FRBNY General Counsel, had no knowledge of Repo 105 transactions, either by name or design." Yet it is these clowns that want to become America's uber-regulator. Now that is funny, considering that at the apex of the greatest cataclysm for the financial industry, the Fed was blissfully unaware of one of the most egregious book cooking scams ever conducted by a Wall Street firm. Yet with all the Fed's bells and whistles, with all its Bloomberg terminals, all its fancy daytraders, all its Flash trading enabled momentum chasing algos, one central bank, half way around the world, knew all too well what was going on at Lehman - the Reserve Bank of Australia. Which is why we nominate the RBA's chair, Glenn Stevens, to be direct supervisor of the entire ungodly and corrupt mess that is Wall Street (and to make Ben Bernanke his butler). We also strongly endorse the nomination of Amanda Drury to supersede that of Janet Yellen, as the Fed's new chair of vice. At least she will bring some inflationary pressures to the Marriner Eccles building.
How Lehman, With The Fed's Complicity, Created Another Illegal Precedent In Abusing The Primary Dealer Credit Facility
Submitted by Tyler Durden on 03/13/2010 14:44 -0500Five months ago, Zero Hedge observed the nuances of the Federal Reserve's Primary Dealer Credit Facility (PDCF) and concluded that this artificial liquidity boosting construct was nothing more than yet another scam to allow banks to extract ever more money from taxpayers, with the complicit blessing of the Federal Reserve Board Of New York (as the original piece also provided an in-depth discussion of the triparty repo market which is now a parallel to the buzzword of the day in the form of Lehman's "Repo 105" off balance sheet contraption, it should serve as a useful refresher course to anyone who wishes to understand why while Repo 105 with its $50 billion in liability contingency may have been an issue, the true Repo market, with over $3 trillion of likely just as toxic assets, is where the real pain in the future will come from). The PDCF would allow assets of declining and even inexistent value to be pledged as collateral, thus making sure that taxpayer cash was funneled into sham institutions holding predominantly toxic assets, and whose viability was and is limited, yet still is backed by the Fed, which to this day continues to pour our money into them. Today, with a tip from the NYT's Eric Dash, we demonstrate just how grossly negligent the Federal Reserve was when it came to Lehman's abuse of the PDCF, and how the trail of slime of Lehman's increasingly obvious manipulation of its books goes to the very top of the Federal Reserve Bank of New York, and its then governor - a very much complicit Tim Geithner.
Weekly Chartology
Submitted by Tyler Durden on 03/13/2010 11:42 -0500Just in case you thought there was any confuction about which way the Goldman propaganda wheel turns: "Investors we met this week remain bullish in both outlook and positioning, consistent with our view. We expect S&P 500 to rise to 1300 by mid-year (+13%), before ending 2010 at 1250 (+9%)." So it was spoken and so it shall be. Amen.
Sprott's Last Decade Retrospective: It’s Déjà Voodoo Economics... All Over Again - This Weekend's Must Read
Submitted by Tyler Durden on 03/13/2010 00:12 -0500If you’re of a certain age, chances are you remember exactly where you were when JFK was assassinated. Similarly, if you’re from Canada or the United States and have an even remote interest in hockey, it’s highly likely that you remember exactly where you were when ‘Sid the Kid’ scored the winning overtime goal in the Olympic gold medal game. These were both "significant events", albeit for different reasons. We wonder, however, if any of you recall where you were on September 18th, 2008? Do you remember that day? We can’t seem to recall it either, which is strange, because it was one of the most important days of the decade. October 7, 2008 is another day that should stick out in our memories, but we’re sure you don’t remember that day either – and we’re in the same boat. How is it, then, that we can’t recall where we were or what we were doing on the two days the entire financial system almost collapsed?!? It boggles our mind. These dates should have been emphasized in every "review of the decade" written at the end of 2009, but we’ve been hard pressed to find them mentioned in any mainstream publication. This is troubling to us, and makes us wonder if people are even aware of the incredible events that took place on those fateful days only eighteen months ago. - Eric Sprott And David Franklin


