Archive - Apr 12, 2010
IMF Prepares For Global Cataclysm, Expands Backup Rescue Facility By Half A Trillion For "Contribution To Global Financial Stability"
Submitted by Tyler Durden on 04/12/2010 22:14 -0500And all the pundits thought that the IMF would be on the hook for just €10 billion... The IMF has just announced that it is expanding its New Arrangement to Borrow (NAB) multilateral facility from its existing $50 billion by a whopping $500 billion (SDR333.5 billion), to $550 billion. The current lending participant group of 26 entities will be increased by 13 new members all of whom will contribute token amount of capital to the NAB. The one country most on the hook in the new and revised NAB - the United States of America, will provide over $105 billion in total commitments, or 20% of the total facility. The US is currently on the hook for just $10 billion, meaning its participation in global bail outs just increased by $95 billion. And the bulk of these bailouts will certainly be located across the Atlantic. What is most troublesome is the massive expansion of the NAR. If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose.
Visualizing America's Tax Inequality, The Wealthiest 11,000 People, And Why Obama's Campaign Promises Mean 77%-91% Taxes For The Richest
Submitted by Tyler Durden on 04/12/2010 20:27 -0500

Now that healthcare "reform|takeover" has passed, Obama is rightfully shifting his attention on tax "reform|takeover" for the very simple reason that America is getting bankrupter by the day. We take this opportunity to disclose the massive pain that lies in store for those who are currently benefiting the most from the endless stock market rally, of course assuming the president keeps his #1 campaign promise (which is a vast assumption). As the charts below demonstrate, American society is currently stratified beyond repair. In this vein, the Tax Policy Center calculates, that for a return to economic normalcy, or deficits at a "mere" 2% of GDP, households earnings more than $200/250k would see their tax rates going up to a stunning 91%. If the economic underperformance target is reduced to more palatable deficits at 3% of GDP, then the top earners would be hit with "only" 77% taxes.
MPs' Pension Jackpot Derailing Pension Reform?
Submitted by Leo Kolivakis on 04/12/2010 19:42 -0500Critics accuse the Canadian government of denying pension woes, and stalling on pension reform. But there are vested interests among all Canadian MPs to maintain the status quo as they line up to hit their pension jackpot.
Bank Sold!
Submitted by Econophile on 04/12/2010 19:32 -0500We were too late to set up Zero Hedge world headquarters in Bicknell, Indiana.
Blast From The EU Past: Almunia - "Greece Will Not Default. In The Euro Area, Default Does Not Exist. There Is No Plan B"
Submitted by Tyler Durden on 04/12/2010 18:23 -0500A casual reminder of what Joaquin Almunia said just over two months ago goes to show the caliber of intellect of those running the show. Needless to say, Zero Hedge was skeptical of Joaquin's bullshit. Speaking of said bureaucrat, we wonder - did he fall off the face of the earth recently? With statesmen like this, who create soundbites such as "We have no Plan B - Plan A is on the the table, it is fiscal adjustment" who needs enemies like Ben Bernanke. Oh yeah, Europe. Nevermind.
Daily Credit Summary: April 12 - Navel Gazing
Submitted by Tyler Durden on 04/12/2010 18:05 -0500Spreads rallied today after positive headlines in Europe and some spread-compressing single-name M&A activity in the US. HY14 closed at its best since inception, below 500bps, as IG closed only at last Tuesday's levels but notably IG outperformed intrinsics and HY underperformed intrinsics suggesting some possible HY-IG decompression was at play.
All-in-all, given the supposed clarification that we got from Europe, today's performance was notably dull with idiosyncratic moves dominating any systemic strength (which is not what many expected). Spreads opened tighter following last night's Greece news (see yesterday's note for our perspective) but it was clear that while the rally in EUR, compression in front-end bonds, and gap in 5Y CDS was exactly what we expected, much as we also expected, these improvements were less than many thought and did not last. 5Y CDS gapped 50bps or so tighter (back only to last Tuesday's levels) and even short-end bonds only managed 100bps compression and around 43bps in GGBs over Bunds (as we pointed out this was not unexpected and does nothing to solve longer-term instability).
Heading Into April 15, Tax Refunds Surge, As Net Treasury Tax Withholdings Plunge
Submitted by Tyler Durden on 04/12/2010 17:31 -0500
We here at Zero Hedge have gotten tired of the endless propaganda and lies coming from the US Treasury regarding its "prudent" cash management. As we demonstrate weekly, gross tax withholdings have collapsed in 2010 compared to the even disastrous 2009. Through the 14th week of the calendar year (not fiscal), cumulative tax withholdings in 2010 are $477.9 billion, $13.5 billion less than the $491.4 billion in 2009. Yet regardless of what the only organic source of revenue for the Treasury looks like, the Treasury (and IRS) are issuing ever increasing tax refunds with the abandon of a drunken sailor. The chart below compares how many more refunds on a cumulative basis have been issued in 2010 compared to 2009. Oddly, it is also $13 billion, however in the wrong direction.
Treasury Burns Through $82 Billion Cash In April, Down To Just $9 Billion; Adds $53 Billion In Debt In Same Period
Submitted by Tyler Durden on 04/12/2010 16:49 -0500In some parallel universe, the Congressional Budget Office is boasting about how its revenues were only x billion less than outlays. We have not seen these numbers, nor do we care: we always and only look at the cash. And so far in April, things are getting scary (almost as scary as March's $333 billion in net debt issuance): The Treasury just reported that its Federal Reserve Account is down to just $9 billion, after starting the month at $91.5 billion, and the year at $108.3 billion: Tim Geithner has burned over $80 billion in cash in just one week, financing aside. This has occurred even as the Treasury has so far recognized about $53 billion in net settled debt, all of its Bills, for net funding deficit of about $145 billion. As we know that almost a hundred billion in Coupons have been issued and pending settlement, as well as another $100 billion + in Bills will settle after this week, we adjust our estimate of net cash burn and believe that total outlays as funded by cash (not much left) on hand and new issuance will hit $300 billion. This delta is also a function of various Trust programs which are now in net need of funding, courtesy of yet another Ponzi scheme created by the great John Maynard Keynes.
John McLaughlin Predicts National Sales Tax To Be Instituted By Early 2011; Will It Be Catalyst For Next Major Recession?
Submitted by Tyler Durden on 04/12/2010 16:36 -0500
At 27 minutes into his show, John McLaughlin predicts that Obama "will enact a new national sales tax in January, February or March of 2011." As we pointed out recently, tax withholdings, contrary to what the budget office or flawed groupthink will have you believe, were down in February and March compared to 2009. Alas, Obama will have no choice but to institute some form of VAT unless he has absolute faith that China will buy US debt into perpetuity. Yet what people in D.C. should remember, is that Japan's hike of the VAT in 1997 and increase in out-of-pocket medical expenses is often credited with prompting their 1997 recession.
Full Industrial Outlook With A High Yield Slant
Submitted by Tyler Durden on 04/12/2010 15:43 -0500For every question you may have on the outlook for the industrial side of the economy, especially if you are a HY analyst, here is the answer (at least from a groupthink perspective) in 167 pages.
Alcoa Misses Revenue Big: $4.89 Billion Vs $5.23 Billion Consensus; EPS Meets Expectations
Submitted by Tyler Durden on 04/12/2010 15:20 -05007% top line miss is not easy to explain, as CNBC just demonstrated. The revenueless (and jobless) recovery is becoming even more revenueless (and jobless) and less recovery. When AA is unhalted will likely not be pretty (a statement based on logic and thus about to be thoroughly disproven).
Hussman: "The Banking System Is Still Quietly Insolvent"
Submitted by Tyler Durden on 04/12/2010 14:57 -0500Nothing reall new here, just more confirmation from John Hussman, who tends to be somewhat more diplomatic than us, in highlighting what all those who care already know (the rest are buying AIG, Fannie and Freddie): the banking system is completely insolvent. And to make matters worse everyone in this administration from the very top, to the regulators, to the accountants, to the investors, and to the firms themselves, is in on it. The only thing that makes it palatable - the complete lack of any information about just how bankrupt America is and will continue to be for years, even as we hear every single day from the administration propaganda business stations how everything is doing great. Ignore all the talk about an economic recovery - with the cornerstone of the financial system still in default if it weren't for a variety of accounting gimmicks, not to mention the trillions in fiscal and monetary boosts, and the transfer of resurrection costs from the present to the future via the steep debt curve, real GDP would be down 10% or more, and all public financial firms would be undergoing liquidation (and their management teams likely in prison). Of course, public recognition of just how much of a ponzi the entire economy has become is never a good thing going into midterm elections. And with the Fed directly and indirectly monetizing, with Primary Dealers complicit in realizing full well their 4th Hamptons house would be on the block if they don't, with China forced to keep buying our debt as the alternative is a nor so glorious revolution, we all not only live in Wonderland, but are fully aware of this sad reality, yet happily will continue to do so until the day this lie can not be rolled into tomorrow.
Dumpster Diving Resumes in Earnst
Submitted by RobotTrader on 04/12/2010 14:49 -0500Another day, another mad rush into financial stocks with the worst prospects ever. And the meltup in airlines, retail, restaurants remains in intact, further boosted by the ongoing drop in commodity prices. But even the energy sector is not immune to the dumpster diving bargain hunters today.
Euro-Gossip Debunked, Courtesy of Trichet and the IMF!
Submitted by Reggie Middleton on 04/12/2010 14:00 -0500IMF says Italy is right on track. Okay, but which track would that be? More facts thrown at you that probably hurt if you believe the soundbites in the media..
Goldman Again Buying Gold, Selling Copper As It Lowers Gold Price Forecast, Boosts Copper
Submitted by Tyler Durden on 04/12/2010 13:59 -0500
First, Goldman royally raped its clients by losing them a boatload in two sequentially failed EURUSD recommendations (on which the firm, of course, being on the other side of the trade, ended up making a killing). Today the firm is handing out vaseline to clients but not in FX - they are now going after commodities and, specifically, gold. Most relevantly, Goldman is once again starting to accumulate Gold. Three months ago Goldman boosted its forecast price target to $1265/toz in 2010 and $1425/toz in 2011, during which period the firms was likely shorting gold to clients who were buying in expectation of a price hike. Today Goldman has revised its call - no surprise: gold is now expected to drop to $1165 in 2010 and $1350 in 2011. Then again, according to former Goldmanite and current gold "expert" Jeff Christian big banks would never do something as risky and foolish as having a naked short position. So please ignore anything we might have said earlier about GS shorting gold unhedged. Bottom line, clients are now expected to sell their gold to Goldman. Which means Goldman is buying. You do the math.






