Archive - Apr 2010

Exceptional and Extended. Die dollar, Die. A few words more from Hoenig: "Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted it could lead to a build-up of future imbalances and increase risks to longer run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly."

The Mass legislator totally loses it after penning yet another angry letter (he is good at that; being unconflicted and actually passing sensible and Wall Street influence-free laws, not so much) in which he says that the $6 trillion extra toxic debt on the US Treasury's books from the GSEs (which the democrats refuse to recognize) is really the republicans' fault. The fact that Barney was instrumental to creating the parabolic phase of the housing bubble with his idiotic statements in 2005 that there is "no bubble", and that his commission currently refuses to deal with issues such as the GSEs and a repeat of the housing bubble is completely absent from his letter.

• Yield of 2.540% versus expectation of 2.532%, 2.568% previously
• Bid To Cover of 2.75, versus 2.55 previously and 2.7 average
• Indirect take down 48.92% versus Average 47.58 and 39.66 previously
• Directs come to the rescue again with a fresh record take down of 14.3%, 10.8% previously and 7.1% average
• Primary Dealer hit ratio at 2010 low of 20.26% after PDs bid $75.94 billion and were allotted $15.39 billion
• 90.56% allotted at high

Notice how many central bankers, analysts, pundits, banks and politicians said the debt problem was not only contained to Greece, but was also solved and all should move on. Uh huh...
I believe what we are seeing is just the beginning, and what the world saw with the collapse of Lehman was simply a microcosm of what happens when actual sovereign states threaten to fail!

Well, if the Senate can say it, so can we - this shit is now beyond ridiculous and has hit accelerated Goldman prop selling dimensions. Below is a joint press release by German Chancellor Angela Merkel, OECD Secretary-General Angel Gurria, WTO Director-General Pascal Lamy, ILO Director-General Juan Somavia, IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick. For the most this bureaucratic essay is worse even than overflowing fecal matter, but this particular statement from the pathological Keynesianites gets a 10 even from the French judgein both hypocrisy and braindeath: "Only a sustainable global economy can continue to guarantee growing wealth without jeopardizing the chance for future generations to meet their own needs." And how do we sustain it? Why, by having the developed world issue half a trillion in debt each and every month.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 28/04/10

Enough with the Federal Reserve mafia syndicate and its endless array of bailouts, under the table deals, cronyism, politicized monetary decisions, and rampant theft of America's wealth already. We endorse the Sanders-Feingold-DeMint-Leahy-McCain-Vitter-Brownback Federal Reserve Transparency Amendment to the Financial Reform Bill. If the Fed's clowns won't end their endless rape of America, it should at least be fully transparent for all to see.

Goldman scrambling to prevent Humpty Ponzi from falling of the well. The latest update from GS' Dirk Schumacher.

Not just Greece ...

Fiat down, gold up. Any questions? Algos finally found where Europe is on googlemaps. Europe closing so US is isolated in its schizobubble for the rest of the day.

"We continue to believe that the 2010 fiscal deficit will be broadly in line with the government's target of 9.8% of GDP. However, over the medium term we anticipate weaker revenue performance and higher spending pressures than what the government envisages, mainly due to our view of more subdued economic growth compared with the government's current estimates. As a result, Standard & Poor's projects that the general government deficit is likely to still exceed 5% of GDP by 2013, significantly higher than the government's official target of 3%. Consequently, we estimate that gross government debt is likely to rise above 85% of GDP in 2013 and continue to trend higher until the middle of the decade. Increases in Spain's borrowing costs, beyond what we factor into our base case, could, in our opinion, also reduce the government's ability to meet its fiscal targets this year and next."

The drama continues following S&P’s slice to Greece’s debt rating (to junk status of BB+, a three-notch decline, which prompted a surge in 2-year bond yields to a Zeus-like 15%) and the two-notch decline to Portugal’s rating, to A- from A+. The Euro has bounced back this morning and the flight to higher quality German and French bonds has partly reversed course as the markets are swirling with speculation that the IMF is about to announce a stepped-up aid package (yet again!) and the ECB’s Trichet (“Mr. Euro” himself) is set to make a trip to Berlin to meet with German parliamentarians today. (In the U.S., the huge rally in Treasuries has subsided too as the bond market braces for $42 billion of fresh 5-year T-notes today). JGBs have rallied all the way to four-month lows, in terms of yield, to 1.28% — talk about a switch to defense (not to mention a slap in the face to the conventional wisdom that JGBs are an accident waiting to happen)

Guess what happens when banks need something? They promptly brief you how the world will end should one not do their bidding. The IMF and the ECB are apparently no exception to the rule. From prophet Goldman Sachs: "Trichet and Strauss-Kahn in Berlin today to brief parliament. ECB president Trichet and the head of the IMF Strauss-Kahn will be in Berlin today to brief parliamentary leaders about the financial help package for Greece. The idea behind the briefing is to explain to MPs the consequences of a Greek default (i.e what are the second and third round effects) and why it is in the German interest to help."

Presenting the EU/IMF's strategic and tactical unit in action.

And so the Abacus fallout is about to hit precisely where the culprit for it all resides: the Federal Reserve Bank of New York. Could there be justice in this world after all? From Bloomberg: "Barofsky says the question of whether the New York Fed engaged in a coverup will result in some sort of action. “We’re either going to have criminal or civil charges against individuals or we’re going to have a report,” Barofsky says. “This is too important for us not to share our findings.” He won’t say whether the investigation is targeting Geithner personally."