Archive - Jul 2, 2011
Save The World?
Submitted by Leo Kolivakis on 07/02/2011 20:44 -0500Hooked up with a buddy of mine who flew into town. Our interesting conversation covered blogging, bankers and regulation, BRICs, oil, interest rates, deflation, the next crisis, Greece and the Greek bailout, ratings agencies, Canada, and lots more. Enjoy!
Russia Discovers American-Style "Capitalism", Completes Record Bailout Of Fifth Largest Bank
Submitted by Tyler Durden on 07/02/2011 19:30 -0500Just in case there was any speculation that American-style communism as any different from Russian-style capitalism, any concerns that the Bernanke put has now gone airborne can be put to rest. As the BBC reports, "Russia's fifth largest bank, Bank of Moscow, has been given the biggest bail-out in Russian history." The hilarity ensues: the $14bn rescue came after another bank, VTB, gained control through a hostile bid, only to uncover bad loans valued at $9bn - a third of the bank's assets. So let's get this straight: VTB bid a premium to the equity price only to find out that not only was the entire market cap worth nothing, but that the purchase could have been completed by buying up Bank of Moscow's bonds at 66% cents on the dollar, promptly followed by a debt for equity swap, in which the bulk of the debt could have been equitized, and the resulting company could have been a lean mean lending machine, without a single taxpayer cent spent. Instead, Russia took the American way out, and pretended assets are worth something. Under the rescue deal, the Russian central bank will provide a 295bn rouble ($10.6bn) 10-year loan at a negligible interest rate to Bank of Moscow. But that's not all: Bank of Moscow's former head, Andrei Borodin, has fled the country, and a warrant has been issued for his arrest. And to think that only a week ago the head of the Afghanistan Central Bank Fitrat, who "obviously" is absolutely innocent of all allegations he stole hundreds of millions from Bank of Kabul, escaped to the US. And to keep some illusion as to which countries are now final destinations to exiled global kleptocrats, Borodin has decided to run away to London, until such time as he takes over some Goldman Sachs M&A banker in the New York office. And how you know how capitalism works under central planning.
Guest Post: Where The Cops Actually Treat You Like A Human Being…
Submitted by Tyler Durden on 07/02/2011 19:12 -0500When is the last time you shook a policeman’s hand, appreciative of the good work he had done for you? I live in Chile and I just did so. In North America, I would never think of doing the same thing. Cops are to be feared there. They are not helpful allies in the fight against crime. A North American is more likely to be victimized by the police rather than helped by them. In Europe, citizens are more likely to be clubbed than supported. YouTube is full of police abuse in the developed world; it is becoming a common reality of a politically correct society rather than a shocking exception. These uniformed thugs break down doors and intimidate innocent people. They plant GPS tracking devices on the cars of private citizens. They arrest people for dancing, arrest them for having a “bad attitude,” harrass people for taking photographs, and otherwise go out of their way to threaten what they are charged with protected. In Chile, things are different. Not only are the cops not corrupt like they are in every other Latin American country, they are actually helpful and efficient. Examples abound.
CHaRTS THaT DoN'T Lie
Submitted by williambanzai7 on 07/02/2011 13:28 -0500The map is not the territory, buy these charts don't lie...
The Declaration Of Debt Independence
Submitted by Tyler Durden on 07/02/2011 13:19 -0500When in the Course of global economic events, it becomes necessary for a people to dissolve the corrupt chains of financial burden which have shackled them by means of indebtedness to the whims of the global banking elite, and to assume among the monetary powers of the earth, the solvent debt free station to which the Laws of Gravity and of Nature's God entitle them, a healthy disrespect to the opinions of Keynes, Croesus, Bernanke and JP Dimon requires they should declare the causes which impel them to the dissolution....But when a long chain of bankster douche weasel abuses, swineful swindling exploitations, and odious derivative usurpations, pursuing invariable the same Ponzinomic Objectives evinces a design to reduce them under absolute Kleptofraudtocracy, it is their right, it is their duty, to throw off such corrupt feckless Government, and to provide new Guards for the welfare and financial security of the Republic and its future generations.
Guest Post: Lives, Fortunes And Honor
Submitted by Tyler Durden on 07/02/2011 13:06 -0500Of those 56 who signed the Declaration of Independence, nine died of wounds or hardships during the war. Five were captured and imprisoned, in each case with brutal treatment. Several lost wives, sons or entire families. One lost his 13 children. Two wives were brutally treated. All were at one time or another the victims of manhunts and driven from their homes. Twelve signers had their homes completely burned. Seventeen lost everything they owned. Yet not one defected or went back on his pledged word. Their honor, and the nation they sacrificed so much to create is still intact...The 56 signers of the Declaration Of Independence proved by their every deed that they made no idle boast when they composed the most magnificent curtain line in history. "And for the support of this Declaration with a firm reliance on the protection of divine providence, we mutually pledge to each other our lives, our fortunes, and our sacred honor."
The (Zero Hedge Reader) Annotated Krugman
Submitted by Tyler Durden on 07/02/2011 12:33 -0500
(In)famous artist Geoffrey Raymond has found a brilliant and 100% margin-generating scheme for boosting the prices of his trademarked annotated paintings: he opens them up for indirect commentary to the Zero Hedge community, which are then subsequently superimposed on to the painting itself. It worked for Jim Cramer, it worked for Ayn Rand, and now, it will work for Krugman (or rather the proud owner thereof). Black and White Krugman. Of course, in the process Raymond has made our prediction from two years ago that his work will be among the best IRRing cash allocation opportunities around, with recent clearing prices generating a triple digit investment CAGR for those who followed our January 2009 advice. So without further ado, here is Raymond's still unfinished Krugman, where the most eloquent ZH comments will take their rightful place. And P.S. no stimulus, fiscal or monetary, was wasted, or monetized, in the creation of this portrait.
Tim Geithner's Cover Letter To Goldman Sachs Leaked
Submitted by Tyler Durden on 07/02/2011 11:42 -0500As Zero Hedge readers predicted by a margin of more than nearly three to one, Tim Geithner's next employer of choice, per bnet's Constantine von Hoffman, is none other than the universal viceroy-cum-vampire squid presiding at 200 West according to a just "leaked" letter. And while we all know the key resume highlights (issuing $1.5 trillion in debt a year for the duration of his tenure, mopped up on both sides by Quantitative Easing, bringing America to the verge of insolvency and living on an "auction to auction" basis), here is the summary of Geithner's key qualifications that make him a shoo in for the job.
Guest Post: Reaching For Yield And Clubbing Baby Seals
Submitted by Tyler Durden on 07/02/2011 11:26 -0500In any period of ‘reaching for yield’ the market sees a gradual shift as investors move out the curve, purchase weaker credits, or dabble in structured products. These are not their usual “comfort zone” of investing. Someone used to investing in 3 year risk, is not used to the volatility of investing in 10 year bonds. The investment grade investor may not fully understand the convexity of callable high yield bonds, not the impact of secured loans above you in the capital structure. Worst of all, the straight bond investor who takes a punt on some structured assets may not fully understand the asset and over estimate the liquidity in bad times by orders of magnitude. These shifts are generally very gradual. It takes investors awhile to get comfortable with the increased risk. As the asset class performs, the investor is more confident in their decision making, and likely has even more need to reach for yield, so they add more money to areas outside of their core competency. Then, one day, almost out of nowhere, something sparks a sell-off. It is almost as though one day the asset class is great, the investor is smart, and the next day, the market is selling off and the investor has no idea why. If it was an area they were experts in they might assess the market carefully and decide to retain their position, or even add. But in a market that they don’t have much experience, the declining price creates fear, and ultimately, it is impossible for the investor who reached for a few extra bps to bury the sensation that they could lose far more money than they hoped to make. Those few extra bps, which the investor viewed as so important, just a short while ago, were only available because this investment was MORE risky. That risk now becomes too much and the investor joins the selling parade, creating a sharp sell-off.
Summarizing The First Half And The Last Scorching Week In Pictures And Charts
Submitted by Tyler Durden on 07/02/2011 10:55 -0500Goldman's David Kostin, who last week was warning about the combustible effects of a hedge and mutual fund space underperforming the general market, has again found his bearings after a week which saw the biggest move in the market in two years, primarily courtesy of an unprecedented and very much delayed shift out of bonds and into any other asset, marking the end of QE2 and substantial uncertainty as to who will buy government issuance in the future. However, the future is a topic for another day. Here is a brief recap of the past: "S&P 500 ended 2Q almost unchanged from the start of April, but has returned 6% YTD. Looking back, Health Care was the major surprise, surging 14% YTD followed by Energy at 11%. Financials was the only sector to post a negative return, falling 3%. Largecaps lagged with S&P 100 returning 5% and Russell 2000 advancing 6%. Looking ahead, macro uncertainty abounds in Europe (sovereign debt), Japan (earthquake recovery), China (inflation pressures), and US (debt ceiling and budget negotiations). However, at the micro level we expect S&P 500 EPS will establish a new high of $96 and lift the index to 1450, a return of 10% in 2H."
Dumb, Silly, Sad and Ridiculous
Submitted by Bruce Krasting on 07/02/2011 10:43 -0500Odds and ends.
Sol Sanders | Follow the Money No. 73 | Obama energy strategy: one part black magic, two parts propaganda
Submitted by rcwhalen on 07/02/2011 07:13 -0500In his June 29th press conference, the President again singled out rebates to push U.S. fossil fuel production in his demand for tax increases for an economy already threatened by double-dip recession. The proposal compounds regulatory mischief: blocking oil and gas in the Gulf of Mexico while Chinese and other foreign companies drill off Cuba almost within sight of Florida beaches, forfeiting 250,000 jobs.






