Archive - Dec 8, 2009 - Story

• Asian shares were mostly lower Tuesday with bank stocks weighing on some markets.
• Bernanke reaffirmed plans to keep interest rates near zero for "an extended period".
• Bernanke sees 'formidable headwinds' for economy on tight credit, job woes.
• China’s stocks fell for the first time in three days, led by raw-material producers.
• Consumers shed debt for the ninth month in October, but at a slower rate.
• Dubai stocks tumble most in world on Nakheel debt restructuring concerns.

This morning is sovereign morning here on Zero Hedge. Having looked into Dubai the United Kingdom, and Moody's non-assessment assessment of the Aaa gang, we explore the popular notion that treating with deep skepticism the economic pronouncements released by the sovereigns of developed, "western" economies (or their nearest approximation) is something for the "tin foil crowd." Despite the tremendous temptation presented to sovereigns in their role as not only issuer and regulator of debt, but the supervising authority overseeing financial reporting (and the absence of an authority empowered to enforce creditor's rights) it apparently seems quite beyond comprehension to wonder if a bit of rose colored lensing isn't being applied.

What might we discover in an audit of the Federal Reserve? Well, let's ask Her Majesty's Treasury, which, imagine this, actually released details of the assets dumped from the holding tanks of Royal Bank of Scotland into the cesspool of the United Kingdom's "Asset Protection Scheme." As a bit of background, perhaps you might frame things thus: RBS is to APS as Citi is to TARP (probably stuck in it for life). (That would make Lloyds Goldman, we suppose).

Not to be left out of the party, Morgan Stanley yesterday issued "A Closer Look at Dubai's Debt."  True, they figure that GRE's (government-related entities) are saddled with about 116% of Dubai's GDP in debt, true, if the government shifted implicit support to explicit support for these entities interest expense could account for a third of government spending very quickly, granted, total public sector debt looks like 140% of GDP (assuming no major GDP falloff of course) yes a 40-50% haircut would be required to have a meaningfully effectual impact on the debtor's predicament, but you should be selling five year credit default swaps on Dubai debt because Morgan Stanley is buying things really aren't so bad.

RANsquawk 8th December Morning Briefing - Stocks, Bonds, FX etc.

The passage of time, in addition to being subject to dilation through the effects of e.g., relative velocity, also suffers numerous perceptual contortions depending on the observer's particular state of mind. For the purposes of day to day affairs, most humans not at relative velocities to their immediate surroundings that reach a significant fraction of the speed of light, would find these subjective changes normally accounting for the largest perceived deltas in the passage of time ("a watched pot never boils, etc.") Of course, as with most of the laws of nature, the regina scientiarum and, if you believe their analysts, even the laws of thermodynamics, when it comes to the ratings agencies, all bets are off and mere humans unable to shift their perceptions into rates more in line with geologic observations will be doomed to frustration and folly. So it is this morning with Moody's, which has, ever so subtly, maybe warned of what might someday develop into conditions that, in exactly the right environment, could potentially result in a downgrade for the Aaa rated United States and the United Kingdom... maybe sometime around 2013 or so, maybe. (Proving once and for all that Moody's finally fired analysts John Cusack and Amanda Peet).

Zero Hedge has come across what could well be Jeff Gundlach's swan song as TCW. While we are still investigating the curious circumstances surrounding Gundlach's unceremonious firing, and subsequent departure of his closest lieutenants, we leave readers with this last masterpiece from the mortgage bond expert while still a TCW employee.

Goldman's tentacles are smart, and know all about contingency planning. With so much of the firm's future strategy contingent on Cap And Trade derived profits, the firm is hedging for a downside case scenario. The attached presentation by the Environmental Protection Agency is just the fall back plan. UEA debate notwithstanding, the EPA, after "careful consideration of the full weight of scientific evidence and a thorough review of numerous public comments received on the Proposed Findings published April 24, 2009" has found that "six greenhouse gases taken in combination endanger both the public health and the public welfare of current and future generations." Truly an opportune timing for the EPA to come up with this, seeing how suddenly scientific evidence does not really mean as much as it used to...oh, one month ago. And not to mention that whole Goldman/Cap And Trade backlash of course.