Bloomberg reports that the big Swiss Bank, UBS, paid $160mm for (surprise-surprise) bid rigging in the muni market. I’m shocked.
The SEC has got the bit in its mouth on this one. From the head of the antitrust division, Christine Varney:
“The investigation is active and ongoing.”
The words 'active' and 'ongoing' has some folks crapping in their pants. How far will the SEC take this?
“When every municipality that has been victimized by this conspiracy receives restitution, we will conclude.”
Oh boy! A no stones unturned approach. My favorite. So who else is involved?
In November, James Hertz, a former JPMorgan Chase & Co. (JPM) banker also admitted involvement, and agreed to cooperate.
Three former employees of a General Electric Co. (GE) unit are fighting charges in the case.
This story is actually as old as the hills. The muni market has always
been fast and loose. I expect we will see a bunch of big names get
snared. Couldn’t happen to a nicer bunch of boys…
Terrible news for Greece all day. I can’t imagine that the charade can
go on much longer. I think the EU/ECB "Plan B" is soon to be announced.
It's not at all surprising to see that CDS spreads went on a tear given
the headlines. Greek spreads widened by a solid 4.9%. Spanish CDS was
up a very hefty 6.6%. But for me, the very concerning price move on the day was Italy. Spreads widened by (a scary) 7.9%.
IMHO Italy should not have been whacked as it was. I consider Italy to
be a core country. Yes, they have a lot of debt, but there is very
little of it outside the country. It does not matter a damn what I think. What’s important is what the market thinks.
Even after today’s pounding Italian spreads are still very low. But
this may be a developing story. One to watch out for. I don’t think
Italy having an "issue"
is at all priced into the global markets. If the market decides that
Italy is in fact an “issue” there are going to be some very big price
adjustments in currencies, bonds and stocks. Stay tuned.
Housing and Urban Development (HUD) had some positive news today. They completed their one-millionth home under the HOME program.
This is a nice story. The single Mom (and her three kids) have a (nice)
roof over there head at a price she can afford. Even I can’t be
critical of this outcome. One thing did catch my eye in the press
release:
Each
dollar of HOME funds leverages nearly $4 million in other public and
private investment with a combined $78 billion over the life of the
program.
One dollar leverages $4mm??? Not even the geniuses down on Wall
Street could dream up that kind of debt to equity ratio. Yet the head
of HUD, Shaun Donovan, brags about it.
The bottom line is that this good result is really about borrowed
money. It would be nice if we did some good things, and paid for it
once in a while.
The CBO
reports that the deficit in the first seven moths of fiscal 11’ was
$871b. That’s $70b more than the deficit was for the same period in
2010.
Of interest is that total federal receipts are up by $110b over the
comparable 10’ period (+70b of increased income taxes). So spending has
gone up by $180b YoY.
The total intake by the Feds comes to $1.3 Trillion. Spending was
therefore $2.2T. If one annualized this spending number it would come
to $3.8T. Well above the projected 3.6T. My conclusion(s):
-We are going to exceed the projected deficit by ~$150b.
-Federal spending in the next five months will slow down from the current pace and with it will come a weaker economy.
Unbelievable day (again) in the crude market. Brent is up 6% on the day. The President is blaming speculators. I think the specs are being beaten to a pulp. What I see is a market that is illiquid. A 15% drop in a week followed by a very hot Monday is not a good sign.
This level of instability in a commodity that is consumed to the tune of $3.5 Trillion a year means one thing. The price to end consumers has to stay high.
They are the ones who are paying the price for the big spike in Vol. To
me, this is just another risk premium the oil market has to pay. Oil
used to trade higher based on instability in Nigeria or Iran. Now it is
trading higher on instability in the futures pits. Fast markets are going to cost us.
I was on radio out of New Orleans today. The talk down there is the
rising Mississippi. One of the many problems this is causing is a
(potential) shutdown of the big gulf refiners. About 15% of refined
product consumed in the US comes from the area. How much this may impact supply is not clear.
Over the weekend I heard/read that the big drop in crude would lead to a drop at the pump. I think that is bunk. The greater risk is that it goes up to $5 rather than the chance it falls to $3.
Gulf delivery for sweet crude is back to $118. The US is paying Brent ++ for crude.
I have articles about space marines, zerg creep and cloaking devices, but I'm always looking for new ideas.
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We miss the posts and very educational thoughts from the more then average gallery of commenteers
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We miss the posts and very educational thoughts from the more then average gallery of commenteers.
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A few idea are usually distinct with me but incredibly specific.
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EU and the default of Portugal at the hands of the Finns, the crisis in Japan, JP Morgan, something that I think starts.
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Thanks they have the best interests of the taxpayers at heart. Currently, it just looks like a bank arb play on their litigation expense
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Osama event would somehow distract conspiracy theorists from the issues, they are saddly saddly saddllly mistaken, its just more ammo, and the stories about dragging Osama out of the freezer for this one time advantage...........
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I am not totally clueless but it is pretty complex. The issues I see discussed in almost every thread are: inflation/hyperinflation/deflation, the fed, Goldmann Sachs, Silver and Gold, other commodities, the EU and the default of Portugal at the hands of the Finns, the crisis in Japan, JP Morgan, something that I think starts.
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Osama event would somehow distract conspiracy theorists from the issues, they are saddly saddly saddllly mistaken, its just more ammo, and the stories about dragging Osama out of the freezer for this one time advantage
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same position experienced with a dour sailor's chord as living thread feels like insult being added to injury... there lies man's illusion of freedom. If we die grasping for gold we feel life was exciting while it lasted. If we die retching from cold we feel cheated before and after...to the same extent, double whammied.
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I might believe they have the best interests of the taxpayers at heart. Currently, it just looks like a bank arb play on their litigation expense which the politicians are employing to prolong the debt ponzi.
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Bruce, I asked you a question on your own blog, I saw the comment got posted up, but then this morning it was gone. I thought it was very weird. But I wanted you to know I visited your own site. I think ZeroHedge should give you a link and not just leach off your knowledge by the way........
Bruce, Do you have any thoughts on Silver miners post-Thursday???? I mean like cherry-picking for a portfolio, not the pussy-like buying ETF way.
The only good HUD is a dead and defunded HUD.
With 4,000,000 to 1 leverage - I could end world hunger, and HUD is writing press releases about helping a single family.
The stupidity of the civil servant who enjoys a guaranteed paycheck apparently knows no bounds, "Each dollar of HOME funds leverages nearly $4 million in other public and private investment with a combined $78 billion over the life of the program." This is non-sensical. Are they trying to imply that the entire cost to the taxpayer for a 20-year block grant program is $19,500? Or are they saying HUD has squandered $312,000,000,000,000,000 of combined public and private capital to place a million families in homes at an average cost of $312 billion per home?
When the DoJ seeks to indict the civil servants who irresponsibly colluded with the bankers to place the taxpayers they serve into an inescapable debt bondage, for the electoral benefit of the politicians- I might believe they have the best interests of the taxpayers at heart. Currently, it just looks like a bank arb play on their litigation expense which the politicians are employing to prolong the debt ponzi.
1.) So UBS settles for a few lousy days profits (which are largely paid by insurance coverage) with absolutely no criminal penalty nor a compensation to the issuers (read taxpayers) of munis defrauded.
Who said that gubamint weren't run by Wall Street?
2.) So essentially a HUD self-admitted taxpayer funded, supported and backstopped program with a 4,000,000:1 gearing ratio.
Who said that gubamint weren't run by Wall Street?
3.) Price of crude resumes upward trajectory in spite of plentiful supplies. Why? Maybe surpressing domestic sourcing whilst making enemies (well, making them bigger enemies than ever before) of offshore suppliers.
Who said that gubamint weren't run by Wall Street and Big Oil?
4.) Mississippi flooding. Due to anthropogenic global warming, necessitating additional user fees (read regressive taxes on the lower and dwindling middle class)
Who said that gubamint weren't run by Wall Street, Big Oil and Campaign Contributions?
5.) WTF, let's just invade another foreign sovereign country for shits and grins (hard taxed to find another logical reason... oh, wait, to enhance our ever tenuous domestic security)
Who said that gubamint weren't run by Wall Street, Big Oil, Military Industry and Campaign Contributions?
6.) And all's well that ends. Why bother anymore?
Gas prices went up where I live over the weekend. Aren't they supposed to drop when oil drops $15 a barrel? Oh, I forgot, not in Amerifraud.
the Miss Tsunami is hard to read, because the levels are high now in some places, doesnt' mean that they will affect those downstream. we know that the POTUS is absolutely corrupt. If Obama hoped (poor choice of words) that distracting the public with the Osama event would somehow distract conspiracy theorists from the issues, they are saddly saddly saddllly mistaken, its just more ammo, and the stories about dragging Osama out of the freezer for this one time advantage is going to backfire badly on them, the story lives on and on and on...
Another great post Bruce!! Milestones
Excellet Post Bruce as always... thank you for all your efforts and thoughts.
Great odds and ends piece Bruce.
What are the odds that the muni price rigging gets swept under the rug?
Without admitting guilt, of course.
So why isn't it possible for the individual issuers to go after the banks for individual torts?
Because the issuer has to go back to the market someday, and those bankers (different suit, same market maker) will make sure there's lots of static for the issuer fool enough to dare rock the banker's squeeze box.
...Settlement... ...Criminal...
Do all criminals get a settlement option, or only those with connections in high places?
THANK YOU - BRUCE !
Federal receipts are up because of Roth conversions--they got plenty of my money.
Bruce...informative as usual. Thanks. I think that the reason that Spain and especially Italy CDS spreads went crazy up is that there is a thread in the market that says there has to ultimately be a 2 tier Euro.
The Buba based Euro and the Club Med Euro. The PIGS (ex Ireland) need their own currency (and a weak one at that). All PIGS bond holders get a 50% one time haircut, and then life goes on.
The Germans will not put up with the bs from Greece now, and then Spain and Italy (Portugal is small) later.
It is the most rational "solution" given the fact that it is pretty much accepted that these countries could never even make a dent into their debt (or even debt service).
This I suspect, is why the EUR/USD was actually finished a few pips stronger today despite the PIGS CDS getting slaughtered.
It is true that there is no other place where more intelligence gathers around the subject of the ONGOING Fukushima catastrophe then here at Zerohedge. Big gracious thanks for that Mr Tyler. We miss the posts and very educational thoughts from the more then average gallery of commenteers.
Here is more evidence of the ever growing cover up:
Deadly Silence on Fukushimahttp://www.huffingtonpost.com/vivian-norris-de-montaigu/deadly-silence-o...
I would strongly urge anyone with children/grandchildren to read this report. F--- Osama and Bummer; read this and get pissed as I am!! Milestones
edited/deleted. Important but off topic and a distraction. Sorry Bruce.