B+

This is the weirdest “bubble” I have seen. 

Brown could face up to seven years in prison for each count. DOCX could be fined up to $10,000 for each forgery conviction and $2,000 for each false declaration...

As US financials continue to surge, the far-reaching impacts of the simple-sounding-yet-inordinately-complex Dodd-Frank bill are perhaps still not appreciated by all. BusinessWeek have done us all a favor by creating the One Chart that explains it all (with a tongue-in-cheek overlay). Whether you are a B.S.D. prop desk, a homeowner, a filthy rich CEO, a bank, or a mortgage provider, there is a little 'shared sacrifice' here for everyone in the easiest-to-grasp graphic on the lengthy bill we have seen yet.

After the announcement of the Seaway reversal back in November 2011, a development which some say was oddly anticipated by the market, the Brent-WTI spread collapse from a near record $30 to just $7 in the span of three months. Further alleviating tensions was the fact that Italy is now once again back firmly in control of Libyan Brent production. Yet recent developments in the Persian Gulf, and elsewhere, have led to the Brent-WTI spread trade becoming an energy trader's widowmaker yet again, as it has doubled from $10 to $20 as of early this morning in less than a month. What happens next, and what are the implications for the energy market as a result of the violent move wider? Here is Goldman's David Greely with some observations and some suggestions.

One of the most ominous developments for us personally crawled out from under its rock in November. Again without any public debate, DHS unleashed its National Operations Center's Media Monitoring Initiative. Yep, it's exactly what it sounds like: The NOC's Office of Operations Coordination and Planning is going to collect information from news anchors, journalists, reporters, or anyone who may use "traditional and/or social media in real time to keep their audience situationally aware and informed." Thus Washington, D.C. unilaterally grants itself the right to monitor what you say. Doesn't matter if you're the New York Times, Brian Williams, a basement blogger, an online whistleblower, or known government critics like ourselves. They're gonna take note of your utterances and file them away for future use. Journalists are not the only targets, by the way. Also included among those subject to this surveillance are government officials (domestic or not) who make public statements; private-sector employees who do the same; and "persons known to have been involved in major crimes of Homeland Security interest," however large that umbrella might be....The larger speculation is: what's the endgame here?

It appears that Greece will not even have to wait until the dreaded March 20 funding D-Day. As was earlier reported, Greek PM Lucas Papademos may resign if he is unable to persuade his coalition unity government to agree to further Troika demands for additional austerity. It now appears that there will be no agreement, and thus the primary demand from the Troika for further cash disbursement will not be met. The FT reports: "All three party leaders in Greece’s teetering national unity government have opposed new austerity measures demanded by international lenders, forcing eurozone finance ministers to postpone approval of a new €130bn bail-out and moving the country closer to a full-blown default. Representatives of the so-called “troika” – the European Commission, European Central Bank and International Monetary Fund – have demanded further cuts in government jobs and severe reductions in Greek salaries, including an immediate 25 per cent cut in the €750 minimum monthly wage, before agreeing the new rescue. But representatives of all three coalition partners, including centre-left Pasok of former prime minister George Papandreou and the centre-right New Democracy of likely successor Antonis Samaras, said they were unwilling to back the government layoffs." Now we have been here before, and as a reminder the last time Greece threatened to pull out of Europe with the G-Pap referendum threat back in the fall, G-Pap was promptly replaced with the Trilateral Commission member and former ECB Vice President, Lucas Papademos. The problem is that for him to obtain power, he needed to form a coalition government. Well, that now appears to be in tatters, as not one party is willing to break to the Greeks that the minimum wage of €750 will be cut even further. The question is who will blink first this time, as it is quite likely that neither the Troika nor Greece want an out of control default. Unless, of course, this was Germany's plan B to the imposition of a Greek commissar all along...

Was the Chapter 11 Petition of MF Global Holdings filed fraudulently?

The most eagerly awaited IPO of the decade has just filed its S-1 statement (link). Some real time observations:

• Symbol: FB
• Proposed maximum aggregate offering price: $5 Billion
• 845 million monthly active users (MAU)
• 483 million daily active users (DAU)
• Users generated on average 2.7 billion Likes and Comments per day in Q4 2011. Er..."liking" is monetizable?
• 100 billion friendships
• 250 million photos uploaded per day
• FB generated $3.7 billion in Revenue in 2011, up from $2 billion in 2010
• FB generated $1 billion in net income in 2011, up from $606 billion in 2010, a 40% growth rate, compared to the 165% growth rate from 2009's $229MM.
• EBIT margin peaked at 52.3% in 2010 ($1MM in EBIT on $2 billion in revenue), has since declined to 47.3% or $1.756Bn on $3.711Bn in Revenue
• $3.9 billion in cash and marketable securities
• Peaked model? - MAU additions peaked in 2010 when FB added 248MM to a total of 608MM; in 2011 it added 237MM to 845MM

Listen to the Landlord in Chief lay out his REO to LBO plan live and in stereo. Since everyone will end up paying for it, directly or indirectly, sooner or later it probably is relevant.

All you need to read.

No sooner have the supposedly close (and yet so far away) Greek debt negotiations increased haircuts but added desperate incentives such as GDP Warrants, then The Guardian is reporting that Greek PM Papademos is calling crisis meetings with Greek political party leaders as tensions are clearly growing between Greeks and their EU overlords/partners. The 'increasingly intransigent' negotiating team sent by Brussels is demanding even more severe austerity measures before sanctioning the new bailout funds. The incredulity at the complete mis-communication and increasing bifurcation is nowhere more clear than the divergence between FinMin Venizelos saying "We are one step [away]. I would say it is a formality away from finalizing (the debt relief agreement)," and the disbelief by Greek MPs that "The troika doesn't appear to be willing to accept any concessions whatsoever on reducing the minimum wage and scrapping bonuses," said the government aide. "No political party is willing to move either, saying wage cuts are a red line they are simply not going to cross. You tell me how this is going to be resolved. We have no idea and we're very worried."

It was only logical that following its most profitable year in history, the world's most successful hedge fund (by absolute P&L), which generated $77 billion in profit in the past year, would follow up with mass promotions. In other news, it is now more lucrative, and with better job security, to work for the FRBNY LLC Onshore Fund as a vice president than for Goldman Sachs as a Managing Director. Also, since one only has to know how to buy, as the ancient and arcane art of selling is irrelevant at this particular taxpayer funded hedge fund, think of all the incremental equity that is retained courtesy of a training session that is only half as long.

Brussels may be striking, but its caterers sure are as busy as possible: with another informal meeting (which is a euphemism for useless) of the European Council members set to begin in under an hour, and with nothing out of the IIF negotiations contrary to expectations, look for the market to sell off at 7pm CET as Europe announces that the confusion is just as palpable as any time during 2011.

Update 2: the first local headlines are coming in now, from Spiegel: Griechenland soll Kontrolle über Haushalt abgeben (loosely Greece must give up domestic control)

Update: Formal Greek annexation order attached.

It was tried previously (several times) under "slightly different" circumstances, and failed. Yet when it comes to taking over a country without spilling even one drop of blood, and converting its citizens into debt slaves, Germany's Merkel may have just succeeded where so many of her predecessors failed. According to a Reuters exclusive, "Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday." Reuters add: "There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough," the source said.' So while the great distraction that is the Charles Dallara "negotiation" with Hedge Funds continues (as its outcome is irrelevant: a Greece default is assured at this point), the real development once again was behind the scenes where Germany was cleanly and clinically taking over Greece. Because while today it is the fiscal apparatus, tomorrow it is the legislative. As for the executive: who cares. At that point Goldman will merely appoint one of its retired partners as Greek president and Greece will become the first 21st century German, pardon, European colony. But at least it will have its precious euro. We can't wait until Greek citizens find out about this quiet coup.

GGP part deux, as the hopium high sold by US regulators that allowed banks and borrowers to pretend bad loans were good wears off and reality sets in..