Fail

There was a time when the US would not guarantee the existence of every bank in perpetuity. When weak organizations, with or without untenable balance sheets would have to adapt to survive or simply disappear. It was known as capitalism. And it was about to change completely. However before it did, in those fateful nights before Lehman was not given the taxpayer capital "get out of bankruptcy free" card that Hank Paulson and Ben Bernanke subsequently handed out with such abandon to all other financial firms, Dick Fuld attempted to warn Chairman Ben and Secretary Hank about what would happen if Goldman got its wish of destroying its number one competitor in fixed income capital markets.

The failure by HSKAX and HFRXEMN indices to generate any profits YTD indicates that traditional market neutral players are in peril of being markedly redeemed, or are currently in process. Who steps in to fill in the void is anybody's guess although some assumptions can be made.

Because nothing bad could ever possibly come of this...

"While [your] scare tactic may work in Chicago, it will not work to intimidate me or other Members of the United States Congress."

- Darrell Issa to Rahm Emanuel

If you answered “C) Both of the above”, not only would you be correct, you'd have the logical reasoning skills required to be a decabox pundit on a respected financial news network.

For people who have forgotten what asset diversification looks like, do not look at this chart to be reminded. All asset classes over the past three days have ploughed higher, contrary to any possible logical argument. But such is our market.Cash out of bonds into everything else... inverse... rinse... repeat. One wonders just how much excess liquidity is trapped in the market.

Also, when it seems like Steve is about to crack in "explaining how we live and how the system is set up", Melissa storms to the front, providing that critical second wind of intellectual superstardom. Michael Pento must still be shell-shocked from that episode.

In what is an interview for the ages, CNBC's Melissa Francis takes on DB's Chief Economist Joe LaVorgna, stupefies him (and whatever watchers the comedy channel might have left) with a definition of inflation taken straight out of Cosmopolitan, tells him he has lost all credibility (4:20 into the clip), rewriters the first chapter in Econ 101, and ploughs on even after permabull Kudlow tells her to shut up. Priceless (in both a deflationary and Cosmo's inflationary world).

The recent addition of legacy loans to TALF caused CMBX spreads to turn on the nitrous and rip like all the commercial real estate concerns over the past 6 months have disappeared (especially in the top-most AAA tranche). Between financials, whose stocks have doubled on average, and CMBX (whose spreads have halved), there is, at this point, no doubt as to what lengths the administration is willing to go to funnel every single printed dollar into these otherwise doomed industries.

hat tip Verne

Bill Gross' recent foray into a shadow government role may be just in time to avoid the depression from spreading onto the green, green grass of the Newport Beach country club.

Bill Gross' recent foray into a shadow government role may be just in time to avoid the depression from spreading onto the green, green grass of the Newport Beach country club.