Hayman Capital

When Takahiro Mitani, Chairman of Japan's $1.4 trillion Government Pension Investment Fund (GPIF) expresses concern over his country's mounting public debt, you'd better pay attention...

When I wrote last week about the emerging problems in foreclosures, I opined that the problem could get much bigger and more complicated. Boy, has it ever. It was noted how quickly this had morphed from a potentially isolated processing problem at a single institution (GMAC) to an industry-wide disaster that may threaten the very concept of securitization. That would be a major problem since at the top of the bubble, it was estimated that nearly 80% of all credit came from securitization.That’s a hole that no fleet of Fed helicopters can fill. - Art Cashin

Any readers who read the back and forth between Tyler and TRS should ask themselves, "But why didn't the Fund answer these important questions?". Hey, they may not be in a death spiral, but when you make what looks like desperate moves and your returns are spiraling at the same time your liabilities are soaring, all the while your risk is flying through the roof... One should expect a blogger or two to take notice, particularly those bloggers who can count.

The WSJ is out with a short piece about new rumblings coming from Japan's $1.43T public pension fund, Japan's Public Pension Weighs New Investments. If I may be so bold as to impersonate the Japan deflation-blogger Mish for a moment, let's take a look at a few of the dynamics at play as reported by the WSJ. I'll provide some commentary along the way.

What does Illinois have in common with Bear Stearns, Ambac Financial, LTCM and Greece? Come on fellas, let's roll the dice. I've got some pension money in case I come up snake eyes...

Zero Hedge is currently going through the 100 or so pages of just released Goldman emails that disclose in excruciating detail the events from late 2006 to late 2007 occurring in Goldman's mortgage trading business. We will have a lot more to say on this tomorrow, suffice to say that we were pleasantly surprised that C-BASS, which we uncovered recently may be implicated in the Goldman SEC fraud scandal, is again involved. We also feel bad for Harvard and MS Prop, and a little better for Hayman Capital. Stay tuned. In the meantime, we will take a brief detour into the financial yellow pages, as we focus on the curious case of Fabrice Tourre, who once again plays a prominent role in today's email discovery. The first thing that caught our attention is the original "Fab Fab" email, finally reproduced in its entirety. One tangent that may be relevant to gleaning some more insight into the character of the "fabulous" 27 year-old mortgage god, is that at the time he penned his email to girlfriend (#1), then Goldman co-worker, Marine Serres, he was likely also with girlfriend (#2) Fatiha Bouktouche, a Columbia University post Doc, to whom he may have been disclosing proprietary Goldman holdings and trades. Who knows to whom, when or how Fatiha may have leaked insider trades whispered to her by Fabrice, and who knows what CDO trades Marine was pitching to the retarded (and soon to be bankrupt) European banks gobbling up everything Goldman would sell them, structured and originated by her boyfriend.

An interesting opinion from Karl Denninger that I missed when it came out. Hat tip to reader Colin for pointing out. In a nutshell Zero Hedge disagrees with Karl's conclusion: his argument of reflexivity in pricing feeding collateral calls is an oversimplifcation.

Unlike the previous letter, this one actually is worth your time. Kyle Bass, the one man Spartan who took on the Xerxian hordes of sub-prime with his Hayman Capital (which has returned 6% in 2008, 9% in 2009 and is up 340% since inception), and won, shares some very valuable insight. Must Read.