Administration Declares GSE Model "Dead", Increases Down Payment Requirements, Sends Gold To Highs Of WeekSubmitted by Tyler Durden on 02/11/2011 08:53 -0500
As the Treasury releases its long-awaited GSE report on "Reforming America's Housing Finance Market" the one asset class that moved is gold. The reason: D.C. proposes, very tentatively, to decrease the role of the government in GSEs, as rumored previously, considering that the banks would love to get an ever greater piece of the securitized GSE action. Not helping is the soundbite from the administration: ""The GSE model is dead," an Obama administration official
told reporters as the Treasury Department released a
long-awaited report on options to revamp housing reform.
" As Reuters reports: "The housing "white paper" presents three different visions for replacing mortgage finance giants Fannie Mae and Freddie Mac, which are set to be slowly wound down. The paper does not make a single recommendation, but broadly outlines alternative possibilities to reduce the government's role in the mortgage market. That strategy aims to "open a dialogue with Republicans that would lead to a consensus outcome within a couple of years," said Michael Barr, a professor at the University of Michigan and a former Treasury Department official." In other words, just like the findings of the president's commission on the deficit, this paper will be glossed over by a bunch of beltway politicians and then promptly forgotten as whatever the banking lobby wishes to happen behind the scenes, happens. As for actionable proposals, the paper core recommendation is "increased guarantee fee pricing, increased down payment requirements, and other measures – to bring private capital back into the mortgage market and reduce taxpayer risk."
How Hank Paulson Broke The Law: "This Will Be A Disclosable Event And We Do Not Want A Disclosable Event" - Parsing The Ken Lewis "MAC" DepositionSubmitted by Tyler Durden on 02/06/2011 18:47 -0500
Among some of the discoveries of the financial crisis is that the entire financial system is now, following the Lehman bankruptcy, built entirely on fraud. And while Ken Lewis may spend the remainder of his days on some private island with stolen taxpayer money providing for his every last wish, it was he, in following the Fed's and the Treasury's orders to make a mockery of fiduciary responsibility, that was among the first people to confirm that there is no rule of low in America, or rather whatever law there is, it only applies to the less than immortal (i.e. the sub-banker class). Below, in an indication that Zero Hedge will never forget, we present the salient highlights from the Ken Lewis deposition on the MAC clause surrounding the Merrill transition, emphasizing the threats from Hank Paulson and Ben Bernanke. For as long as neither of these three is in jail for what is documented shareholder (and taxpayer) fraud, we fail to see why the remaining 300+ million Americans continue to diligently pay their share of taxes into a government that is now beyond (and in full documentation) corrupt. Also, how BofA's lawyer Wachtell was not at all present during the discussion of the MAC clause, makes a complete mockery of the US legal process in its entirety. We wonder just when the official scribe of the kleptocracy, Andrew R. Sorkin, will write a book disclosing the truth of what happened, including a listing of all the laws broken with full premeditation by every single player, and not the watered down, PG13 (and rather expensive)version that makes everyone come out like a law-abiding superman.
Let’s pretend the US is a company...
To my way of thinking, you only own Gold if you OWN Gold. By this I mean you have REAL ACTUAL GOLD in your hands, NOT a claim on Gold that someone else CLAIMS is exists. After all, the paper-based Gold ETFs are all run by large banks that claim to have enormous warehouses of Gold. Seeing as these institutions are all lying about the toxic debts, off-balance sheet assets, and more… what’s to stop them from lying about their bullion reserves?
Now, $1 trillion is a tough number to get your head around. Here’s a little visualization to help you…Imagine you had a stack of $1,000 bills. $1 million would be a stack eight inches high. $1 billion would be over 800 feet high (think of the Washington Monument). And $1 trillion would be a stack 142 MILES high.
Tracking The Gold "Conspiracy" - GATA's Must Read Presentation To The Cheviot Asset Management Sound Money ConferenceSubmitted by Tyler Durden on 01/29/2011 13:45 -0500
GATA has compiled what is probably one of the best and most comprehensive reports on the history of the gold market, the "special" place gold holds in the central bankers' world, the interaction between the physical and gold paper markets, and the documented historic evidence and definitive proof that the gold price has long been the most manipulated concept in the history of modern capital markets. Must read for all interested in the dynamics behind the price of gold.
Expect dire reactions by financial markets when the US debt/GDP ratio soon tops 100%. With the current spending trajectory and the new tax compromise, total debt will reach $23 trillion by 2020, or some 160% of today’s GDP, 1.6 times the WWII peak. China and Japan might even demand a retreat from our $150 billion a year commitments in Iraq and Afghanistan to protect their bond holdings. Who were the real big spenders?
Watching Obama deliver his State of the Union Speech last night, reminded me of all the rah-rah quarterly meetings that we had to attend as Managing Directors at Goldman, where senior management would remind us all of how great we were, and if there were any areas of competitive weakness relative to our adversaries at other banks, all we had to do was step up our game, innovate and globalize (or something like that.) Obama wasn't delivering a summary of what has, or is, going on for most Americans last night, no such negative status report. And, if you didn't expect him to, he gave good speech - full of reminders of how it is America's destiny and the American dream to be great and powerful, "robust democracy" that we are. There was a massive pink elephant in the room called reality though....My reaction was wtf?
Whispers Of The Inevitable Unwind Of The Fed's SFP Program And The Ensuing $200 Billion Liquidity Injection CommenceSubmitted by Tyler Durden on 01/25/2011 16:30 -0500
It was less than 24 hours ago when we first suggested that the Fed's Supplementary Financing Program is about to end. In addition to providing a $200 billion debt ceiling buffer (which the government will fill up in about a month), we noted that the end of this program, which was previously introduced to gradually phase out the ridiculous (in Q1 2010) amounts of liquidity, would provide an additional $200 billion in excess liquidity over a two month period, or effectively doubling the impact of POMO, which monetizes roughly $110 billion in bonds per month. Specifically, we said: "We are confident the US Treasury will announce that beginning with the week of February 14, it will no longer roll maturing 56-Day Cash Management Bills, which means that for the ensuing 8 weeks, one on every single Thursday, there will be a total of $200 billion in incremental liquidity flooding the market, and probably sending stocks, commodities, and everything else that is not nailed down into the stratosphere all over again." Today, Bloomberg has a full story on just this topic, which discusses precisely the end of the program. It is safe to say that within 2-3 weeks, the SFP unwind will commence, and the market will price in another $200 billion in additional free liquidity, which in turn will lead to excess bank reserves surging to about $1.7 trillion in the next 4 months, 70% higher from where they are now. If you think the market is worried about inflation now, wait until June. And that excludes that virtually certain QE2+ announcement: there is no way that the Indirects can shoulder the burden of buying $3-4 trillion in US Treasuries over the next 2 years. The Fed will have no choice but to continue monetizing everything.
Government Says No to Helping States and Main Street, While Continuing to Throw Trillions at the Giant BanksSubmitted by George Washington on 01/13/2011 16:19 -0500
How is the government STILL bailing out the giant banks? Let me count the ways ...
New Jersey’s pension fund has gained 8.7 percent so far this fiscal year, but it won't make a dent in its funding status. And Illinois is getting ready to sell more pension obligation bonds...
Zero Hedge is happy to announce a new collaboration with the precious metals experts at Gold Core. We look forward to posting periodic industry updates, notes, analysis and commentary in conjunction with GC on all matters of topical significance in the PM space. As an introduction, we would like to present GoldCore's review of 2010 and Outlook for 2011. A sample from the analysis: "Should the dollar and other debt laden currencies and government bonds fall sharply in value due to a panic and wholesale liquidation we could experience hyperinflation. In this scenario paper assets will be shunned and people will protect themselves by buying hard assets such as real estate, commodities and gold and silver bullion. In such a scenario, gold and silver surge would quickly reach their inflation adjusted 1980 high of $2,300/oz and $130/oz before overshooting to much higher levels as was seen in Weimar Germany and more recently in Zimbabwe."
Timmah's MAD - Redux: "US Could Hit Debt Ceiling By March 31", Sends Very Scary Letter To "Dear Mr. Leader" Harry ReidSubmitted by Tyler Durden on 01/06/2011 10:50 -0500
As we predicted in September, the US, which is issuing debt at a clip of about $125-150 billion per month (in line with the Fed's monetization of every single newly printed dollar of debt), will likely hit its debt ceiling as soon as March. We finally get confirmation from none other than tax expert Tim Geithner, who in continuing his tirade of scaring the bejesus out of anyone dumb enough to listen to him , has just confirmed our concerns. Not only that, but he has also written a letter to Dear Mr. Leader Harry Reid in which he uses big and scary words to make it clear just how fucked this country is if it can not issue about $2 trillion in debt each and every year. Because the only way to avoid bankruptcy is, as Joe Biden once said, to issue way more debt.
Hidden tax ...
"There's a Huge Difference Between What is Good for American Companies Versus What is Good for the American Economy"Submitted by George Washington on 12/30/2010 14:13 -0500
Where have all the jobs gone? Oh ...