Treasury Department

Warning! Highly controversial post. Long. Thick (with information) & HARD [hitting]! Thus if you are easily offended by pretty women, intellectually aggressive brothers in cognitive war garb, government regulators selling you out to the highest European bidder, or cold hard facts borne from world class research not seen in the sell side or the mainstream media, I strongly suggest you stop reading here and move on. There is nothing further for you to see.

Just starting on C-SPAN 2 is a new hearing on Obama's Solargate, Solyndra, which today will focus on the question of whether the Solyndra loan restructuring broke the law. From CSM: "Newly released emails show that the Treasury Department was concerned that the loan restructuring, approved earlier this year, could violate federal law. The deal was structured so that private investors moved ahead of taxpayers for repayment on part of the loan in case of a default by Solyndra. Administration officials have defended the loan restructuring, saying that without an infusion of cash earlier this year, Solyndra would likely have faced immediate bankruptcy, putting more than 1,000 people out of work. Leaders of the House Energy and Commerce Committee say the hearing Friday will focus on whether the Energy Department broke the law when it agreed to restructure Solyndra' s debt in February. The lawmakers cite emails showing that Mary Miller, an assistant treasury secretary, said the deal could violate the law because it put investors' interests ahead of taxpayers. Miller told a top White House budget official that she had advised that any proposed restructuring be reviewed by the Justice Department before it was approved. "To our knowledge that has never happened," Miller wrote in an Aug. 17 memo to the White House Office of Management and Budget. Rep. Cliff Stearns, R-Fla., called Miller's memo "startling" and said it appears that DOE violated "the plain letter of the law" in approving the restructuring. "We need insight into Treasury's role in reviewing this loan guarantee," said Stearns, chairman of the energy panel's subcommittee on oversight and investigations." Learn more in today's hearing.

Parts of Thailand have experienced terrible flooding lately, and much of the country’s production shut down as a result. Thailand makes everything from tire factories to hard disk drive manufacturers to rice… and given the slowdown in the economy, it couldn’t have come at a worse time. Not to worry, though, the government has a plan to fix it. Let me explain: Thailand’s central bank is sitting on roughly $212 billion in net foreign reserves right now. That’s up 37% from last year and nearly 80% from 2009. Curiously, it all starts with Ben Bernanke.

All you need to read.

All you need to read.

Just who is watching who? We're watching them is the answer

In an amazing story by the WSJ Blog - Real-Time Economics, the mysterious world of the Fed-embargoed statement production is revealed. For all those worried HP or Xerox in the tough global economy (or for that mind any printer-ink/copier provider), fear not, for the Fed will keep their revenues flowing as we can't help but envision the movie 'Office Space' when we read this: Why Was Fed Statement Late? 20th Century Technology.

Demonstrating that when it comes to "lecturing" Europe is no better than America's own Tim Geithner (who was loudly jeered at last week's FinMin meeting in Poland after he came, he saw, and told Europe to do everything that the US had done before with such 'stunning success'), is an exclusive report from Reuters which references an EU document according to which "the European Union will call on China this week to boost domestic demand and on the United States and Japan to tackle their public deficits." Furthermore "the consolidation plans to be undertaken in most EU countries, in the U.S. and in Japan need to be accompanied by appropriate policies in other regions of the world so as to avoid an undesired compression of global demand." In other words, if the rest of the world could promptly go ahead and fix itself and fall bak in line so the status quo can resume its dutiful creep to previously unseen Ponzi heights asap, that would be wonderful and much appreciated by Brussels, and Europe can pretend its monetary union is still a viable long-term option.

In the latest installment of what is rapidly becoming Obama's Keynesian Solargate, we learn that the Treasury Department's Inspector General has opened an investigation of the now defunct $528 million government loan to Solyndra which has no chance of getting repaid, following what will be a pennies on the dollar liquidation of the company, especially since it is primed by a $75 million term loan to George Kaiser, a documented Obama "bundler" as was documented previously. Per the AP, "A spokesman said Thursday that the inspector general is reviewing the role and actions of the Federal Financing Bank, a government corporation supervised by the Treasury Department. The bank provided the low-interest loan to the Fremont, Calif.-based company." The "concern" is that Obama has pushed levers to get the investment in a venture controlled by a "friend" on a fasttrack, with the White House Office Of Management Supervision urging the DOE to release the funds without proper diligence. "The House energy committee released documents Wednesday that appeared to show senior staff at the White House Office of Management and Budget chafing about having to conduct "rushed approvals" of a loan guarantee for Solyndra. Republican members of the committee said the emails raised questions about whether the loan was rushed to accommodate a Solyndra groundbreaking ceremony in September 2009 that featured Vice President Joe Biden and Energy Secretary Steven Chu." And while there is more, we will spare the Treasury IG some time (assuming he is at least a little less corrupt than everyone else in the administration and actually plan on conducting a legitimate investigation) and advise him to simply look at campaign and other contributions by Solyndra's equity backers which features the George Kaiser Family Foundation, U.S. Venture Partners, CMEA Ventures, Redpoint Ventures, Virgin Green Fund, Madrone Capital Partners, RockPort Capital Partners, Argonaut Private Equity, Masdar and Artis Capital Management. When in doubt, always follow the buck... especially when it is looking for a very fast turnaround courtesy of taxpayer capital IRR padding.

All you need to read.

After breaking the story of Solyndra's shady taxpayer funded practices (which were not enough to stave off bankruptcy, and yet another confirmation that government stimulus in the form of subsidies is virtually always an epic failure), Bruce Krasting subsequently delved into the one entity that somehow had managed to get priority interest to subordinated government loans to the tune of $528 million in government funding: Argonaut Ventures, and specifically one George Kaiser who just happens to be a material fund-raiser for the president. And while it is not known yet whether the embedded improprieties in this peculiar relationship will end Obama's chances for reelection, things are starting to stink. Because as Bloomberg reports, as of a few hours ago, the company's headquarters was raided by the Feds. While at this point they are certainly looking for signs of criminal malfeasance by management, it won't be long before they put two and two together and decided to analyze the logic behind the funding, and why it is that an Obama-favored person will get his money out first while US taxpayers will likely suffer a total wash.

Once again European debt problems are hitting the headlines and putting pressure on stocks globally. While we were busy basking in the glow of the now annual Jackson Hole rally, the situation in Europe actually got worse. The bickering and finger pointing seems constant now. A few key things are worth watching are presented below. In the meantime, as we wait for NFP, SOVX is back above 300, MAIN is above 160, and IG and HY are both well off their tights and are trading as though a lot of bears got long for a trade jumping on the momentum from last week and the month-end and long weekend technicals.

I am tearing up my Eurail Pass, returning my espresso machine to Costco, and sending my gelato maker to the recycling center. Next year’s summer vacation is going to be at Coney Island, not the Italian Rivera. Those damn Europeans are spoiling everything!

The US stock markets made a determined effort to put in a bottom last week, with the S&P 500 rallying 106 points off the bottom with blinding speed. But the Europeans had other ideas.

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A very positive spin on things from the CBO. Of course, politics has nothing to do with it.