This and That

Bruce Krasting's picture


Question for Bernanke


Two charts from the CBO, then a question.




No surprise in this chart. 11m people are in the US illegally. 8.5m are from Mexico or Central America. This one was a surprise:




Looking at this chart I concluded that the unemployment rate at the end of 2012 for the native born population was very close to 6.5%. Based on what has happened so far in 2013, I would expect that the rate today is less than the YE level.

The 6.5% number is significant because Bernanke has set this level as a line in the sand. If the overall unemployment rate falls to this magic level, then the Fed has promised it will back off on the insanity that is now US monetary policy. Now the question:

Mr. Bernanke, are you running monetary policy to achieve a significantly lower rate of unemployment for undocumented workers? If so, please tell us why this is in the best interest of the country.



How Much Did Paulson Buy??


I've been following the Fannie/Freddie Pref story for a long time. My first article (July 2009) asked the question:


Agency Preferred Stock – Who’s Buying?


To some extent, that question has now been answered. It's hedge funds, apparently lead by none other than John Paulson.




The confirmation that Paulson has been leading the charge, comes from Senator Bob Corker (R-TN). His words:


“There are funds that have taken very large positions, large hedge funds, and they are lobbying heavily”


So good old JP, who just got his faced ripped off in a gold play, is now making a come back with a bet on busted Preferred stock?

I didn't make too much of the Bloomberg story, and neither has the market. The price of the Agency Pref has drifted sideways since this story broke. I was beginning to wonder if Paulson's involvement with the Pref was not just another kiss of death. "If JP's long - then maybe I should be out"; did cross my mind. But in the last 48 hours there has been an interesting development. Somebody bought a boatload of junk.

Yesterday, 21m shares of FNMAS crossed in just two transactions. Today another 39.6m shares (10 times average volume) went through in big block trades. Add to this, another block of 10m of the FMCKJ (Freddie Pref) and it comes to 75m shares - A total of $350,000,000 of buy-side demand.

All that money being put up for swill. That is a bet worth noting. Either something is brewing in this goofy story, of JP has bet the farm. Stay tuned.



Setting Priorities


An interesting new law has been offered up by Congressman Tom McClintock (R-CA). The Bill has come from the House Ways and Means Committee and is working its way through Congress.


Screen Shot 2013-05-08 at 6.42.47 PM


Simple stuff. In the event that Congress could not agree on a debt limit extension, there would be a new carve-out of what would get paid. Principal and interest on the national debt that is held by the public, and the debt held by the Social Security Trust Fund would be honored. Everything else would be at risk.

To me, this sounds like some Republicans are preparing for a debt limit fight. The theoretical debt-limit deadline is in May, but the issue can fester for another three months. The Bill to allow for payments of debts to SS and bond holders would limit the consequences of a deadlock, so the law has a thread of logic to it.

My problem is that once something has been granted senor status, then everything else immediately becomes subordinated. No one likes to be forced onto the back of the bus. In this case, those that would be subordinated includes all retired Military and Federal workers, the entire military (and all of the contractors), food stamps and Medicare payments to doctors/hospitals. Any government guaranties that were not funded by debt to the public would also be on the "B" list.

I'm thinking of the old couple down in Boca, who get checks, and the generals, lieutenants and sergeants who don't. Social Security checks are more important than Food Stamps? Who says?

The real insanity here is that there is even a discussion (much less new legislation) of the "proper" way to default. Should this legislation pass, it would go a long way toward insuring that there is no resolution of the debt ceiling by the end of the summer. There would be less incentive for D.C. to come to terms with the debt limit. H.R. 807 would minimize the consequences of of a debt limit crisis, but it would split the country apart. Like I said, no one likes to forced to set in the back of the bus.



Just Silly


I'm sure there is some intelligent explanation for this proposed new law; just reading the words makes me laugh. What are these people thinking about?


Screen Shot 2013-05-08 at 6.38.53 PM






Reader Question


Who's the lady in the Pic.?




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asscannon101's picture

Its either Elizabeth Warren or Charlie Munger. They both looked alarmingly similar when they were young.

CheapBastard's picture
‘Obamacare’ Poll Finds 42% of Americans Unaware It’s Law


It's really no wonder what's going on is, indeed, going on. Most people are clueless.

GeorgesamaBushLaden's picture

Why, that's Nancy Pelosi with the pointy "rack". Now where do I claim my prize?

I think "Miss Lube Rack" is a far more fitting title for her than "Madame Speaker".

BraveSirRobin's picture

Unfortunately, that is NOT Pelosi. It is, rather, Harry Reid.

grunk's picture

Angela Merkel.

francis_sawyer's picture

Why... that's Miss Lube Rack [in the moments before her rack was lubed with a grease gun]...

BeetleBailey's picture

Why...that's my aunt Rosie....always...taking off her clothes.....hanging out at lube racks....something about....convenience I think she once said.....spends a lot of time in bed...and with strange men that have their names stitched onto coveralls....

stiler's picture

she's a cardboard cut-out. I don't know. 

surely the Lubrick King knows.

cdskiller's picture

Bruce, for crying out loud, the second CBO chart has nothing, whatsoever, to do with the first chart! Not all Americans born in Mexico or Central America are unauthorized and undocumented, and, with all due respect, it is racist to assume they are. Your entire speculation about Bernanke is bogus race-baiting, insinuating that there are no actual legitimate American citizens of Mexican or Central American birth. Get it together, brother.

Agent P's picture

Not sure why you got so many down votes.  This was the same thought I had.

Son of Loki's picture

Builders in my area say they can hire immigrants at $6 an  hour so why should they hire Americans?


Good quiestion since there is no downside to it looks like. I am surprised blue collar Dems have not put up a fuss about it....

the grateful unemployed's picture

it's against the law for one thing. if you're caught doing this they put the permit process on hold, which can break you if you've borrowed money and need to get the property finished so you can sell and pay your contractor.

Blano's picture

You don't really think all those brown skinned construction laborers hanging around vying for work are here legally, do you???

Fredo Corleone's picture

The vehicle on the lift is a 1950 Olds; as it looks rather new, the image is likely a "Life" cover shot from 1950, or 1951.

In that context, the future Mrs. Buffett ?

Zero_Sum's picture

Well, Bruce, you were right about something brewing with Fannie. They just announced record profits. And guess what? They're just over $20B from 'paying back' all the money they got from Treasury! So once they've crossed that line, there should be no issue with them going private. Right? Right?  

Bruce Krasting's picture

I don't think it is as easy as just paying back Treasury. This fight is far from over. D.C. does not want to make hedge fund guys like Paulson rich.


Speaking of rich, the FNMAT is trading 21% higher in pre market. This means that "someone" made $70m in a day.

Me? I'm 98% sure the info on FNM earnings was leaked. Why else would someone bet the farm on swill unless they had the inside "skinny"?

Lonewar's picture


Of course the Fannie Mae info was leaked. The Board stated in the Annual Report that they were going to release about ~55 BILLION in Deffered Tax Assets and most likely in the first quarter.

Freddie will be doing theirs most likely this quarter.

The treasury wants the fat money off the books prior to allowing shareholders to sue to get the 3rd amendment to the Conservatorship annulled. That is the bullshit factor that is the reason I didnt get to retire this morning...

And NO, Fannie and Freddy have NOT paid the Treasury back a single dime. ALL of the payments made are pure dividends, and NONE of it was Principle... I am just hoping Paulson is greedy enough, and has bought enough politicians to get that 3rd Amendment killed... If he does, the Preferred are going to $48.00 per share and the Common to $55.00.

silverserfer's picture

Easy, Bruce's mom. Bertha Krasting. Big questions is which grease monkey's his dad?

azzhatter's picture

that's what she is trying to figure out

wareco's picture

"Social Security checks are more important than Food Stamps? Who says?"  Hmmm, gee, my guess would be all those people who actually gave money to the Federal Goverment via SS and are looking to get some of it back, as opposed to those people who take money from the Federal Government because they are too stupid or lazy to get a decent job from which they can use their own damn money to buy fatty shit for their too numerous children.  Ahh, if only we could go back to the good old days, when you either did or you died. 

therearetoomanyidiots's picture

because they are too stupid or lazy to get a decent job

Or, because they are too smart and can get around in the system....which happens when you create rules and regulations, much like the tom foolery that occurs with corporations and our governing elites.

csmith's picture

100+ for this one...millions of college kids today getting degrees in gaming the system...

OldTrooper's picture

I had a very similar initial reaction to that line, wareco - and there's something to that argument, no doubt.

However, I won't judge everyone on food stamps that harshly.  These days it's easy and far too common to find that your 'decent job' has disappeared, never to return.  Maybe it isn't all bad that the feds are dumping some of their borrowed money here at home.  That seems a bit better than pouring it into the war chests of foreigners that hate us to me.  It helps me keep my sanity to think of it that way.

And then there's the question of whether the boomers really paid in enough to fund their benefits. 

Is the person that naively believed their job would always be there really that much worse than the person that naively believed much fewer children would somehow fund their retirement?

Maybe no one is entirely innocent (or guilty) these days.  Excuse me while I get more bourbon on the rocks.

Solon the Destroyer's picture

Yes, because in a non gold standard economic world that guarantees structural employment, everyone without a job is stupid or lazy


And as long as Bernanke's priaptic prick remains jammed hard on the CTRL-P button, employment promises to be even worse.

At no time in history has printing currency "willy-nilly" not destroyed the demand for labor.

Bob Sacamano's picture

One of my rare leaps -- In FNMFN ($50 par pfd) at $1.90/share cost.  Hoping the boys drive it higher.

sgorem's picture

Barney Frank? hell i dunno..........

asscannon101's picture

Oooph! 'Banzai, it looks kinda like your Salvador Dalí influence is shining through.

Beau Tox's picture

Nancy Bernankrupt now!  She Miss Boob Rack.

thewayitis's picture


  6.5% will not happen while the Bernack is still in office. IMO it won't even happen next year. Unless of course they FUDGE the numbers MORE....



booboo's picture

must be something about the 50's, the girls all had pointy tits.

Tapeworm's picture


tO MATCH the black rubber bumper inserts as in Cadillacs.

Arthur's picture

to match the Caddy fins

Room 101's picture

Full faith and credit.  Or basically the only folks who get paid are the moneychangers.

Pretty well sums it up the priorities. 

QQQBall's picture

11M? that is the biggest crock ever. Where do you think all the kids are coming from to require L.A. to build multi-story schools. Stand out front of a school in L.A. or jsut get stuck in a drop-off lane; dude all thpose faces are brown. My kids' mother in Mexican, so don't play the racist card... 11M is a joke; if they used real numbers the costs woudl BK the country. 

dunce's picture

They put out the same number over 10 years ago, they would have you believe that the number is static because as many return as sneak in every year. The true number is at least 30 million.

csmith's picture

It's way higher then 11 million. The GOP wouldn't be apoplectic about putting a new "face" on their entire party for a measly 11 million.

RagnarDanneskjold's picture

Back in 2007 or 2008 when they last debated immigration, it was already well over 20 million. And though some people went back during the recession, they are coming back because they think amnesty is coming.

azzhatter's picture

harry reid in drag?

B2u's picture

Helen Thomas?

El Oregonian's picture

No, Helen Thomas would of been the centerfold for "Miss Covered Wagon".

Agent P's picture

I don't want to say she's old, but if she were a car, she'd be a horse.

the grateful unemployed's picture

cheap trick to get more hits, you suck bruce

fourchan's picture

you just blew my mind bruce.

RaceToTheBottom's picture

Looks like the guy on the right already shot his wad, all over his coveralls.


Yep, his grin gives it away.

PubliusTacitus's picture

More importantly, who is the serial killer to the left?


God, if that car had only fallen off the lift and killed everyone instantly...

Pure Evil's picture

I think I see Heinrich Himmler at the bottom right.

I guess the rumors and pictures of his death were greatly exaggerated.