Archive for February 9th, 2010

Chinese have their own “nuclear option”

Tuesday, February 9th, 2010

Full story here from ZeroHedge. Iran [cap pistol threat to dollar hegemony with its opening of an oil bourse only dealing in roubles and euros] has NOTHING on China, which is reminding the US about what’s funny and what’s not. Gan bei, comrade!

“And you were worried about Iran. China’s People Liberation Army has come out and openly said that the nuclear option, i.e., selling US Treasuries, is now on the table and should be exercised as “punishment” for U.S.’ arms sales to Taiwan. China undoubtedly realizes that this is a prime example of sado-masochism as the resultant plunge in Treasuries that would follow would hurt the US certainly, but also have a “mild to quite mild” impact on China’s $700 (and likely much greater) UST holdings. Game theory 101 just got interesting. (more…)

CIA agents hired by hedge funds

Tuesday, February 9th, 2010

Sadly, that is not a misprint. Missed this earlier from Huffington Post. George Carlin (if he wasn’t already dead) would most certainly have keeled over from a thrombo on this …

“In the midst of two wars and the fight against Al Qaeda, the CIA is offering operatives a chance to peddle their expertise to private companies on the side — a policy that gives financial firms and hedge funds access to the nation’s top-level intelligence talent, POLITICO has learned.

In one case, these active-duty officers moonlighted at a hedge-fund consulting firm that wanted to tap their expertise in “deception detection,” the highly specialized art of telling when executives may be lying based on clues in a conversation.

Read the whole story: Politico

Parallels between AIG & Greece…and the CDS puppetmaster behind it all

Tuesday, February 9th, 2010

Full story here from ZeroHedge.

“David Fiderer’s below piece, originally published on the Huffington Post, continues probing the topic of Goldman and AIG. For all intents and purposes the debate has been pretty much exhausted and if there was a functioning legal system, Goldman would have been forced long ago to pay back the cash it received from ML-3 [Maiden Lane 3] (which in itself should have been long unwound now that plans to liquidate AIG have been scrapped) and to have the original arrangement reestablished (including the profitless unwind of AIG CDS the firm made improper billions on, by trading on non-public, pre-March 2009, information), and now that AIG is solvent courtesy of the government, so too its counterparties can continue experiencing some, albeit marginal, risk, instead of enjoying the possession of cold hard cash. Oh, and Tim Geithner would be facing civil and criminal charges. (more…)

America not near to solving its debt problems

Tuesday, February 9th, 2010

Full story here from The International Forecaster.

“As we have been forecasting for the last two years, the second wave of mortgage defaults and foreclosures will hit the economy this year. Not only will we have failure in prime loans and option-arm loans, but we are faced with a new crop of subprime and ALT-A loans put into motion by Fannie Mae, Freddie Mac, Ginnie Mae and FHA. In addition, we find it of great interest that the FHA is changing the rules to purchase homes. That, of course, means less homes will be purchased.

The incidence of unemployment may be lessening, but it isn’t going away. Those of you who keep your ear to the ground know that real unemployment is 22.5% and in cities like Detroit it is somewhere near 45 to 50 percent. This is the result of free trade, globalization, offshoring and outsourcing. No city in America has been deprived of their livelihood more than Detroit. Yet, this is only the beginning. If allowed to continue 30 percent more of our jobs will be allowed to leave America, making our country an economic basket case over the next 20 years. The $25 billion that our federal government is about to loan to the states will help keep unemployment paying out and save some 40 states from going into bankruptcy. That will keep some Americans going but not for long. (more…)

DTCC: too big to fail?

Tuesday, February 9th, 2010

Full story here from ZeroHedge.

“In order to streamline securities settlement, Congress ordered that shares traded on exchanges be immobilized, which obviates both physical delivery of certificates and registration of transfer because the shares usually remain registered in the name of a depository or its nominee. This process creates a discrepancy between ownership of the share (economic or beneficial ownership) and the legal status as shareholder (registered stockholder). The more of a market’s securities that are registered in the name of a central depository, the greater the number of transactions that can be carried out on its books. The ultimate goal in this model is for all issuers to cede control over all shareholder data to a single entity, which would then conduct all of the market’s transactions on its books, just as if all securities in circulation on the market had been dematerialized. Today, in fact, it is likely that a listed company will have only one registered shareholder, appropriately named “Cede & Company”, the nominee of the Depository Trust Company (DTC), which is a subsidiary of the Depository Trust and Clearing Company (DTCC), the entity whose group clears and settles almost all securities transactions entered into on organized markets in the United States. The rules of DTC require that Cede be registered as holder for all deposited securities.”

“The Rise and Effects of the Indirect Holding System: How Corporate America Ceded its Shareholders to Intermediaries”

Theodor Baums
Andreas Cahn
Working Paper No.68
Institute for Law and Finance
Frankfurt, Germany

Marc Faber: If the US was a corp, it would be junk rated

Tuesday, February 9th, 2010

Full story here from ZeroHedge. I love that sexy Swiss man talking sense.

“Marc Faber discusses America’s unsustainable debt load in this interview with Margaret Brennan on Bloomberg TV. An amusing observation: the GDP growth from each $1 of new total debt has dropped from $0.25 to -$0.60. Also some much deserved Bernanke and Krugman bashing. Why it is so difficult to realize that the only way out of the crisis is to cut corporate and sovereign debt, we don’t understand. Ah yes, because for that to happen, equity values across virtually all of the US economy would be wiped out… And that would destroy the myth that there is any real equity value in America.”

Check the link for the full Faber interview.