Well, no one ever claimed that Mirek Topolánek, the (quasi) Prime Minister of the Czech Republic, was soft spoken (particularly aggressive photographers), so we aren’t particularly surprised to hear him describe the stimulus plans of the United States as “the road to hell.” Perhaps he was just cranky (he was been shown the door by the Czech Parliament just yesterday and this whole missile shield thing is enough to annoy the most stoic Eastern European statesman) or he was just prepping the waters for Obama’s up coming visit to Prague. Whatever the case, you can bet Obama and Mirek will be studiously ignoring each other for some time to come, and, really, Mirek has nothing on Maxine Waters anyhow.
Czech Premier Slams Obama Stimulus Plan [The Wall Street Journal]
Archive for March 2009
Touched by his Crackness.
The Obama Portfolio (Since Inception): +14.85%
Earlier: The Obama Portfolio
Just in case you have an urge to relive it, the credit crisis is the subject of a museum exhibit. Like the dropping of the atom bomb on Japan, the potential for exhibit controversy is high. We cant help but wonder how the sensitive issue of Maxine Waters and Goldman Sachs will be presented, for example. Which outfit will Mad Max be wearing in her wax figure? How will she be depicted? In the midst of a conspiratorial discourse with large microphone? Will Ruth Madoff’s grocery habits find treatment? We, of course, are pitching for the Marcus Schrenker faux-suicide scene in campground tent.
The global economic crisis wears on, but the Museum of American Finance is already documenting its history in an exhibit that opened on Wednesday.
“Tracking the Credit Crisis” provides a timeline of the events that led to the current recession and translates the catchphrases of the economic downturn such as “securitization,” “liquidity,” and “derivative” for the average person.
Considering he has apparently transformed into a mortgage backed securities bull (in selective cases) it’s interesting to hear that John Paulson doesn’t seem interested in using cheap government leverage and guarantees to participate in the public-private plan to pick up legacy assets, as he told the Times. Why not? We actually have no idea, given Paulson’s soft spoken treatment of the subject, but it is great fun to speculate.
Perhaps the prospect of an ever-changing regulatory morass or retroactive witch-hunts turned off our hero? Or perhaps Paulson would simply prefer to cherry pick his own hit-list of prospective value plays, avoid the gamble of an auction and the spectacle of banks trying to game the system? Lots of buyer’s regret potential here. Leveraged buyer’s regret, actually. It is also not particularly hard to imagine that anything the banks want to sell might be less attractive than a few carefully picked distressed assets from better motivated sellers.
Is Paulson alone? We would like to find out. Dealbreaker is going to keep a running tally of who decides to opt out and in. So far:
Bridgewater: Considering it.
Citadel (according to sources): Considering it.
Paulson: No.
Let us know as you hear. Share: tips at dealbreaker dot com.
Top Hedge Fund Managers Do Well in a Down Year [The New York Times]
If you don’t end it? Here’s a li’l preview of what you’ll have to look forward to, according to “Anthony Papa,” who in 1985 was “sentenced to 15 years to life under New York’s draconian Rockefeller Drug Laws for a first-time nonviolent drug crime.”
Your identity will be taken away when you are stripped naked and ordered to bend over and spread your butt cheeks. You will be forced to comply. If you don’t, the officer conducting the search will call the “goon squad,” abouta half-dozen killing machines who will come in dressed in battle gear, armed with batons. They won’t care that you are 70. They will strike blows in a way that will not leave bruises because you are a high-profile case.
Once you are sitting in your temporary cell awaiting sentencing, officials will isolate you from the general population. By this time, several contracts on your life have been taken out. Even those who are not contracted will want to take your head off so they can get their name in the paper.
Our spy on a Treasuries desk has some interesting things to say via the mailbag about the bond market in the imminent face of $300 billion in quantitative easing by proxy:
Wall Street Dealers are giving the Treasury the biggest “fuck you” on new Treasury debt. There’s an auction today and a buy program tomorrow. Since Bernanke just announced that the Treasury is buying bonds, Wall Street- the dealers en masse- are basically refusing to show a good bid but then taking out a huge profit out of the Treasury. You want to talk 90% taxes? This is unprecedented.
Hell hath no fury like a bond trader scorned? We aren’t so sure. The UK had similar problems today.
The U.K.’s effort to buy government debt wasn’t enough to prevent today’s failed auction of 40-year gilts, the first time that the government failed to attract enough bids at a sale of nominal debt since 1995. Investors bid for 1.63 billion pounds ($2.4 billion) of 4.25 percent notes, less than the 1.75 billion pounds offered.
“The failed gilt auction doesn’t bode well for Treasuries,” said Michael Franzese, head of government bond trading for Standard Chartered in New York. “It is a supply issue on top of that. Is the buying that’s happening today by the Fed going to offset the selling that’s going on today and tomorrow by the Treasury?”
What say you DB? The largest bond price fixing conspiracy in history? That would be quite entertaining.
Treasuries Fall as Five-Year Note Auction Draws Yield of 1.849% [Bloomberg]
As mentioned earlier, Alpha magazine is set to follow up its annual list of the this year’s top earning hedge fund managers tomorrow with a list of 2008′s Biggest Losers, comprised of a group of managers who together lost $6.2 billion 2008. (The mag uses two factors to calculate earnings, or, in this case, lack thereof: “the managers’ shares of their firm’s performance and management fees, as well as gains on their own capital.”) According to CNBC, it will look something like this:
1. Ken Griffin, down $2 billion (personally)
2. Eddie Lampert, down $1 billion
3. Steve Cohen, down $750 million
Sure, the President claims not to pay any attention to blogs, but we aren’t sure how else you could explain the latest news in light of our recent piece on Paul Volcker. At first glance you would think The Volck a bit too busy with that whole “saving the financial world” project to take on a task as gargantuan as reforming the tax code, but if you look at the meeting record of the Presidential Economic Recovery Advisory Board (won’t take long, there isn’t one) it quickly becomes apparent that there’s plenty of time for side projects.
President Barack Obama is putting former Federal Reserve Chairman Paul Volcker in charge of a tax-code review aimed at closing loopholes, streamlining the law and generating revenue, budget Director Peter Orszag said.
Volcker, 81, who heads the president’s Economic Recovery Advisory Board, is being asked to take a top-to-bottom look at the laws in an effort to rebalance the tax system.
Obama Asks Volcker to Lead Panel on Tax-Code Overhaul [Bloomberg]
No lesser source of scintillating financial analysis than the New York Post is reporting the suddenly ravenous appetite of Citigroup and Bank of America for mortgage backed securities.
Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.
The Post, surprisingly, declines to provide details so we are left to wonder. Shrewd public relations? Doubtful. Altruistic financial patriotism? We think not, but BofA claims so:
“Our purchases in [mortgage-backed securities] increase liquidity in the mortgage market allowing people to buy a home,” said BofA spokesman Scott Silvestri.
Shameless profiteering? Yes, of course. But we don’t suppose anyone would believe us if we said that Citi and BofA are calling an MBA bottom… would they?
Double Dippers [The New York Post]
Who Said It: We’re Not Asking For A Bailout, But If We Don’t Get One This Thing’s Gonna Blow
By Bess LevinHint:
Jimmy Cayne, Whose House Gets TP’ed By The Neighborhood Kids On The Regular, Scoffs At These Amateur Attacks
By Bess LevinClose ups on the damage done at Fred Goodwin’s home this morning.
