Summer Song

It ‘s Friday. Let’s have a smile.
This one comes from Andy Borowitz

In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the U.S. Department of the Treasury.
According to Goldman spokesperson Jonathan Hestron, the merger between Goldman and the Treasury Department is “a good fit” because “they’re in the business of printing money and so are we.”…
Mr. Hestron said the only challenge facing Goldman in completing the merger “is trying to figure out which parts of the Treasury Dept. we don’t already own.”

The future for Bernie Madoff is less bright than everybody expects. ‘He will leave prison in a bag or in a coffin’ comments one man, owner of http://www.wallstreetprisonconsultants.com/.
His intake is original and – I believe – true: not his former clients, but the banks where he is hiding al his billions have an interest to silence him.

Diamonds are forever. That’s what we all believe. Hmmm, learn everything about this story on http://www.theatlantic.com/doc/198202/diamond.
And than there is this.

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A long time...

Even Bernie Madoff was sentenced to 150 years in jail (and than some), it doesn’t mean his case is closed. So much money was in play that a lot of second rang players had their fair share in this scheme.
What about the fact that UK investiogators knocked at the door of Sonja Kohl , president of Bank Medici, an Austrian outlet. The allegation is that this small bank charged millions of pounds to an outpost of the Madoff empire for worthless research.
Why did I miss this opportunity?

Detail: Bank Medici, which invested most of its $3.2bn in the Madoff empire and ran investor “feeder” funds in Luxembourg and Ireland, is one of the most spectacular casualties of the disgraced tycoon’s scheme. It is now under the control of the Austrian authorities and is to wind down most of its operations.

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Too big to fail...

Is there something rotten in the Kingdom of the US ?
FED president had to testify before Congress on the mater of Bank of Amercia’s acquisition of Merrill Lynch and whether or not the Federal Reserve pressured BofA CEO Ken Lewis into going through with the deal once due diligence showed up much bigger than expected losses at Merrill.
If you want to read this testimony, you can find it here.
What really happened is that BofA wanted to dump the Merrill deal and was then told by the FED not to do it. Even if this would cause problems for the bank.
The emails relating to the specific intention to not tell the SEC what was going on by senior Fed officials was very damning. Bernanke's pathetic response that he didn't know what this senior Fed official was doing, and that he was operating on his own in his stated intention to keep the SEC in the dark is either an admission of a complete failure of leadership.

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Please, give my bonds back

Did someone hear recently anything new about the 134 bln USD US bearer bonds which were carried by two Japanese at the Swiss Italian border?
If these bonds are real – though I doubt it – than Italy will keep a third as their statutory penalty for non-declaration at the border. Or 40 bln USD.
Please will the owner step forward? North Korea? The mafia? ECB?
Who printed 249 US Federal Reserve bonds worth 500 million USD each? The funny thing is that the US is not issuing bearer bonds. Or do they…?

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Ponzi, hedge funds and the reflation trade

The Frankel International fund is a South African construction. Lately we hear a lot of rumors which are not positive at all. Seems to be a Ponzi scheme where well known UK business men and some Monaco-based Russians are involved.

In the mean time we learn that hedge funds are working on their come back. Liquidations fell by 50% in the first quarter from 2009 from the record levels we saw in 2008.

Do we see the reversal of the reflation trade?
If so, buy government bonds aka TLT.

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To FAS or to FAZ

I love this bonus rage in the States.
And the tax of 90%.
Where is it going to stop? Is the mob going to take the streets again?
They drag the CEO before Congress to grill him and chastise him over the bonuses of AIG. This is a guy who came out of retirement to work for 1 USD a year to try and turn this thing around.
The mob hasn’t changed that much over the centuries.
Ok.
Let’s get over it.

And go elsewhere.

Also the FAS (3x Leveraged Financial ETF) is going down. Yesterday it opened 10% higher only to close 5% down. Is the short squeeze over?

The most popular stocks these days are FAZ and FAS. In this all shorting story of financial stocks, these ETF become increasingly popular.
This is the FAZ (thanks Tim). Look how positive momentum is building like a storm after a hot day. The volume is increasing while the price is not going lower anymore. Ready for this ride?

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Crooks

From the New Yotk Times:

Standard & Poor’s and Moody’s are worthless and should be ignored, argue Jerome S. Fons, former managing director at Moody’s, and Frank Partnoy, a law professor at the University of San Diego.
Investors and regulators should drop rating-related language from contracts. Instead, they should return to good old-fashioned judgment.
Credit ratings can mean the difference between life and death for a company, but the agencies should get F’s for failure, Fons and Partnoy assert in an editorial in The New York Times.
“No one has been more wrong than Moody’s and S&P,” they write.
They gave stellar marks to large but troubled companies such as AIG and Lehman Brothers. Mortgage-backed assets now called toxic got AAA ratings until recently.
Yet many investors opt to buy or sell — are even required to buy or sell — based on rating. Downgrades can trigger sell-offs and panics.
“This has left us in a ratings trap,” the pair write. “As more regulators and institutions rely on ratings, the agencies have become increasingly reluctant to downgrade.”

It's a little late now to close the doors of the barn now the horses have fled

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