Tuesday, July 5, 2011

Watch The Teleprompter Discuss The Latest "Deficit Reduction Efforts"

Following the earlier news that government retirement accounts have been plundered by the most since the breach of the debt ceiling, it is only fitting that the teleprompter will shortly update the eager public with the latest on the debt reduction efforts. Perform a frontal lobotomy and watch live below.

Instead of Funding Retirement Accounts As Mandatory, Treasury Proceeds To Plunder The Most Since Debt Ceiling Breach

As the chart below shows, while at the end of every quarter, the US Treasury is traditionally supposed to fund a quarterly payment into the various government retirement funds (previously discussed here), this time around, instead of putting in even one penny into G and CSRD Funds, Tim Geithner has decided to defraud government retirees by the most since the US debt ceiling was breached, or, specifically, since intragovernmental "holdings" became a mere plug to make room for marketable debt. So while the debt held by the public increased by $21 billion following the settlement of last week's auctions, in order to stay under the $14.294 billion ceiling, the Treasury was forced to "disinvest" another $20 billion from retirement funds. At this point the various funds that fall under this umbrella are underinvested by at least $120 billion and likely much more. Of course, this is not an event of default as per Geithner's fine print: as soon as the debt ceiling is hiked, these will be the first funds that are replenished. On the other hand, if there is no debt ceiling hike, and courtesy of marketable debt having priority to intragovernmental debt, government retirees are increasingly becoming the impaired class in what may be shaping up to be the world's biggest bankruptcy filing in history.

July Market Volume Starts Of With An Inverse Bang

Submitted by Tyler Durden on 07/05/2011 16:09 -0400

We were too lazy to Shift-F7 that and change it to "whimper." The chart says it all. At this rate Wall Street firms will have to cut 120% of their headcount and replace everybody with the same Made in Taiwan Chinabots that are now soley responsible for the /ES courtesy of its 1.0000000 correlation with the EURUSD, which as is now well known, is soley purchased by the Beijing politburo.

Did John Paulson Receive Preferential Terms From Dealers When Selling Lehman Bonds?

Submitted by Tyler Durden on 07/05/2011 15:28 -0400

Last night, the FT penned a rather curious, not to mention 2 month delayed, PR puff piece, discussing Paulson's success in investing in Lehman bonds, ostensibly to offset the firm's recent horrendous investing performance (Sino Forest, Bank of America and Premier Foods to name a few). While it is true that Paulson was one of the very first investors in Lehman bonds following the banks bankruptcy on September 15, most notably alongside Wexford Capital and Pimco, some of the math in the FT piece is rather misleading. We will present a detailed analysis and a more objective version of Lehman bond trading history when we bring to our readers the complete breakdown of trading as disclosed in the Lehman 2019 ad hoc committee response (thank you Northwest airlines) that hit the Lehman docket on April 19. However, in the meantime we wanted to bring to both readers', and regulators' attention one rather peculiar piece of information that has emerged as a result of the trading disclosure provided by the firms in the Lehman ad hoc creditor committee, in this case Paulson and Taconic, which hold over $4 billion and just under $2 billion in face value of Lehman General Unsecured Claims. Specifically, it appears that when trading out of Lehman bonds, Paulson may have obtained highly preferential terms which were certainly not available to other hedge funds, beginning the question: were (are?) dealers willing to assume losses on transactions with Paulson (to the detriment of other market players), simply to be in the hedge fund manager's good books? We don't know. But here is the data.

EURCHF Plummets On Casey Anthony Verdict

Submitted by Tyler Durden on 07/05/2011 14:24 -0400

We kid... We kid... Who the hell know what caused the surge in the Swissy. Maybe the fact that the Titanic just sank by another 5 feet. We'll confer with the violinists and let you know. In the meantime we fully expect the mean reversion algos to take over and reverse the correction overshooting by 2 std devs to the upside next.

Moody's Downgrades Portugal To Ba2 From Baa1, Outlook Negative

And heeeeeere's Moody's to dump on today's no volume levitation and push Portugal further into junk: "Moody's Investors Service has today downgraded Portugal's long-term government bond ratings to Ba2 from Baa1 and assigned a negative outlook. Concurrently, Moody's has also downgraded the government's short-term debt rating to (P) Not-Prime from (P) Prime-2. Today's rating action concludes the review of Portugal's ratings initiated on 5 April 2011."