Did you happen to catch Paul Krugman being interviewed on CNN by Fareed Zakaria. Thank goodness it was over the holiday weekend and most missed it, as I must confess it was a most difficult interview to stomach without an airplane sickness bag. The best part of Krugman getting all this air time is that the Nobel laureate and his reputation are going down the same drain the Maestro's (re: Greenspan) did. Fitting.
In the Denver airport over the holidays I saw a cat reading Zuckerman's book The Greatest Trader Ever which, as most know, is the story about how John Paulson made about $40 billion on the housing bust and approximately $4 billion personally from it.
This blogs 7 regular readers know that previously I have been extraordinarily critical of Paulson and the trade. I took serious issue with his 'stacking the deck' as he specifically arranged which monumentally toxic paper were to go into the vehicle he would short. These were also not your run of the mill, average low probability pay back mortgages, these were the creme de la creme of dog shit paper, there was no chance in hell they would get paid back. No mediocrity allowed here. So, as I sat waiting patiently with my lovely wife for our flight out of Denver into the back country that is gorgeous Colorado I had an epiphany.
Paulson is a pure genius! He is the greatest trader ever! This is the greatest trade ever!
So why the dramatic change of heart? Well, hear me out.
Paulson knew the powers that be would never let anything tank (stocks are always supposed to go up) without throwing every monkey wrench and kitchen sink in the way to upset the most carefully laid plans. As anyone who was short any number of dog shit housing and mortgage stocks (re: Countrywide, Great Western Financial, et al.) can attest to, the gamz that were played (re: buyout rumors, CEO statements, Fed comments, etc.) gunning these worthless stocks to keep the ponzi going was something to behold. Paulson knew this and realized he could not short a "mainstream" investment as anything traded on a public exchange could be thereby subject to the manipulations and machinations of da boyz and leave him hanged, drawn and quartered.
No dear readers, Paulson was shrewd. He resorted to the black market, the underground market where all the unregulated derivatives traded. You know the ones sitting on all the banks and pension balance sheets valued at 80 cents to par on the dollar when they're really worth a dime but who's counting anyway. By tapping this black market Paulson could get short a package a guaranteed toxic shit, remember now he chose the pinnacle of shit for this vehicle so guaranteed means GUARANTEED, and never be subjected to the stomach churning, margin call inducing short covering gamz da boyz were playing upstairs, int the light of day, in full view of eunuch-in-chief at the time Chris Cox and the SEC!
For the record I stand corrected. Paulson did pull off the greatest trade ever and did so in an extraordinarily canny, astute way. He fully anticipated da boyz moves in advance. He knew they would cheat him, so just like Paul Newman did in poker game on the train in the absolute must see training video for ALL capital market participants 'The Sting', Paulson CHEATED FIRST and CHEATED BETTER !!!
Kudos to John Paulson. What a grand story to pass from generation to generation by his work-free heirs and heiresses to tell their children.
Warren and Tony
I get a lot of email whenever I challenge or trash his excellency, the oracle, Warren Buffett. Many refuse or simply are incapable of seeing or hearing any ill with 'the oracle'. I on the other hand, see some serious warts on the investment legend and refuse to bow down before his excellency, unlike the mainstream financial media, which caters to his every whim.
That said and trying to keep separate the eerily awkward and uncomfortable Howard Marshall/Anna Nicole Smith thing between 'the oracle' and his CNBC concubine, eerr excuse me, exclusive designated interviewess Becky Quick, lets review Mr. Buffett's recent comments regarding embattled BP CEO Tony Hayward. In particular Buffet had this to say regarding Mr. Hayward:
"Tony Hayward should not continue as BP's CEO, so that the American people can "feel better" about the company's response to its massive oil spill in the Gulf of Mexico."
Now I am not defending Tony but say again Warren? Feel better?
Let me get this straight in my itty bitty cranium. Tony has to go but Lord Blankfein of Goldman, who led the rape and pillage of the taxpayers should stay? Did I get that right? If so, please let me introduce you to a brand new word for your vocabulary.
Hyp*o*crite /ˈhɪpəkrɪt/ [hip-uh-krit]
1. a person who pretends to have virtues, moral or religious beliefs, principles, etc., that he or she does not actually possess, esp. a person whose actions belie stated beliefs.
2. a person who feigns some desirable or publicly approved attitude, esp. one whose private life, opinions, or statements belie his or her public statements.
I thought I would share that with you Mr. Buffett, just in case you may have skipped the word in the dictionary or your copy has that particular page torn out. Maybe comprehension of this word just depends on whether you own the underlying stock in question or not? Just in case you think I am throwing around words haphazardly and being unduly harsh you Mr. Buffett, didn't you recently say in your testimony before the Financial Crisis Inquiry Commission that;
"CEO's of companies that needed public help should go away broke"
If I recall correctly it seems to me that Goldman needed some of that public help you mentioned. You surely remember them now don't you? Goldman Sachs that is, the company you threw $5 billion into, the one's doing God's work. With the same CEO in change.
Warren.... it's spelled H-Y-P-O-C-R-I-T-E. Just in case you forgot.
Lebron James and the NBA
First up the NBA. I am a sports fan, in particular U.S. college basketball and non-MLS soccer. Many friends and associates have been bewildered at my absolute detest for the NBA. My refusal to watch the NBA, let alone pay to watch should be obvious to anyone who has stomached even 5 minutes of the garbage.
Sure Commissioner Stern, I will pay $40-200/seat to watch 10 overpaid, lazy, tatooed from head to toe, purported greatest athletes on the planet, put in any adjective you want here, walk up and down the court to play one on one and then complain for a foul. Of course everyone would much rather do this than pay $8/ticket to watch U of D Mercy play Loyola as the 10 players out there sprint the floor and dive for every loose ball, playing each play like it's the last of their lives.
The NBA is a cess pool and you can stop putting all the blame on the players and give a giant mirror to the Napoleonic owners and their money losing franchises, recycling coaches like the L.A. Clippers Mike Dunleavy who don't know whether they are a coach, GM, scout or ball manager like former New Jersey Nets coach Lawrence Frank. Basically cats like this who would be working at an Arby's outlet were they not ensconced in the merry go round clique that is the NBA.
Amare Stoudamire, 5 years 100 million? Yeah sure. You want odds on the over under on more money or brains for those NBA owners? Mr. Stoudamire must be laughing all the way to the bank. Hopefully he made sure that the bulk of that $100 mill is front loaded. The billionaire club that is the NBA owner fraternity should stick to doing what they do best, besides extorting taxpayer funded stadiums, which is collecting Arabian horses, 100 ft yachts, overpriced real estate and last but not least trophy wives.
Finally a note to Dan Gilbert, owner of the Cleveland Cavaliers. You give me a payroll of 3 million dollars and I can provide you a .500 team and the franchise makes money, guaranteed! And yes Mr. Gilbert you can take that to the bank!
Next up Lebron James. I was on vacation the past few days and could not help but howl at the Lebron spectacle and the frat boy sports media led by ESPN with their hour long "special" on his decision. Have some pride you guys for crying out loud.
Did you happen to catch Ted Strictland, the Ohio governor grovelling to Lebron with other assorted Ohio politicians as they sang with the rest of the brain dead zombies to keep Lebron in Cleveland? The video seems to be disappearing now though. Maybe if Strictland spent time autering the Ohio budget instead of singing Ohio might be faring better.
But really are you shocked Strictland would do this? Or any other politician for that matter? Water seeks its own level and this is something the village idiot can wrap his/her arms around.
State finances are collapsing, the Mexico border is lawless, the gulf is being poisoned, and yet where Lebron plays is deemed important and must see television. Who the bachelorette marries is important? As Donnie Brasco would say fugget about it.
How truly pathetic we have become. Are you still wondering why I'm bearish on stocks?
Don't you just love the volume on the rally of the last 4 days. Speaking of volume, does anyone at CNBC even look at the volume anymore?
Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48
Short 1 unit Apple ticker AAPL @ $275.20 stop @ $280.06