Thursday, January 6, 2011

News Items

Some quick news items. 

It appears the U.S. economy is incredibly strong. We all know it to be so and it is reinforced daily by the propaganda outlets known as the mainstream media. Yes, the economy is so strong that according to recent Fed minutes;

"Federal Reserve officials stuck with the pace of their $600 billion Treasury bond-buying program last month because the economy wasn't improving fast enough to make a noticeable dent in unemployment, minutes of the December meeting show."

Yes nothing to see here, move along. 

In other equally useless news it appears bankruptcy filings rose 9% last year. Nothing to worry about those numbers either. Again, please continue moving along. 

It also appears, according to Gallup, that unemployment rose in December. Go figure!

The St Louis Fed recently reported that initial claims for unemployment rose. Who'd a thunk?

And in yet more evidence of the charade that is our markets, not that anyone cares anymore, it seems S&P put out a press release before the holidays -which I missed as I coulda been in the eggnog early - in which they indicated they May Reduce 1196 Securities Tied to Residential Mortgages After Errors. You're kidding right?

As Jesse Eisinger reports in his great piece, Standard and Poor's Triple A Ratings Collapse Again. The Question is Why? over at Pro Republica:

"Well, two-thirds of these mortgage bonds were rated only last year, long after the financial crisis. And S&P was supposed to have taken the distress of the housing crash and credit crisis into account when it assessed them. But in December, the ratings agency admitted that it had made methodological mistakes, including not understanding who would get interest payments when."

You can and should read Jesse's piece as it is a good one.  But in my opinion, you can take a sample of this mortgage paper, let's call it a sample of shit. (Pardon the expression)

You can then slice, dice, grind, mince, saute and puree it and yet you still have shit. (again, pardon the expression)

Further to this, you can take more crap. (ooops, oh well)

You can then bundle, package, tranche, tier and categorize it all every which way to Sunday and yet you still have crap.

Even further to this, you can call Moodys or in this case Standard and Poors and they can slap a AAA rating on heap yet it is still crap! 

And even still further to this, you can haul out any number of Ivy league MBA's, PhD's and Nobel prize winners in economics or physics for that matter to tell me it isn't shit but I can assure you with the utmost confidence that this is in fact still crap.

Jesse goes on in the article to say: 

"The agencies rated billions of dollars worth of these bonds, mostly just in the last two years. With shocking rapidity, even some of those Triple As have defaulted.

The lesson is that the agencies are still susceptible to problems that plagued them before the crisis."

"Still susceptible to problems that plagued them before the crisis." Jesse? 

C'mon man. Take the gloves off. 

Jesse seems to be a little more politically correct than we over here at Prudens Speculari are. How about "they're still on the take, selling a AAA rating to the highest bidder Jesse?"

How far behind the ball ya think Moody's is on this issue? Can you imagine saying something like that about a firm 'the oracle' (Warren Buffet) and the Hypocrite of the Year (Charlie Munger) have a huge stake in.

In other equally useless and meaningless news you may have missed it, but over the holidays a Brookline, Mass principal sent home permission slips with students for the pledge of allegiance. Yes you read that correctly.  So given this state of affairs you really shouldn't be shocked with this next one.

One Ezra Klein from the Washington Post appeared on MSNBC the other day to declare:

"The issue of the Constitution is that the text is confusing because it was written more than 100 years ago and what people believe it says differs from person to person and differs depending on what they want to get done."

Lovely. What a piece of work this Klein is. No doubt a hot commodity now with a full dance card at all the major media outlets. 

Please my good waiter, take the steak back as I am only interested in the sizzle~!

I guess now the path to stardom and the punditry circuit is to stand on the rooftops and shout the most assinine statement you can think of and the result is your 60 seconds of fame, a la Henry Blodgett calling for AMZN $400, or Koran burning hick pastor to what, maybe a flock of 50, Terry Jones.


Now hear this "THE EARTH IS FLAT.....I repeat..... THE EARTH IS FLAT !"

All major media outlets can contact my booking agent below to schedule me !

Absolutely breathtaking for what passes for punditry these days. How do you say 'shit for brains' in proper jounalistic diplomatese?

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".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
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 @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84

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