[firestarter]

Ambac is getting murdered after hours. Hmmm.

[dinopello]

$this->bbcode_second_pass_quote('firestarter', 'A')mbac is getting murdered after hours. Hmmm.

[Cid_Yama]

Bond insurers are begging banks to tear up $125 billion in credit default swaps in order to save their lives. You never know, this could be a blackmail situation…”hey, you rip up these Credit Default Swaps or you will take big losses when we fail”.

Yes, I ride these guys hard and always assume the worst first. Why shouldn’t I? Since New Century failed in March of 2007 we have been lied to at least in 99% of the cases regarding potential serious problems with companies claiming ’there is nothing to see here’ and by officials, analysts and famous investors when talking about the mortgage, housing or credit crisis in general.

My standard operating procedure it to assume they are lying and let them prove they are not. What generally happens is a story like this breaks and the company says ‘there is nothing to see here’. The other companies involved and some sort of official, regulator or large scale investor backs up their story. Then, they find someone on which to blame the story as being ‘misconstrued’. Two months later it comes full circle where the worst case scenario was true all along. I believe that this story could be big.[..]

"The nominal value of these CDSs on CDOs is about $125bn, according to estimates by Standard & Poor’s, and banks with the most exposure, such as Citibank, Merrill Lynch and UBS, have already taken writedowns related to the hedges as the credit quality of the bond insurers has deteriorated in recent months. To commute an insurance contract, the policyholder usually receives an upfront payment in exchange for agreeing to tear up the policy.

There is little certainty about whether or not these CDSs will ever have to be paid out. In theory, bond insurers could be on the hook for billions of dollars, but it is possible that if market conditions stabilise and improve, their actual pay-outs might be low.”

This reminds me of when I make my typical $50 bets with friends on a sporting events and half way into it I am getting killed. I always ask, “how about I pay you $5 now and we call it even” before the game is over knowing my odds of losing $50 are near a sure thing. Hey, you never get anything in life unless you ask for it, right?

This desperate act comes as reports are surfacing that the public mutual fund universe has not been truthful about their structured mortgage debt marks. Sources say that most mutual fund managers have their MBS holdings mis-priced, which puts the public at significant risk. The job that structured mortgage debt did on hedge funds and banks has been bad, but a mark-to-market across the public mutual fund universe could be worse because it’s larger and directly effects Ma and Pa America.

link

[bratticus]

Whitney Tilson on Financials (YouTube link)

[Jotapay]

Take it for what you will.

Ticker Forum
Investment News Link

$this->bbcode_second_pass_quote('', '
')The credit crisis is causing a growing number of delivery failures with Treasury securities.

The latest data from the Federal Reserve Bank of New York showed that cumulative failures hit a record $2.29 trillion as of Oct. 1. The federal settlement period is T+1 (trade date plus one day).

[idiom]

So huge number of people are going to discover they don't own Treasuries they paid for?

Physical T-Bills are only good store of value?

[Jotapay]

If true, this is the craziest thing I've ever seen.

[patience]

Scariest thing I've seen yet. And my wife is trying to get her Thrift Savings Plan cashed out at the Censusu Bureau. It's "supposed" to be all in US Treasuries. Aaah, but her password was unexplainably "changed", so she can't access the account online..... They will snail-mail her account number to her for access. Wonder what will happen by the time THAT gets here?

There goes our 50 grand? DAMN!! I HOPE NOT!!!

I'll post the results here. But if we can't get a Govt.-backed Treasury account out of her Govt. job savings plan, then truly, TS HAS TF.

FWIW, While I was reading the Tickerforum link, they locked it out to non-paying members, which means they are swamped with hits today.

[Jotapay]

$this->bbcode_second_pass_quote('patience', '
')FWIW, While I was reading the Tickerforum link, they locked it out to non-paying members, which means they are swamped with hits today.

[seahorse2]

Raising capital is hard in this recession. America needs new ways of raising capital to finance a transition to other energy sources while at the same time creating jobs. So, I propose the Federal gov't authorize a new tax free "energy bond" that private companies can issue to raise capital for projects like nuclear plants, windmills, clean coal plants, railroads, hybrid and electric cars, solar manufactures, etc. The interest on these bonds would be exempt from Federal and State taxes.

[Tanada]

$this->bbcode_second_pass_quote('seahorse2', 'R')aising capital is hard in this recession. America needs new ways of raising capital to finance a transition to other energy sources while at the same time creating jobs. So, I propose the Federal gov't authorize a new tax free "energy bond" that private companies can issue to raise capital for projects like nuclear plants, windmills, clean coal plants, railroads, hybrid and electric cars, solar manufactures, etc. The interest on these bonds would be exempt from Federal and State taxes.

[seahorse]

I would hope that a market for these could be created like the old WWII "War Bonds." Even better, with tax free energy bonds, individuals could buy a bond for their own favorite project, support it, instead of sending tax dollars to the black hole of the gov't coffers.

[aahala2]

$this->bbcode_second_pass_quote('seahorse2', 'R')aising capital is hard in this recession. America needs new ways of raising capital to finance a transition to other energy sources while at the same time creating jobs. So, I propose the Federal gov't authorize a new tax free "energy bond" that private companies can issue to raise capital for projects like nuclear plants, windmills, clean coal plants, railroads, hybrid and electric cars, solar manufactures, etc. The interest on these bonds would be exempt from Federal and State taxes.

[jamest]

Interesting idea.

My only concern is, who would decide what would be a qualified energy investment? If it's left in the hands of congress, they will use this as a mechanism for funneling money to their constituencies, regardless of the merits of the venture for energy development.

We all know what they did with biofuels, which turned almost immediately into the corn ethanol scam that has very little to do with energy production, but everything to do with political largesse.

[seahorse2]

aahala,

I haven't read the report you linked, at least not yet. But I did see the title is about Federal subsidies, which means the Federal gov't provides financing to a project. An "energy bond" would not require any gov't money, no gov't subsidy, other than exempting the payments on the bonds from state and federal taxes. It would be similar to a revenue bond, which is typically exempt from taxes and repaid from revenues generated from the project.

These "energy bonds" would hopefully catch the political momentum building up in society to "go green and fight global warming" to "get off fossil fuels" and support local projects or the project of their choice. I think that "energy bonds" would hopefully encourage individuals to contribute, or buy bonds, for their own favorite projects.

We could possibly make a "reverse bond" which is in reality a tax free contribution to a project. For example, a local utility needs capital to put up a windmill. It issues "energy bonds" to do so. The bonds pay no interest, but the principal paid for the bond is treated as any other deductible contribution.

[vtsnowedin]

When your writing your legislation don't forget to make the principle a tax deduction from gross income. Also make the interest income exempt from the AMT. That should generate an adaquate pool of capital to build whatever is needed.

[ReverseEngineer]

For the first time in 9 months since the credit crisis began gathering steam, CA is going to try to sell $4B in Bonds starting on Monday. The State Comptroller even bought $500K worth of radio and print ads hawking this toilet paper.

SFGate

WTF in their right mind would invest money in CA bonds? This is like investing in a turd spiralling down the toilet after you flush it. It hasn't quite made it down to the septic tank yet, but the turd is inexorably moving in that direction.

After the initial offering to individual investors, the unsold bond (likely about ALL of them) will be offered up to Investment Banks to buy. How many investment banks are LEFT to buy CA TP? The likely buyer here if this is an inside job would be Goldman, using Obamout TP. If nobody does buy the Bonds, it could be the kind of signal for a Bond Market dislocation we all have been waiting for.

Apparently our Goobermint officials at all levels are convinced you can keep issuing more debt and moving it around in a perpetual motion machine. At some point here the wheels have to fly off this bus though. The CA Bond sale might just be the Canary in the Coal Mine we have been waiting for.

Reverse Engineer

[seldom_seen]

California doesn't have a printing press. So yeah, they need some backdoor to download Bernanke dollars to the state.

The fed giving the money to Goldman, who then buys the bonds sounds about right to me.
Of course we'll never know.

Is it just a coincidence that this bond sale is announced at the same time as Geithner's new "plan" to give money to hedge funds to buy up worthless paper?

[patience]

If they had such a helluva time getting money to pay for tax REFUNDS, who would LEND them anything? They must think we all have "stupid" tattooed on our foreheads. It's all about reurn OF capital now, not about earnings. I don't think they can pry money out of the hands of dead people, let alone a living person with more than a dozen functioning brain cells.

[misterno]

I wonder what the interest rate on these bonds gonna be? If they default I will be more than glad to take over terminator's wife.