MonkeyBusinessBlog

Hmm. "Leading Indicators" and "Philly Fed" Versus 5.23% of ALL PRIME MORTGAGE LOANS NOW DELINQUENT...IN SECOND QUARTER!!!

Naturally, stocks rallied off of the better than expected Leading Indicators and Philly Fed as opposed to the horrifying mortgage delinquencies (not to mention the news of the FDIC's beggaring and corporate defaults setting new records)!  I swear, when it comes to this market the only comparison that I can make from personal experience is a time from college.  I had to spend a Saturday in the library doing some school work (I guess) and when I came back to my dorm all my buddies had eaten magic mushrooms.  Since I was the only sober one (of course nobody saved anything for me), they picked, or I should say begged, me to drive them to the National Zoo. Imagine walking around with six guys hallucinating on shrooms at the zoo and your the only one who's not high on anything.

Anyway, that is how I felt after seeing these numbers lumped together and watching stockees go up! Here's a great piece of sobering reality (13% of ALL mortgage loans are now either delinquent or in default), after Santelli, from one of the few value added members of CNBC, Diana Olick.  

AIG Keeps the Laughs Going While FHA Keeps the Subprime Loans Flowing!

Last post from me today.  I am taking the family to New Yankee Stadium!  If at some point the money supply dips sharply around 1PM, don't be alarmed. It's just me using my debit card to buy the kids lunch and souvenirs!

What's funnier than this Benmosche Said to Start AIG Tenure With Croatian Trip.  

Robert Benmosche, the chief executive officer ofAmerican International Group Inc., plans to spend part of his first month leading the insurer in Croatia on vacation, according to two people familiar with the situation.

Benmosche, 65, who started yesterday as CEO and president of the bailed-out company, will leave for about two weeks, according to one of the people, who declined to be identified because the plans were private. Mark Herr, an AIG spokesman, said the New York-based firm wouldn’t comment on CEO travel.

“It’s probably not a propitious time for an incoming CEO to begin with a vacation,” said Steven Seiden, president of New York-based executive recruitment firm Seiden Krieger Associates. Seiden said that while the absence won’t hurt the company’s financial position, “from a public relations standpoint it’s probably not the wisest thing to do.”

Benmosche bought a Croatian villa, with 8,000 square feet of living space located along the Adriatic Coast, after visiting Dubrovnik in 1999, according to a 2004 Forbes magazine article. He paid about $1 million for the property, which was built in 1934 for the king of Yugoslavia’s treasurer and included four buildings and 150 feet of waterfront, the magazine said.

“It’s breathtaking -- you couldn’t find anything like this anywhere else,” Benmosche told Forbes. “I’m an hour’s flight to most places in Europe and a ferry ride across the Adriatic to Italy.”

People, I ask you.  Could anybody possibly make this sh*t up?  What were the choices?

1. Another Goldman Sachs Board member or,
2. A tone-deaf Ass-h*le. 

Also, a vital report from the field from our good buddy and real estate mogul Fletch.  Remember yesterday the WSJ The Next Fannie Mae. FHA and GNMA are Becoming $1 trillion Subprime Guarantors.  Fletch reports that the FHA is the only game in town.  His real estate empire sold a property yesterday with the buyer heavily FHA subsidized, ZERO money down!  

How we doin??  Think about this the next "Pending Home Sales" or "Existing Home Sales" number comes out.

Ok, off to get fleeced at the Stadium.  At least they're winning!

  

The Invisible Hand of Government in the Debt Markets!

From Bloomberg News;

“It puts Ford, which is attempting to do everything right, at a huge competitive disadvantage to GM, which is run by the government,” said Representative Jeb Hensarling, a Texas Republican. “It’s very difficult to compete with somebody who can print money and, legally, only Uncle Sam can do that.”

Ford’s higher cost of capital is highlighted in two recent transactions.

GMAC, 9.9 percent owned by GM and lender to its dealers and buyers, sold $3.5 billion of 2.2 percent three-and-a-half year notes on June 3 guaranteed by the Federal Deposit Insurance Corp. priced at 99.841 cents on the dollar to yield 2.25 percent. Ford issued $1.1 billion of five-year 8 percent notes May 28, priced at 82.036 cents on the dollar to yield 13 percent. Paying a higher yield boosts Ford’s borrowing costs.

Hmm, Bankrupt Company - 3-year Debt Guaranteed By FDIC 2.25%

          Solvent Company    - 5-year Debt 13%

Nothing to see here folks, keep moving please.  And now for some inspiration!

April Fools Day Again?

From Bloomberg News;

April 29 (Bloomberg) -- U.S. stocks rose for the first time in three days as banks rallied following Fox-Pitt Kelton Cochran Caronia Waller’s first upgrade of the industry since 2004 and energy shares climbed with oil.

Citigroup Inc. and Bank of America Corp. gained more than 4.8 percent after Fox-Pitt analysts said non-performing assets will peak at the end of 2009. Exxon Mobil Corp. and ConocoPhillips gained as oil rebounded above $50 a barrel. Equities advanced even after government data showed economy contracted more than economists estimated in the first quarter.

The Standard & Poor’s 500 Index increased 0.9 percent to 863.03 at 9:35 a.m. in New York. The Dow Jones Industrial Average rallied 63.40 points, or 0.8 percent to 8,080.35. Stocks in Europe and Asia climbed as earnings at companies from Siemens AG and Sanofi-Aventis SA to China Petroleum & Chemical Corp. showed profits are weathering the worst of the global recession.

“The market is now saying it’s a possibility that banks will earn money and those profits will build up their balance sheets,” said Robert Lutts, who oversees $400 million as president and chief investment officer at Cabot Money Management Inc. in Salem, Massachusetts. “Writeoffs are coming to an end.”

No comment necessary from me.  Good Luck.

"Okay Boys, Name of the Game is Pass the Trash....All CDO's are Wild!"

This is just fabulous.  As if the American people aren't pissed off enough.  Today in the Financial Times we have this Bailed-Out Bank Groups Consider Buying Toxic Assets From Rivals. 

I used to have a great "Beavis and Butt-Head" clip where the boys enter a school fundraising contest by selling candy.  While all the other kids are out selling candy to actual customers, Beavis and Butt-Head start with $2 by selling two candy bars to their neighbor and then spend the rest of the day passing the two bucks back and forth to one another, buying candy from each other and eating it all! 

Now here we are with the Treasury's PPIP scheme to "get legacy assets off bank books".  Naturally, the banks have figured out a way to arbitrage the plan in about ten minutes!  Considering that Timmy probably came to them with the plan first, before putting it out, the banks probably already were in full "arb-mode" two weeks before Timmy laid it down to the public.  From the FT article;

Banks have three options if they want to buy toxic assets: apply to become one of four or five fund managers that will purchase troubled securities; bid for packages of bad loans; or buy into funds set up by others. The government plan does not allow banks to buy their own assets, but there is no ban on the purchase of securities and loans sold by others.

“It’s an open programme designed to get markets going,” a Treasury official said. But he added: “It is between a bank and their supervisor whether they are healthy enough to acquire assets,” raising the possibility regulators may prevent weak banks from becoming buyers.

Wall Street executives argue that banks’ asset purchases would help achieve the second main goal of the plan: to establish prices and kick-start the market for illiquid assets.

Good Lord!  The government is like a newbie getting thrown into general population at Rikers Island!  We are going to "establish prices" first by pumping them up with once in a life time non-recourse term funding, and THEN the banks, especially the "troubled banks" are going to do what Beavis and Butt-Head did in their little candy sale.....pump the prices some more by investing in funds run by PIMROCKSAM to buy each other's crappy assets!!!  The end result?  Not only are taxpayers on the hook for the majority of the risk, but the banks aren't even clearing their freaking balance sheets!! Combine this with the new FASB ruling and we may just have reached the very top of this whole cluster-f**K!