Dear CIGAs,
The madness continues. How many of these swaps, better known as Credit Default OTC derivatives, do you really believe are properly hedged or just ratio hedged? Ratio hedge is a nice way of saying not hedged. There is very little difference between how MBIA guaranteed against financial failure (which was a cartoon) and how these instruments work.
This is an example of how all the financial intervention simply made Wall Street whole but never focused on making the Weapons of Mass Destruction, the OTC derivative, whole. On top of that the institutions that brought this disaster to you that have now all been rescued are simply going on producing more toxic paper that will not function when called upon to.
On top of that, MOPE (management of perspective economics) says OTC derivatives are just fine by quoting these damn things as indicators of credit worthiness according to the value of the swap. Swap what? Do you really believe the other side is 100% short of the NYT or their debt? They are simply not! They at best have a ratio spread on that. Tomorrow morning if the NYT was broken the instruments would be equally broken.
New York Times Swaps May Double, Analyst Report Says
July 13 (Bloomberg) — The cost to protect against a default by New York Times Co. may almost double as the newspaper publisher fails to pull out of a “nosedive” in revenue, according to Credit Derivatives Research LLC.
Investors should buy credit-default swaps on the publisher of the New York Times and Boston Globe in a bet that its second- quarter earnings report will spark an increase in the derivatives, used to speculate on creditworthiness or to hedge against losses, analyst Byron Douglass said in a July 10 note to clients. The contracts, trading at about 580 basis points, or the equivalent of $580,000 a year for every $10 million of debt protected, may climb to 1,000 basis points, he wrote.
Times Co., looking for new revenue after a 27 percent decline in first-quarter advertising sales, said in a survey sent to print subscribers last week that it’s considering a $5 monthly fee for access to its namesake newspaper’s Web site.
“With advertising revenues falling and not showing any signs of stabilization, we find the company grasping for any sort of additional revenue to be rather distressing for its credit valuation,” wrote Douglass, who is based in Walnut Creek, California.
The “fair value” of credit swaps on Times Co., based on measures including its share price and options on the equity, suggest they should be trading at 1,000 basis points, he wrote. The contracts are down from a record 1,098 basis points on Dec. 8, according to CMA DataVision prices.
Catherine Mathis, a Times Co. spokeswoman, said in an e- mail she didn’t have an immediate comment on the analyst report.
Jim Sinclair’s Commentary
All he had to do was give the money to the poor. He would have been Robin Hood and let off on community service
New York lawyer sentenced to 20 years for financial fraud
NEW YORK, July 13 (Xinhua) — A New York lawyer was sentenced to 20 years in prison Monday for financial fraud, following arch swindler Bernard Madoff’s imprisonment of 150 years last month.
Marc Dreier, a lawyer in Manhattan, admitted he had stole more than 46 million dollars from hedge funds by selling them fake promissory notes.
Dreier’s lawyers asked the court to sentence him only 10 years in prison, however, Dreier was assumed to be sentenced to as long as 145 years in jail. His judge Jed Rakoff sentenced him 20 years in prison, which was obviously much shorter than expected.
Dreier, 59, graduated from Yale University and Harvard Law School, and then became a lawyer in Manhattan. On May 11, 2009, he pledged guilty to eight charges including money laundering, securities fraud and wire fraud.
Dreier reportedly spent a huge amount of money to maintain his luxury lifestyle. He had an ocean view luxury apartment on the Upper East Side New York. He also has several expensive cars and a 18-million-dollar yacht. His office had a large number of art collections including Picasso and Warhol’s works. The estimate value of his collections was 40 million dollars.
Jim Sinclair’s Commentary
Yes there is something to believe in – GOLD!
The very fabric of society is breaking down around us. What the hell is there left to believe in?
It’s all gone wrong. Our belief in everything has been shattered by a series of shock revelations that have shaken our core to its core. You can’t move for toppling institutions. Television, the economy, the police, the House of Commons, and, most recently, the press … all revealed to be jam-packed with liars and bastards and graspers and bullies and turds.
And we knew. We knew. But we were deep in denial, like a cuckolded partner who knows the sorry truth but tries their best to ignore it. Over the last 18 months the spotlight of truth has swung this way and that, and one institution after another was suddenly exposed as being precisely as rotten as we always thought it was. What’s that? Phone-in TV quizzes might a bit of con? The economic boom is an unsustainable fantasy? Riot police can be a little "handy"? MPs are greedy? The News of the World might have used underhand tactics to get a story? What next? Oxygen is flavourless? Cows stink at water polo? Children are overrated? We knew all this stuff. We just didn’t have the details.
Jim Sinclair’s Commentary
Prepare yourself for more of this.
FBI: Bank robber cites economy during holdup
HOUSTON CHRONICLE
July 14, 2009, 1:35AM
A pistol-wielding robber blamed the nation’s troubled economy for a holdup this morning at a northwest Houston bank, authorities said.
While demanding cash about 10:30 a.m. from a teller at a Compass bank branch, 12514 Tomball Parkway, the armed robber said, “I’m only doing this to eat. They’re not letting me work,“ FBI officials said.
