Wednesday, April 28, 2010

Tough Decisions for the Bulls

Bulls are taking yesterday's selloff as a buying opportunity. At the open, call buying was at levels that qualify as "shameless." They'll be facing some tough decisions if the market doesn't quickly bounce back, and the temptation will be to cut their losses.

It looks like Credit Bubble Stocks started buying puts on financial companies six months before the squid got serious about doing it. Looks like they need to get out of Manhattan more!

Bloomberg has an important article about SIGTARP's investigation of the Fed and Treasury

The TARP watchdog has also criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc. was saved from insolvency in 2008, when Geithner was head of the Federal Reserve Bank of New York.

The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.
I have joked about how many 30 year bonds the U.S. Treasury could sell (at a 2% interest rate) if they rescinded the bailouts and seriously investigated the possibility that AIG's sale of CDS at ludicrously low prices was really a "bust out" that insiders knew would be paid for via a bailout of AIG.

Another interesting development is the Sanders-Feingold-DeMint-Leahy-McCain-Vitter-Brownback Federal Reserve Transparency Amendment to the Financial Reform Bill, which
Requires the non-partisan Government Accountability Office (GAO) to conduct an independent and comprehensive audit of the Federal Reserve within one year after the date of enactment of the financial reform bill;
Requires the Federal Reserve within one month after the date of enactment to disclose the names of the financial institutions and foreign central banks that received financial assistance from the Fed since the start of the recession, how much they received, and the exact terms of this taxpayer assistance.
The Fed's partisans are fighting the audit to the death, because it IS the death of them if they are audited. 

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