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Tuesday, December 22, 2009

Brainstorming Tuesday - part1

1. The FED fraud with its MBS purchases in the magnitude of 1.3 tril is driving most of the profits in Bondtrading on Wallstreet. Altis outright FED buying A and Prime have almost doubled from the lows due to the outright buying spree despite the fact that delinquencies are rising sharply. The FED has produced a price bubble which helped the banks to get rid of them at atrificial high prices while others were trading with the backstop of the FED. THis is a double fraud as Wallstreet got artificially created profits sponsored by the FED who will at some point declare outrageous losses on this investments.
Banks who created this mess are noıw getting to make profits of worthless paper which will hit taxpayers in years to come as the FED will hold them till maturity and does not need to mark them to market. For now some of the purchases of the FED on those may even look like profits buts that is just on paper as there is no real buyer besides them. As soon as their program stops the value will drop. The TARP which was supposed to buy this toxic stuff was not used as the congress mişght have ruled into the operation but the FED could do this to their liking or actually to the liking of the banks.

2. GDP finally at 2.2 after starting at 3.5 , which is a classic strategy of DC as market does not care now anymore it got the market to the year end high so the crooked bonus can be paid out. The Christmas presents for the ranking politicians who supported this biggest theft in history will be obscene - its about time for the people to speak up actually rather act. The consumption grew by 2.8% they claim which is a lie as it is nothing but the hidden inflation ( see chart below). After deducting real inflation this quarter GDP is in the red again around -2 /-3%.
Alternate CPI Chart

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