by Tyler Durden via zero hedge
http://www.zerohedge.com/article/ransquawk-10th-march-morning-briefing-stocks-bonds-fx-etc-0

1) Somebody (wink wink) spreads a rumor that shorting government-owned companies will be banned. Citi is one of these companies.

2) Rumor spreads, causing AIG, C, FNM and FRE to skyrocket.

3) Citi announces it is placing $2 billion in TruPS, benefiting from the stock-buying orgy.

4) Cramer, and a bunch of fourth-rate analysts come out of the woodwork, and join the bandwagon, saying how Citi is massively undervalued and how the stock is merely an indication of the market realization that Citi’s -100% Tier 1 capital when Marked-to-Market is a much more palatable 349,594,388% when Marked-To-Bullshit.

5) SEC (wink wink) comes out with a one sentence refutation of the rumor late at night, when nobody will notice: “There is no truth to the rumor that we are considering restricting the
short-selling of stocks in which the government has a stake,” John
Nester, Securities and Exchange Commission.

And that’s how the market works nowadays. Better luck next time.

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/scamming-investors-continues-courtesy-rumormill-formerly-known-equity-market

Entropy – Why the World as We Know It Is Dying, submitted by David Galland, of The Casey Report

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/guest-post-entropy-%E2%80%93-why-world-we-know-it-dying

Columbia’s Charles Calomiris, who predicted the Argentina sovereign debt crisis (not sure which one: do people actually keep count?) was on Bloomberg TV spreading some more logic, first as pertains to those satanic monsters better known as CDS traders with the following piece of brilliance - “the CDS market always requires two parties in any transaction.” This is something that everyone tends to forget. Unlike stocks or cash bonds, where the whole concept of Zero Sum is somewhat murky (especially in naked shorting) in derivatives it is precisely that - one man’s loss is another man’s gain - no exceptions. Why is nobody scapegoating those traders who enable the speculators to exist? If you raise the CDS offer high enough nobody will buy - we could just as easily blame the CDS sellers for their stupidity and willingness to take on capital losses. But as the whole topic of CDS speculators is pretty much a dead horse at this point. Calomiris also points out another obvious feature of the Greek speculator raid: “the spreads that we saw in Greece at their worst in the CDS market were about 4%. Based on what we know from the history of sovereign crises given the current fundamentals in Greece if anything that is a very muted response in the market. I would have expected a much greater response and I think we will see a much greater response...” Second, Calomiris says that the next country to fall after Greece will be not Spain, but Italy - the reason: massive governmental corruption.

And here is what is the real problem - someone please notify Papandreou.

“This is just a case of shoot the messenger. I think we need to focus on the unsustainable situation that Greece has gotten itself into, with the highest consumption to GDP ration in Europe, one of the lowest labor force participation rates in Europe, one of the highest government social protection rates in Europe, and deficits that have been outsized for several years during the boom, and the of course the fraudulent accounting. I should also note that within the Eurozone, Greece has the worst corruption score according to Transparency International which is a problem because it is telling you is that the institutional quality of the Greek government for reforming itself is very low.”

Not surprisingly the next casualty of the rolling crisis (because, to quote Dubya, make no mistake, the crisis will be back very soon) will be not Spain or Portugal, but Italy - another nation using swap gimmickry to enter the Eurozone back in the day.

“The real concern right now should be on Italy. Italy is the country that is most like Greece in this current situation. Highest Debt to GDP ratio, not as high deficits so with smaller changes they can stop the problem. They also, however are very corrupt. They are second to Greece in the level of corruption within the Eurozone.”

As a reminder, Italy CDS trade in the low 90s. Evil, hideous speculators - dig in.

Full clip after the jump:

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/columbia-prof-who-called-argentina-crisis-corruption-reason-italy-will-be-next

The meeting between the Greek Minister Of Prime Scapegoating and the US Secretary of Treasury Defrauding (”I used TurboTax”) has ended “satisfactorily”: idiotic lunacy, which we are now convinced has mutated and gone airborne, has spread and now Geithner is very likely infected. According to preliminary reports president Obama may be contagious as well. G-Pap is quoted by Market News as saying that “President Barack Obama gave a positive response to the European efforts to combat some aspects of market speculation that could destabilize markets and the euro.” Seriously, is this just some sick, perverted scheme to make going long the dollar (short the euro) illegal? Can we just make it so much easier and simply hand Benny and the Inkjets the constitution to use as 1-ply Treasury Paper one of these days?

Some memorable quotes from Papandreou, who had he spent half the time fixing his busted budget as chasing after windmills and CDS trade tickets, Greece would have a budget surplus several time greater than its GDP, and not resort to hiring CB Richard Ellis to sell Mykonos.

“The European Union is stepping up to its responsibilities to deal with this issue, and I think that is a very important signal around the world because what is saying is that Europe is united on this cause, there is solidarity, and it will not allow speculators to play around with the stability of the eurozone and the currency.

It is very important to stabilize international markets to not allow the crises that may occur, such as the one that occurred in Greece, be used to create wider destabilization either of the eurozone or of the world financial system.

I found a very positive response by President and certainly this will be an issue that will be high on the agenda at the next G20 meeting.”

Furthermore,  Papandreou said German President Angela Merkel and French President Nicolas Sarkozy have joined him in taking the initiative to fight against such speculation. As for describing his meeting with Geithner, Papa said he had a good meeting in which he discussed specifics on the possible anti-speculation measures.

And since this is a world tour, and some concertgoers always get stuck in the nosebleeds, G-Pap, said, for the n millionth time, that Greece was not begging (or any variation thereof) for financial aid, and that all signs to the contrary have been planted by rogue and vile speculators.

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/us-leg-blame-fxcdsgoatherding-speculators-world-tour-comes-end-front-tim-geithners-office

Former Bridgewater-ite (which we hear is not doing that hot lately) Rick Bookstaber, who was recently appointed at the SEC in some risk management capacity, comes out with a truly amusing rant on why gold is in a bubble, and, not just that, but that “we all know gold is in a bubble.” Ignore the fact that all multi-billionaire hedge fund managers have been loading up, all relevant and semi-relevant pundits have been claiming that gold is gradually becoming the one alternative to fiat debasement which has recently become a global phenomenon, and ignore that even with the dollar going up, gold has defended its 1,100 an ounce price quite successfully. Bookstaber compiles vivid imagery upon even more vivid imagery, and goes as far as comparing the quest for gold with the pursuit of hookers “Even if a guy is just after sex, he at least has the decency to act like there is some substance behind his interest. But with gold, no one seems even to
care about giving a justification, other than “gold has been a store of
value throughout 5,000 years of monetary history”. No one? Dear Mr. Bookstaber, feel free to peruse the following thoughts by Eric Sprott, Dylan Grice, Hugh Hendry, David Rosenberg, Fred Hickey, Jim Grant, David Einhorn and last but not least, Goldman Sachs, on some contrarian opinions to your prevailing dogma. And speaking of unconflicted advance warning vis-a-vis ponzi bubbles, where was your current employer cautioning the general population about the dot com bubble? Or the housing/credit bubble? Or the Madoff ponzi? Or the current Great Currency Deflation Bubble? Perhaps you can expend your time and energy on the real source of soon-to-be unparalleled wealth loss instead of focusing on the fringe “tin foil”-hatted gold community which nobody takes seriously anyway (except India of course which just incidentally bought 200 tons of gold north of $1,000).

From the SEC-member’s blog:

The Gold Bubble

This represents my personal opinion, not the views of the SEC or its staff.

I am not going to spend time here talking about how the price of
gold is off-the-wall, that it is not just a bubble in the making, but a
bubble waiting to burst. I don’t want to waste your time on that
point.We all know it is a bubble.

George Soros has said “The ultimate asset bubble is gold”. Many of
the top asset managers, such as Tudor and Paulson, are piling on; Paul
Tudor Jones recently said gold “has its time and place, and now is that
time.” The banks are echoing this view with their research. Goldman has
a research piece that looks for gold to approach $1,400 in the next
year. The more ebullient Charles Morris of HSBC has said, “I absolutely
believe it’s heading into a bubble, but that’s why you buy it. ” He,
along with a number of other professional and otherwise rational
managers, looks for gold to move as high as $5,000 an ounce.

More interesting than this almost universal agreement is what that agreement tells us about the dynamics of the market.

The Naked Bubble

Usually the markets have the
courtesy of giving cover for bubbles. We adorn the bubbles with some
justification. Even if a guy is just after sex, he at least has the
decency to act like there is some substance behind his interest. For
the Internet bubble, it was that fundamental analysis based on the
brick and mortar world did not bear relevance in the New Paradigm. For
the Nikkei bubble, it was that the crazy P/E ratios were not
considering one subtlety or another in the Japanese accounting system.

But with gold, no one seems even
to care about giving a justification, other than “gold has been a store
of value throughout 5,000 years of monetary history”. Which is fine as
far as it goes, but that doesn’t say anything about what the price of
that store of value should be.

Pump and Dump

Given that “hedge fund” and “highly secretive” are usually said in
the same breath, don’t you get suspicious when so many of the top
managers are so vocally out there about their gold investments? And
when their positions are structured in a way that make them open to
view? Paulson and Soros have huge positions in gold ETFs. We know that,
because if you buy ETFs, they show up in your 13-F filing. Granted,
with an equity investment you can’t help putting that information out
into the market, but with an asset there are plenty of ways to take the
position without signaling it.

That they are taking a highly
visible route to their positions suggests the game that is being played
is one of leading the herd. The 13-F reports positions with a big lag,
so no one will notice if they quietly slip out the side door while the
party is still hopping. And how about when the view is backed up by
none other than Goldman Sachs? Will they let everyone know when they
think it has gone too far before they get out. Or before they go short?
Maybe they already have.

Herds, crowds, mobs, and the Top Ten

And yet, we follow the herd, as we have countless times in the
past. Herding is a timeless and universal market behavior, but one that
seems less than rational. It is broader than markets; think of the Top
Ten phenomenon. We feel better if a lot of other people think that our
favorite artist or actor is The Best. We like a song better if we know
a lot of other people are liking it as well. Thus our love affair with
lists. Magazines featuring the Ten Sexiest, the Five Best, the 100
Whatever are all best sellers, even if the list is the product of a
story meeting between an editor and five reporters.

Herding can be explained as an
artifact of what was rational behavior in earlier times, when we were
running around as hunter gatherers. Back then, mob and herding behavior
made sense. Mob behavior if attacking a competitive group or killing a
large animal; herding behavior if protecting against predators or
uprooting to a new location. Whatever it was that got started, you
could be pretty sure there was safety in having a crowd on hand to
finish it.

The very notion of mobs and herds evokes a certain spontaneity. But
with the gold bubble, we are moving on to a concept of herding by
appointment. Everyone seems to be happy in agreeing that this is a
bubble, and we are all going to participate in this bubble in a
rational, genteel way. We have all decided that this is going to be a
number one hit, a Top Ten. Though we might want to ask who is leading
this herd, because my bet is they will be stepping aside and cheering
us over the cliff.

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/sec-employee-rick-boostaber-we-all-know-gold-bubble

The SEC’s Chief Economist and PPT liaison, who previously held the same position at the Gary Gensler (former Goldmanite) run CFTC, has decided to leave the much maligned and impoverished syndicate for greener pastures. His next stop: NERA Economic Consulting.

Bloomberg has additional info on his departure which was provoked by Schapiro’s most recent short selling lunacy, and the Republican purges at the SEC.

The U.S. Securities and Exchange
Commission’s top economist is leaving the agency after Chairman
Mary Schapiro merged his office with another and passed short-
selling rules that hedge funds said ignored financial analysis.

Republican commissioners cited economic analysis last month
as they protested the SEC’s new restrictions on short-selling,
saying the agency lacked data to show bearish stock bets
contributed to the 2008 financial crisis. Kynikos Associates
Ltd. President James Chanos, in a news release after the vote,
said the SEC disregarded evidence that short-selling boosts
liquidity and leads to more accurate stock valuations.

“Because there were fears that short-sellers were causing
problems, the SEC responded,” said Lawrence Harris, a former
chief economist for the agency who’s now a finance professor at
the University of Southern California in Los Angeles. “We don’t
want to do things in the heat of the moment that we later
regret. Analysis helps ensure that the government doesn’t make
capricious decisions.”

Overdahl was named chief economist three years ago by
Christopher Cox, Schapiro’s Republican predecessor. He stopped
reporting directly to Schapiro in September after she merged
economic analysis with the office charged with spotting emerging
risks to financial markets. Schapiro appointed University of
Texas law professor Henry Hu to oversee the combined unit.

Overdahl said he will work in NERA’s Washington office as a
vice president in the securities and finance group. He declined
to comment on whether the short-sale rules or the reorganization
affected his decision, and said today in an interview that he
began his job search before last month’s vote.

From the SEC:

The Securities and Exchange Commission announced today that Chief Economist James A. Overdahl will leave the agency to rejoin the private sector after serving since July 2007 as principal economic advisor to the Commission on policy, rulemaking, and litigation support.

As Director of the Commis’sion’s Office of Economic Analysis, Mr. Overdahl supervised the agencys economics program, advising policymakers on a wide variety of topics affecting securities markets including the role of securities lending and short selling, market structure issues, money market mutual funds, credit rating agencies, and litigation matters.  The Office of Economic Analysis is part of the SECs new Division of Risk, Strategy, and Financial Innovation.

“Given the importance of rigorous economic analysis to the Commission, we truly appreciate Jim’s dedication and his many contributions during a time of extraordinary challenges in our financial markets,” said SEC Chairman Mary L. Schapiro.

“Both as a member of the staff in the early 1990’s and then later as Chief Economist, Jim brought to the Commission real expertise in a number of economic areas, including market structure, enforcement issues, and derivative securities,” said Henry Hu, Director of the Division of Risk, Strategy, and Financial Innovation. “Jim’s a fine, thoughtful economist who provided leadership related to the economic analysis so material to the Commission’s activities.”

Mr. Overdahl said, “It has been my honor to serve as the Commissions Chief Economist during a period that posed extraordinary challenges to our financial markets - when rigorous economic analysis was absolutely crucial to the Commission’s work.  I will miss working day-to-day with my talented colleagues, who always rose to the occasion and gave their best when things were at their worst.  I am extremely proud of the accomplishments of the SEC’s economists during extremely difficult economic times.”

During his time at the SEC, Overdahl’s team of economists completed a major study of the impact of provisions of the Sarbanes-Oxley Act regarding internal control over financial reporting requirements.  Overdahl also testified before Congress on behalf of the Commission on over-the-counter derivatives, and worked closely with the financial agencies in the President’s Working Group on Financial Markets on policy issues related to the recent market crisis.

Mr. Overdahl will leave the SEC at the end of March to join National Economic Research Associates (NERA), an economic consulting firm, as a Vice President in their Washington, D.C., office.

Before joining the SEC staff, Overdahl served as Chief Economist of the Commodity Futures Trading Commission from 2002 to 2007.

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/images-titanic-and-assorted-rodents-chief-sec-economist-james-overdahl-leaves-private-sector

Headline which tells you all you need to know:

15:32 03/09 GREEK PRIME MINISTER ENTERS MEETING WITH US TSY’S GEITHNER

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/meeting-deciding-fate-greece-now-session

This is just getting ridiculous. First the NYT had some choice words over the weekend in describing the whole CDS fiasco, which alas did not have quite the desired effect, and now the BBC is out with a primer on SPECULATION ANALYSIS (yes, a primer), in which it has the following stunner:

Government bonds come with an insurance policy, called a credit default swap (CDS).

At this point: i) everyone has become an overnight “expert” on CDS, ii) every “expert” is patently wrong on what CDS is, iii) insane college green preachers have incorporate the word CDS to go right before harlot, and right after apocalypse, iv) “Unprincipled speculators are making billions every day by betting on a Greek default” according to Papandreou, even though the DTCC notes the net notional in Greek CDS is only $9 billion, v) the SEC is about to get involved meaning activation of WOPR can’t be far behind.

Oh, and just because there was a slight shortage of idiotic broken record commentary, here comes Papandreou with more cow dung:

GREEK PM: EU UNITED, WON’T ALLOW SPECLTRS PLAY W/FX STABILITY
GREEK PM: ANTI-SPECULATION TO BE VERY HIGH ON NEXT G20 AGENDA
GREEK PM: HAD POSITIVE RESPONSE FROM OBAMA ON ANTI-SPEC STEPS
GREEK PM: EU SENDING VERY IMPORTANT SIGNAL TO MARKETS
GREEK PM: REPEATS: NOT SEEKING FINANCIAL AID, BAILOUT
GREEK PM: CAN’T ALLOW CRISIS TO CREATE WIDER INSTABILITY

Yup, the important signal is if you ever go long the dollar (better known in this case as short the euro) you will be incarcerated. Ben Bernanke wins again!

At this point we present our gift to all those who want to sound sophisticated and use the words “Credit Default Swaps” and/or “CDS” intelligently in conversation during the lunch hour on CNBC, and actually know what they are talking about, here is the bible - the JPM CDS handbook. Feel free to read it cover to cover.

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/can-someone-please-finally-explain-what-cds-are-mainstream-media

Charlie Gasparino over at Fox Business News reports a rumor that the government may be looking to dispose of its 27% Citi stake at some point over the next 3 months. Logistics aside, presumably somehow this means that even more bankrupt companies like AIG, FNM and FRE are probably next in line for offloading the taxpayer stake into the hands of hapless hedge/sovereigns funds. We hope it is not the same hedge funds that have recently received subpoenas and C&D orders from ever shorting the euro (i.e., going long the dollar).As a reference point the gov’t owns 27.01% of Citi which has a hilarious market cap of $108 billion, and owns 80.66% of AIG with its $23.5 billion capitalization (and $107 billion in debt). This explains why the government is now actively pulling the borrow: gotta sell at the highest possible price.

From FBN:

The U.S. government, looking to unwind its investment in the banking system following the near-collapse of the financial
system in 2008, is discussing plans to sell its massive stake in Citigroup,
possibly as early as this spring, FOX Business has learned.

Previously, federal officials, including Herbert Allison, who heads the Troubled Asset Relief Program, have said that they
plan to unload the government’s 27% stake in Citi over the next year. But FBN has learned that in private meetings with Wall
Street investment bankers, the federal government is discussing the possibility of doing it sometime over the next three months.

Meanwhile, Doug Kass reports that a rumor of “new stringent short-selling rules is causing a squeeze in heavily shorted names this afternoon.”

Last but not least, here is the rumor as reported by Seeking Alpha.

So yes, it appears we are back to the joyful days of late spring 2009 when the rumorsphere drove crap financials into the troposphere, even as nobody knows anything, and rumors are generated simply to explain massive short squeezes.

by Tyler Durden via zero hedge
http://www.zerohedge.com/article/summarizing-afternoons-financial-rumors