Did u know about this?

[deception]

http://www.globalpost.com/dispatch/commerce/090724/the-end-nigh?page=0,0

Sixteen Hong Kong banks have pledged to reimburse investors who had bought Lehman Brothers-backed products. This watershed deal demonstrates that the much-maligned financial class is perfectly capable of cleaning up the enormous mess it helped create without requiring government rescue.

Yet, to this day, many still believe that it was a mistake to allow Lehman to fail (or begin catharsis) last Sept. 15. Lehman operated in more than 40 countries and had more than 650 distinct legal entities outside of the United States. It was the largest bankruptcy in history and shocked the global financial system. Worldwide credit markets froze as those in the industry feared that any money lent might never be repaid. Stunned that such failure could happen so quickly and extensively (although it had been brewing for years), Lehman’s creditors and investors worried they might never recover one penny, pence, pfennig, or fen from the firm.

But 10 months later, atonement is well underway. Hong Kong bankers are planning to return as much as 70 percent of the principal to thousands of investors, many of whom are widows and retirees, who bought Lehman “mini bonds.” While investors won’t get all their money back, the reimbursement will cost the banks more than $800 million.

On the other side of the globe, the administrators of Lehman’s European unit announced plans to return frozen hedge fund assets to creditors early next year.

These international resolutions serve as important future models of how to help make parties whole when there are no unified rules of how to proceed after such a far flung disaster.

Of course, these efforts would not have occurred without pressure from the local regulatory bodies — the Securities and Futures Commission in Hong Kong and Britain’s bankruptcy courts — or the numerous lawyers for Lehman and its creditors.

But the Lehman resolution does not drag taxpayers, in the country where it is headquartered (the U.S.), into some overblown rescue scheme. Instead, it puts responsibility where it belongs, on the shoulders of the management, employees, shareholders, investors, business associates and regulators worldwide who enabled the company to operate in the first place.

 

[maxiep]

No investment is riskless. I don't see any reason--other than political pandering--that these funds should be returned.

 

[Shapecity]

This watershed deal demonstrates that the much-maligned financial class is perfectly capable of cleaning up the enormous mess it helped create without requiring government rescue.

I've been saying this all along. These bailouts weren't necessary at all. Other companies would step up to buy another companies assets and the worthless crap would eventually go away. The bailouts are completely inefficient and are just going to prolong any recovery.

A perfect example was Penske stepping in to buy Saturn. If the other automakers weren't bailed out we could've seen more stories like this.

Drives me nuts!

 

[Denny Crane]

http://www.cnbc.com/id/32201716

Weak Treasury Auctions Raise Worries About US Debt Burden

The U.S. Treasury sold $39 billion in five-year debt Wednesday in an auction that drew poor demand, raising worries over the cost of financing the government's burgeoning budget deficit.

It was the second lackluster showing in as many days, convincing analysts that the stellar results of debt auctions just a few weeks ago were a fluke and that Thursday's $28 billion seven-year offering could suffer a similar fate.

Under the weight of the ballooning deficit, the government has raised auction volumes and analysts now wonder whether the strain on the market is showing."Obviously everyone is inferring that tomorrow's won't be good either," said James Combias, head of government bond trading at Mizuho Securities USA in New York. "Maybe you will see more interest tomorrow but I think the increase in the auctions and the size of them may be starting to have an effect. These are very large auctions."

Demand for the five-year notes was below average, measured by the bid-to-cover ratio of 1.92, the lowest in almost a year.

This followed a poor two-year auction on Tuesday. In a further sign of a weak sale, yields at the auction were well above expectations, known as a "tail."A key proxy for foreign interest, the indirect bidder category, was slightly above the average of auctions over the past year at 36.6 percent but far below the most recent sale.

"It was just a horrendous result," said William O'Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich, Connecticut.

"It was the weakest bid-to-cover since September 2008, and by my numbers it was the biggest tail since February 1993. It was just a very, very weak result."

The tail indicates that dealers drove an unexpectedly hard bargain to raise yields, and lower prices, to buy the bonds. Ultimately, this could raise interest rates throughout the economy at a faster rate than might be appropriate given the lingering effects of the worst recession in decades.

"If rates unwind higher and too quickly — driven not by the Fed but by the old bond vigilantes — that will be the house of pain for all risk markets," said George Goncalves, head of fixed income rates strategy with Cantor Fitzgerald in New York.

Economic data may also play a role in Thursday's auction. A bigger than expected rise in weekly data on claims for jobless benefits, due at 8:30 a.m., could hurt appetite for risky assets, which might benefit safe-haven government bonds.

Also, the month end tends to produce increased appetite for bonds.

Five-year notes fell in price and were last trading down 6/32, with the yield rising to a four-week high around 2.66 percent.

"It was pretty poor underwriting and there has to be some concern somewhere in the Treasury about the inability to underwrite the supply," said John Spinello, Treasury bond strategist at Jefferies & Co in New York.

"It's a little disconcerting to the market. It creates a negative psychology before the seven-year notes to be bid on tomorrow."

The five-year sale is part of this week's record $115 billion in coupon securities being auctioned, which also included $6 billion in Treasury Inflation Protected Securities that hit the market on Monday.

The government plans to issue $2 trillion in new bonds this year to finance economic and financial rescues.
Treasury auctions have come under particularly close scrutiny since investors began to question the longevity of the United States' prized AAA credit rating back in May.

Overseas central banks, particularly in Asia, have been huge buyers of U.S. debt in recent years and own more than a quarter of marketable Treasuries. China is the biggest such buyer.

 

[Shapecity]

Rising interest rates here they come.

 

[maxiep]

I've been saying this all along. These bailouts weren't necessary at all. Other companies would step up to buy another companies assets and the worthless crap would eventually go away. The bailouts are completely inefficient and are just going to prolong any recovery.

A perfect example was Penske stepping in to buy Saturn. If the other automakers weren't bailed out we could've seen more stories like this.

Drives me nuts!

Amen. Markets clear all on their own. The problem comes when you try to pick winners. Those people generally will benefit, but at what cost to everyone else? For example, Obama's victory was like the UAW winning the lottery.

 

[maxiep]

Rising interest rates here they come.

Can you say Carter-like inflation?