Carpe Diem
Taxpayers from Massachusetts to California are paying Wall Street banks
to end derivative contracts gone bad as they exit the collapsing auction-rate bond market,
with penalties in some cases topping $10 million and compounding the pain of rising borrowing costs.
States, cities, hospitals and colleges face penalties exceeding $10 million to terminate swaps that failed to protect them against higher rates.
That's on top of the $1 billion in fees they're paying to dealers to help sell bonds that would replace auction- rate securities they sold.
Sacramento County, California, paid Morgan Stanley $5 million to cancel an interest-rate swap agreement when it refinanced $79.5 million in auction-rate securities last month.
The fee added to the cost of the bonds after the rate on the securities more than doubled to 9.8% in March.
Redding, California, expects to pay Citigroup $6.7 million to close out a swap on $67.3 million of auction-rate bonds it sold,
Last year, new bond sales, a record $430 billion with states and municipalities.
Yet, the largest Swiss bank, UBS, recently on the verge of bankruptcy, is exiting the municipal bond market. Why?
In a harbinger of what is to come in the real estate market with PMI insurers...
First, asset toxicity; as hedge funds and tender-option bond programs dumping billions of dollars in suddenly "risky" municipal bonds.
Then, the collapse of the municipal bond insurers, which at one point covered half the market, left no safety net for the high wire act.
Then this year, the dealers all decided to stop supporting the auction bond market, alienating issuers and investors alike.
Bottom line: Market collapse and someone will still have to work out how to help thousands of issuers sell $300 billion to $400 billion in bonds every year.
Hmmm, the wheels are turning... I feel a rant of epic proportion coming on...
Hattip to Bloomberg here and here.
The Nattering One muses... "On Wall Street, if you're making the money, you get to decide."
Isn't it bad enough the taxpayer is unwillingly bailing out the home lenders and Wall Street through garbage loan dumping via
higher GSE loan limits for FHLMC, FNMA & FHA in the "economic stimulus bill" from senate-whore's Frank & Dodd?
Isn't it bad enough that FNMA will finance 120% of current underwater appraised value;
and FHA will "profit share" if the lender will write down to 85% LTV? All so the underwater loans can get dumped on the taxpayer.
I guess robbing savers, the fiscally prudent, widows, orphans & pensioners through
Bennie & The Fed's rate cuts isn't enough for these moral-less jackal's either?
Now these unethical double headed snakes who destroyed the market, want to stick the taxpayer with
their hedge "termination" fees, while charging service fees to sell the new bonds?
The fact is the "best and brightest" read
"greedy MBA morons on Wall Street" and "bastard blue blood bankers" and
their "duplicitous trait-whore's in the legislat-whore and Fed"
AKA "the ascendancy of the house of finance" (or those who would pimp their mother's on a corner for cash, and have buggered Lady Liberty at every turn.)
have DIRECTLY CAUSED our economic demise and the sub prime mess which resulted in,
amongst other things, the housing debacle and the auction term bond market collapse.
"You say you want a Revolution? Well you know we'd all want to change the world...." - The Beatles
Excuse me but since these legislat-whores have already socialised the housing industry,
and are attempting to artificially support asset prices and control "free" markets... Why not, and strictly for the PUBLIC BENEFIT mind you...
You say you got a real solution, Well you know, We'd all want to see the plan...
catch a bout of good old "Castro like" benevolence & government "eminent domain" seizure in the financial and energy markets while we are at it?
You heard me right, WE should CARPE DIEM in these BROKEN and MANIPULATED markets...
The greediest and traitorous have FAILED on a GLOBAL SCALE, and were rewarded amply in doing so.
Its about time they step down and disappear quietly with their ill gotten gains,
lest we tar and feather them, then garnish their holdings and tax their tax evading trusts adequately? Isn't it OUR TURN NOW?
You ask me for a contribution, Well you know, We're all doing what we can...
If WE and our children are going to DIRECTLY underwrite the operations and pay for the losses with multiple bailouts on multiple levels...
And WE DIRECTLY support the entities and markets by utilizing and paying for the services, then WE ARE DIRECTLY making the money for them.
WE are taking ALL the risk and footing ALL the bills and eating ALL the LOSSES,
look at the poor common stockholders getting screwed by "preferred share sales" to raise capital. Its about time WE step up and decide..
to put our foot down, and take DIRECT CONTROL over the BROKEN markets and ALL the ASSETS in them & PROFITS from them too. RIGHT?
You say you'll change the constitution, Well you know, We'd all want to change your head...
WE gave THEM our lunch money and toys, then they carelessly lost the money
and broke the toys while playing recklessly, and now they run to US crying for MORE?
Why should WE pay to fix something THEY PROFITED FROM THEN RUINED. What? So THEY can profit from it and RUIN it AGAIN?
WE should knock the shit out of these spoiled little children of the ivy league and Whor-ton's and teach THEM a friggin lesson or two.
Think about it, as scary as it sounds, the facts of the matter are undeniable and the logic is irrefutable.
Besides, how much worse of a job could WE manage to do than these spoiled brats? Food for thought.
You tell me it's the institution, Well you know, You better free your mind instead...
to end derivative contracts gone bad as they exit the collapsing auction-rate bond market,
with penalties in some cases topping $10 million and compounding the pain of rising borrowing costs.
States, cities, hospitals and colleges face penalties exceeding $10 million to terminate swaps that failed to protect them against higher rates.
That's on top of the $1 billion in fees they're paying to dealers to help sell bonds that would replace auction- rate securities they sold.
Sacramento County, California, paid Morgan Stanley $5 million to cancel an interest-rate swap agreement when it refinanced $79.5 million in auction-rate securities last month.
The fee added to the cost of the bonds after the rate on the securities more than doubled to 9.8% in March.
Redding, California, expects to pay Citigroup $6.7 million to close out a swap on $67.3 million of auction-rate bonds it sold,
Last year, new bond sales, a record $430 billion with states and municipalities.
Yet, the largest Swiss bank, UBS, recently on the verge of bankruptcy, is exiting the municipal bond market. Why?
In a harbinger of what is to come in the real estate market with PMI insurers...
First, asset toxicity; as hedge funds and tender-option bond programs dumping billions of dollars in suddenly "risky" municipal bonds.
Then, the collapse of the municipal bond insurers, which at one point covered half the market, left no safety net for the high wire act.
Then this year, the dealers all decided to stop supporting the auction bond market, alienating issuers and investors alike.
Bottom line: Market collapse and someone will still have to work out how to help thousands of issuers sell $300 billion to $400 billion in bonds every year.
Hmmm, the wheels are turning... I feel a rant of epic proportion coming on...
Hattip to Bloomberg here and here.
The Nattering One muses... "On Wall Street, if you're making the money, you get to decide."
Isn't it bad enough the taxpayer is unwillingly bailing out the home lenders and Wall Street through garbage loan dumping via
higher GSE loan limits for FHLMC, FNMA & FHA in the "economic stimulus bill" from senate-whore's Frank & Dodd?
Isn't it bad enough that FNMA will finance 120% of current underwater appraised value;
and FHA will "profit share" if the lender will write down to 85% LTV? All so the underwater loans can get dumped on the taxpayer.
I guess robbing savers, the fiscally prudent, widows, orphans & pensioners through
Bennie & The Fed's rate cuts isn't enough for these moral-less jackal's either?
Now these unethical double headed snakes who destroyed the market, want to stick the taxpayer with
their hedge "termination" fees, while charging service fees to sell the new bonds?
The fact is the "best and brightest" read
"greedy MBA morons on Wall Street" and "bastard blue blood bankers" and
their "duplicitous trait-whore's in the legislat-whore and Fed"
AKA "the ascendancy of the house of finance" (or those who would pimp their mother's on a corner for cash, and have buggered Lady Liberty at every turn.)
have DIRECTLY CAUSED our economic demise and the sub prime mess which resulted in,
amongst other things, the housing debacle and the auction term bond market collapse.
"You say you want a Revolution? Well you know we'd all want to change the world...." - The Beatles
Excuse me but since these legislat-whores have already socialised the housing industry,
and are attempting to artificially support asset prices and control "free" markets... Why not, and strictly for the PUBLIC BENEFIT mind you...
You say you got a real solution, Well you know, We'd all want to see the plan...
catch a bout of good old "Castro like" benevolence & government "eminent domain" seizure in the financial and energy markets while we are at it?
You heard me right, WE should CARPE DIEM in these BROKEN and MANIPULATED markets...
The greediest and traitorous have FAILED on a GLOBAL SCALE, and were rewarded amply in doing so.
Its about time they step down and disappear quietly with their ill gotten gains,
lest we tar and feather them, then garnish their holdings and tax their tax evading trusts adequately? Isn't it OUR TURN NOW?
You ask me for a contribution, Well you know, We're all doing what we can...
If WE and our children are going to DIRECTLY underwrite the operations and pay for the losses with multiple bailouts on multiple levels...
And WE DIRECTLY support the entities and markets by utilizing and paying for the services, then WE ARE DIRECTLY making the money for them.
WE are taking ALL the risk and footing ALL the bills and eating ALL the LOSSES,
look at the poor common stockholders getting screwed by "preferred share sales" to raise capital. Its about time WE step up and decide..
to put our foot down, and take DIRECT CONTROL over the BROKEN markets and ALL the ASSETS in them & PROFITS from them too. RIGHT?
You say you'll change the constitution, Well you know, We'd all want to change your head...
WE gave THEM our lunch money and toys, then they carelessly lost the money
and broke the toys while playing recklessly, and now they run to US crying for MORE?
Why should WE pay to fix something THEY PROFITED FROM THEN RUINED. What? So THEY can profit from it and RUIN it AGAIN?
WE should knock the shit out of these spoiled little children of the ivy league and Whor-ton's and teach THEM a friggin lesson or two.
Think about it, as scary as it sounds, the facts of the matter are undeniable and the logic is irrefutable.
Besides, how much worse of a job could WE manage to do than these spoiled brats? Food for thought.
You tell me it's the institution, Well you know, You better free your mind instead...
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