OT: whose ox is getting gored now?

Of particular interest to people living in or having businesses located in California, Florida, Nevada, Ohio, Wisconsin and
Michigan.
When the people take it on the shin from everything from wage/job competition by illegal immigrants to "dumped" imports and counterfit goods, the politicians cry "its just the market in action."
Now that "The Market" has turned round on them, the cry is "it's not fair -- bwaaaaaaaaaaaa."
"The practice of betting against such states is “distasteful,” said Frank Hoadley, Wisconsin’s director of capital finance in Madison. " says it all.
===========Goldman Draws Ire for Advising Default Swaps Against New Jersey Dec. 10 (Bloomberg) -- Goldman Sachs Group Inc., one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 states’ debt.
In the three months since the New York-based securities firm recommended “shorting municipal credit,” the value of the Markit MCDX index of the derivatives’ price more than tripled, to as high as 278.33 basis points from 87.75. A basis point on a credit-default swap protecting $10 million of debt for five years is equivalent to $1,000 annually.
Bets against public debt, once unheard of on bonds considered safe enough for retirees, have soared as the National Conference of State Legislatures projects recession-fueled budget crises will cause $97 billion of shortfalls nationwide over the next 18 to 24 months.
It’s “disturbing” to advise investors to bet against the financial health of a state whose bonds Goldman helps sell, Assemblyman Gary S. Schaer, a Democrat who chairs the Financial Institutions and Insurance Committee, said last week in a letter to Chief Executive Officer Lloyd C. Blankfein.
“New Jersey needs to maximize its presence in the credit markets, not to see its presence undermined.” Schaer wrote. <snip> ‘A New Reality’
Short sellers borrow securities to sell, betting their value will decrease. Credit-default swaps, conceived to protect bondholders against default, pay a buyer face value in exchange for the underlying securities or the cash equivalent should an issuer fail to adhere to debt agreements. They increase in value as perceptions of credit quality deteriorate.
“Shorting municipal bonds -- the world is a new place,” said Patrick Born, chief financial officer for the city of Minneapolis. “There’s a new reality, at least for a while.”
The appreciation in municipal credit default swaps came as borrowing costs rose, with tax-exempt yields as measured by the Bond Buyer 20-bond index reaching 6.01 percent on Oct. 16, the highest since January, 2000. The index is now 5.58%.
Though familiar in corporate finance, credit-default swaps had been largely absent from the $2.7 trillion tax-exempt bond market. Trading grew this year as the biggest municipal bond insurers lost their AAA ratings and the MCDX index, tied to 50 municipal issuers, was started in May.
Secondary Market
The spread on 10-year California swaps widened to 289 basis points yesterday from 93 basis points in mid-September, according to data compiled by Bloomberg. Investors who sold their contracts could have pocketed $196,000. A basis point is equivalent to 0.01 percentage point. <snip> New York-based Morgan Stanley has also recommended using swaps to bet against state credit. While Merrill Lynch recommends the derivatives to “institutions who want a vehicle to express relative value views,” Phil Fischer, a vice president of municipal strategy at the firm, said many are “thinly traded.”
Merrill is the second-leading underwriter in municipal bonds this year, with 329 deals totaling $39 billion, and Morgan Stanley is fourth, with 292 issues worth $31.2 billion, according to Thomson Reuters. <snip> Underwriter’s Role
As part of a September presentation to institutional investors on “Best Long and Short Risk Strategies,” Goldman recommended buying credit-default swaps on “a basket of liquid State General Obligation credits with current and worsening fiscal outlooks,” including California, Florida, Nevada, Ohio, Wisconsin and Michigan.
The firm also recommended the derivatives on states with “significant unfunded pension” and other retiree obligations, including Illinois, Connecticut, Hawaii, New Jersey, Massachusetts and Nevada. <snip> -------- for complete article click on http://www.bloomberg.com/apps/news?pid 601109&sid¬9AV.yzTCNw&refer=home
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
Add pictures here
✖
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Great. Here's my plan: Make all Goldman Sachs executives wear radio-transmitter ankle bracelets, and take a torch to their passports. Then put a GPS readout on every one of them on the Web so we can make sure they aren't being a danger to society.
The irony here is that NJ's governor, Jon Corzine, is a former CEO of Goldman Sachs. I'll bet the phone calls to HQ are running hot and heavy. d8-)
-- Ed Huntress
Add pictures here
✖
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Castrate them first. Then the ankle bracelet, etc.

Goodgawd.... there is no hope whatsoever. We don't just have foxes guarding the chicken coup -- we got starving wolves *inside* sed coup.
Remember my prediction: Workers will soon be living in barracks. Proly starting with GM. Yer local Pol: Hey, but yer gettin free food..... Yeah, a'ight...
--

Mr. PV'd

Mae West (yer fav Congressman) to the Gangster (yer fav Lobbyist):
  Click to see the full signature.
Add pictures here
✖
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Thu, 11 Dec 2008 17:31:59 -0500, "Proctologically Violated©®"
<snip>

<snip> ===========If you though that one was good, I just ran across this gem. (That's billion with a "B," and its *NOT* a misprint.)
Looks like the question "where did all that money go?" is beginning to be answered. To generate 20 Billion, the vics must have suffered far greater losses.
He should'a bought his own country and relocated while he had the chance.....
==========Madoff Charged in Fraud of More Than $20 Billion (Update1)
By David Glovin and Bradley Keoun
Dec. 11 (Bloomberg) -- Bernard Madoff, president of Bernard Madoff Investment Securities, a market maker for hedge funds and banks, was charged with securities fraud by federal prosecutors in New York in a scheme that totaled more than $20 billion, according to a person familiar with the case. <snip> ------------- for complete article click on http://www.bloomberg.com/apps/news?pid 601087&sid¨EVy7KVpBaA&refer=home
Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
Add pictures here
✖
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Polytechforum.com is a website by engineers for engineers. It is not affiliated with any of manufacturers or vendors discussed here. All logos and trade names are the property of their respective owners.