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Obama Pays More Than Buffett as U.S. Risks AAA Rating
source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aHjVRrVodt4g&pos=2
By Daniel Kruger and Bryan Keogh
March 22 (Bloomberg) -- The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.
Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.
The $2.59 trillion of Treasury Department sales since the start of 2009 have created a glut as the budget deficit swelled to a post-World War II-record 10 percent of the economy and raised concerns whether the U.S. deserves its AAA credit rating. The increased borrowing may also undermine the first-quarter rally in Treasuries as the economy improves.
“It’s a slap upside the head of the government,” said Mitchell Stapley, the chief fixed-income officer in Grand Rapids, Michigan, at Fifth Third Asset Management, which oversees $22 billion. “It could be the moment where hopefully you realize that risk is beginning to creep into your credit profile and the costs associated with that can be pretty scary.”
Moody’s Warning
While Treasuries backed by the full faith and credit of the government typically yield less than corporate debt, the relationship has flipped as Moody’s Investors Service predicts the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K. America will use about 7 percent of taxes for debt payments in 2010 and almost 11 percent in 2013, moving “substantially” closer to losing its AAA rating, Moody’s said last week.
“Those economies have been caught in a crisis while they are highly leveraged,” said Pierre Cailleteau, the managing director of sovereign risk at Moody’s in London. “They have to make the required adjustment to stabilize markets without choking off growth.”
Advanced economies face “acute” challenges in tackling high public debt, and unwinding existing stimulus measures will not come close to bringing deficits back to prudent levels, said John Lipsky, first deputy managing director of the International Monetary Fund.
Unprecedented Spending
All G7 countries, except Canada and Germany, will have debt-to-GDP ratios close to or exceeding 100 percent by 2014, Lipsky said in a speech yesterday at the China Development Forum in Beijing. Already this year, the average ratio in advanced economies is expected to reach the levels seen in 1950, after World War II, he said.
Obama’s unprecedented spending and the Federal Reserve’s emergency measures to fix the financial system are boosting the economy and cutting the risk of corporate failures. Standard & Poor’s said the default rate will drop to 5 percent by year-end from 10.4 percent in February.
Bonds sold by companies have returned 3.24 percent this year, including reinvested interest, compared with a 1.55 percent gain for Treasuries, Bank of America Merrill Lynch index data show. Returns exceeded government debt by a record 23 percentage points in 2009.
Berkshire Hathaway
Berkshire Hathaway’s 1.4 percent notes due February 2012 yielded 0.89 percent on March 18, 3.5 basis points, or 0.035 percentage point, less than Treasuries, composite prices compiled by Bloomberg show. The Omaha, Nebraska-based company, which is rated Aa2 by Moody’s and AA+ by S&P, has about $157 billion of cash and equivalents and about $52 billion of debt.
P&G, the world’s largest consumer-products maker, saw the yield on its 1.375 percent notes due August 2012 fall to 1.12 percent on March 18, 6 basis points below government debt. The Cincinnati-based company, rated Aa3 by Moody’s and AA- by S&P, makes everything from Tide detergent to Swiffer dusters.
New Brunswick, New Jersey-based Johnson & Johnson’s 5.15 percent securities due August 2012 yielded 1.11 percent on Feb. 17, 3 basis points less than Treasuries, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The world’s largest health products company is rated AAA by S&P and Moody’s.
Yields on bonds of home-improvement retailer Lowe’s in Mooresville, North Carolina, drugmaker Abbott Laboratories of Abbott Park, Illinois, and Toronto-based Royal Bank of Canada have also been below Treasuries, Trace data show.
‘Avalanche’
“It’s a manifestation of this avalanche, this growth in U.S. Treasury supply which is under way and continues for the foreseeable future, and the comparative scarcity of high-quality credit,” particularly in shorter-maturity debt, said Malvey, whose Lehman team was ranked No. 1 in fixed-income strategy by Institutional Investor magazine from 1998 through 2007.
Last year’s $2.1 trillion in borrowing by the government exceeded the $1.08 trillion issued by investment-grade companies, the biggest gap ever, Bloomberg data show. Malvey said the last time he can recall that a corporate bond yield traded below Treasuries was when he was head of company debt research at Kidder Peabody & Co. in the mid-1980s.
While Treasuries are poised to make money for investors this quarter, they are losing momentum. The securities are down 0.43 percent in March after gaining 0.4 percent last month and 1.58 percent in January, Bank of America Merrill Lynch indexes show.
Benchmark 10-year Treasury yields will reach 4.20 percent by year-end, up from 3.69 percent last week, according to the median forecast of 48 economists in a Bloomberg News survey. Two-year yields will rise to 1.77 percent, from 0.99 percent.
Relative Yields
Investors demand about half a percentage point more in yield to own 10-year Treasuries than German bunds of similar maturity, Bloomberg data show. A year ago, debt of Germany, whose deficit is 4.2 percent of its economy, yielded about half a percentage point more than Treasuries.
President Obama’s budget proposal would create bigger deficits every year of the next decade, with the gaps totaling $1.2 trillion more than his administration projects, the nonpartisan Congressional Budget Office said this month. Publicly held debt will zoom to $20.3 trillion, or 90 percent of gross domestic product, by 2020, the CBO forecast.
There’s “a lack of a long-term plan to deal with the federal budget deficit,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York. “At some point in time the market may lose its patience.”
Balance Sheets
Deutsche Bank and Barclays Plc, two of the 18 primary dealers of U.S. government securities that are obligated to bid at the Treasury’s auctions, say balance sheets of high-rated companies make them more attractive than Treasuries.
Corporate borrowers are reducing debt at a record pace. Companies in the S&P 500 cut their liabilities by $282 billion to $7.1 trillion in the fourth quarter from the prior three months, Bloomberg data show. That represents 28 percent of assets, the least in at least a decade.
Investors are accepting smaller premiums to lend to companies, with yields on bonds rated at least AA falling to within 107 basis points of Treasuries on average, Bank of America Merrill Lynch indexes show. That’s down from the peak of 515 basis points in November 2008, and approaching the record low of 36 in 1997.
Adding to Corporates
New York Life Investment Management is adding to bets the difference in yields will continue to shrink.
“As the balance sheet of corporate America continues to improve and the balance sheet of the government deteriorates, that spread should narrow,” said Thomas Girard, a senior money manager who helps invest $115 billion at the New York-based insurer. “There is some sort of breaking point. The federal government can’t keep expanding its borrowing without having to incur some costs.”
For all the concern about U.S. finances, Treasuries are unlikely to lose their role as the world’s borrowing benchmark, said Michael Cheah, who manages $2 billion in bonds at SunAmerica Asset Management in Jersey City, New Jersey. The U.S. has the biggest, most liquid securities markets, said Cheah.
Speculating that Treasuries may lose their privileged position is “not a bet I want to put on,” said Cheah, who worked at Singapore’s central bank. Yields on 10-year notes are about half their average since 1980.
Losing its Status
The last time there was talk of the U.S. losing its status as the world’s benchmark for bonds was in the late 1990s, when the government began amassing budget surpluses in 1998 for the first time in almost three decades. The amount of Treasuries outstanding dropped 8 percent to $3.4 trillion in 2000, the biggest annual decline since 1946.
Treasury supply resumed growing in 2001 after two rounds of tax cuts proposed by President George W. Bush led to deficits. Outstanding Treasury supply rose 53 percent to $4.5 trillion in 2007 from 2000 as the U.S. borrowed to finance tax cuts intended to revive a slumping economy. The amount has since risen 64 percent to $7.4 trillion.
More is on the way. The U.S. will sell a record $2.43 trillion of debt in 2010, according to the average forecast of 10 of the 18 primary dealers in a Bloomberg survey.
At the same time Treasury sales are rising, the cash position of the largest corporations is swelling. Companies in the S&P 500 held a record $2.3 trillion as of the fourth quarter, Bloomberg data show.
Growing Supply
High-rated corporate bonds due in three to five years are most likely to yield less than Treasuries, according to Deutsche Bank’s Pollack. The growing supply of Treasuries with those maturities will make government debt a bigger proportion of indexes that fund managers measure their performance against, he said. Managers betting Treasury yields will rise may diversify into corporate debt, Pollack said.
“There’s no natural law that says a Treasury has to yield less than a corporate,” said Daniel Shackelford, who is part of a group that manages $18 billion in bonds at T. Rowe Price Group Inc. in Baltimore. “It wouldn’t be the first time that I would scratch my head and say ‘this doesn’t make sense, the market’s behaving irrationally.’ And it can go on for much longer than you may think.”
To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Bryan Keogh in London at bkeogh4@bloomberg.net
Last Updated: March 21, 2010 23:15 EDT
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Les news à lire ! VIVE LA REPRISE ( JOKE )
Regulators shut 7 banks in 5 states; 37 in 2010
http://www.usatoday.com/money/industries/banking/2010-03-19-bank-failures_N.htm
WASHINGTON (AP) — Regulators have shut down seven banks in five states, bringing to 37 the number of bank failures in the U.S. so far this year.
The Federal Deposit Insurance Corp. on Friday took over the banks: First Lowndes Bank, in Fort Deposit, Ala.; Appalachian Community Bank in Ellijay, Ga.; Bank of Hiawassee, in Hiawassee, Ga.; and State Bank of Aurora, in Aurora, Minn.Greenspan & Bernanke still don't get it
http://money.cnn.com/2010/03/19/markets/thebuzz/index.htm
NEW YORK (CNNMoney.com) -- Alan Greenspan and Ben Bernanke have a message for everyone who thinks the Federal Reserve isn't to blame for the housing bubble and Great Recession: It wasn't our fault.
In a 48-page paper that Greenspan presented at the Brookings Institution Friday called "The Crisis," the former Fed chairman wrote that it was low long-term rates, not the Fed's easy money policy from 2002-2004, that caused the spike in home prices.Dollar On Verge Of Break Out; Goldman On Verge Of Being Stopped Out (Of Long EURUSD Reco)
The DXY is ripping, and is about to break out of recent resistance levels. News out of Europe that no bailout of Greece is to be expected, further compounded by some serious doom and gloom out of Evans-Pritchard about the EMU and the euro in general, means that the euro will soon make a date with the one point two-handle. This is certainly not good for Goldman clients who just one week ago bought into Goldman's pitch of going long the EURUSD, with a 1.35 stop. Looks like that stop is about to be breached.
Tony Blair's Secret Deal with a Multinational Oil Giant
by Jason Groves
http://www.globalresearch.ca/index.php?context=va&aid=18247
Blair's Fight to Keep His Oil Cash Secret: Former PM's Deals Are Revealed As His Earnings Since 2007 Reach £20Million
Tony Blair waged an extraordinary two-year battle to keep secret a lucrative deal with a multinational oil giant which has extensive interests in Iraq.
The former Prime Minister tried to keep the public in the dark over his dealings with South Korean oil firm UI Energy Corporation. votre commentaire
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Billet d'images, posons nous la question... selon Ben Gourion, sioniste créateur d'israel UPDATE
UN RAPPEL : LES 10 COMMANDEMENTS
I - • Tu n'auras pas d'autres dieux devant ma face.
II - • Tu ne te feras point d'image taillée, ni de représentation quelconque des choses qui sont en haut dans les cieux, qui sont en bas sur la terre, et qui sont dans les eaux plus bas que la terre. Tu ne te prosterneras (1) point devant elles, et tu ne les serviras point ; car moi, l'Eternel, ton Dieu, je suis un Dieu jaloux, qui punis l'iniquité des pères sur les enfants jusqu'à la troisième et la quatrième génération de ceux qui me haïssent, et qui fais miséricorde jusqu'en mille générations à ceux qui m'aiment et qui gardent mes commandements.
III - • Tu ne prendras point le nom de l'Eternel, ton Dieu, en vain ; car l'Eternel ne laissera point impuni celui qui prendra son nom en vain.
IV - • Souviens-toi du jour du repos, pour le sanctifier. Tu travailleras six jours, et tu feras tout ton ouvrage. Mais le septième jour est le jour du repos de l'Eternel, ton Dieu : tu ne feras aucun ouvrage, ni toi, ni ton fils, ni ta fille, ni ton serviteur, ni ta servante, ni ton bétail, ni l'étranger qui est dans tes portes. Car en six jours l'Eternel a fait les cieux, la terre et la mer, et tout ce qui y est contenu, et il s'est reposé le septième jour : c'est pourquoi l'Eternel a béni le jour du repos et l'a sanctifié.
V - • Honore ton père et ta mère, afin que tes jours se prolongent dans le pays que l'Eternel, ton Dieu, te donne.
VI - • Tu ne tueras point.
VII - • Tu ne commettras point d'adultère.
VIII - • Tu ne déroberas point.
IX - • Tu ne porteras point de faux témoignage contre ton prochain.
X - • Tu ne convoiteras point la maison de ton prochain ; tu ne convoiteras point la femme de ton prochain, ni son serviteur, ni sa servante, ni son bœuf, ni son âne, ni aucune chose qui appartienne à ton prochain. (Exode 20/3-17)
CECI étant posé, voila 2 IMAGES qui PARLENT :L'un , le véritable respect, l'autre l'antithèse de la croyance !
Et oui les Résistants dans l'histoire du moyen orient, ce sont bien les PALESTINIENS
qui se battent avec des cailloux et des rockets au pire...contre une ARMEE et leurs Armes au phosphore blanc !!!
Les ENVAHISSEURS colonialistes qui ont volés les terres des palestiniens ce sont les SIONISTES
et leur armée Tsahal : SONT ILS LES NOUVEAUX NAZI ?
Faux temoignage
Je vous conseille de regarder la série sur L'histoire interdite du sionisme 1
et son fondateur HERZL dont voici le 1er épisode
et la suite ici :
http://www.dailymotion.com/video/x9au6y_l-histoire-interdite-du-sionisme-2_webcam
http://www.dailymotion.com/video/x9au8z_l-histoire-interdite-du-sionisme-3_webcam
http://www.dailymotion.com/video/x9auah_l-histoire-interdite-du-sionisme-4_webcam
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Billet d'humeur 21/03/2010 : L'EUROPE n'est qu'une Merde démocratique une parodie démocratique
Nervyoko
Il serait temps pour la Grèce et pour l’Europe toute entière d’ouvrir les yeux : l’Europe ne fonctionne pas avec les regles actuelles.
La solidarité n’est que du vent dans cette Europe de l’Elite et non du commun des mortels. Le Peuple , lui , subit les lois car ce même peuple n’est pas représenté dans cette Europe de fasciste!
Une Europe imposée, en niant 3 référundums qui ont montré le REFUS de cette Europe, les seuls fois ou l’Elite ou l’oligarchie financiere a voulu demander aux peuples et qui s’est soldé par un échec des plus notables. Une Europe qui ne correspond pas avec la Démocratie, où la Commission a tous les pouvoirs(les commissaires sont nommés, pas élus), ou le parlement ne fait que faire le béni-oui-oui et voter simplement un budget car le seul organe qui peut proposer des lois, les exécuter et veiller à leurs bons fonctionnement c’est la toute puissante COMMISSION…
Si dans l’histoire, les plus abrutis des hommes sont capables de comprendre que la séparation des 3 pouvoirs (Exécutif-Législatif-Judiciaire) est une obligation, aujourd’hui, les plus intelligents des hommes sont incapables de comprendre l’autorité dictatoriale de la commission !
Herman Van Rompuy Président des cons et Catherine Ashton ministre des affaires étrangères des cons(européens)
VOICI LES 2 GUIGNOLS QUI NE REPRESENTENT PAS L'EUROPE.
Ces 2 guignols ne sont pas connu du public, et pour cause, ils ont été nommé, choisi par l'Elite et imposé au peuple "européen" Ils sortent de nullepart, si du chapeau des bilderbergs!
Allez une video pour montrer aux cons Européens qu'ils sont gouvernés comme des cons, sans agir, sans remuer ni critiquer! Leur démocratie et leur sécurité , une illusion pour les abrutis qu'ils sont, je leur dis MERDE, vous êtes trop cons.
Une citation pourrait les réveiller ces bouseux :
JEFFERSON (Thomas)
| Bio express : Écrivain politique et homme d’État américain (1743-1826)
<< Si tu es prêt à sacrifier un peu de liberté pour te sentir en sécurité, tu ne mérites ni l’une ni l’autre. >>
| Source : Discours, entretiens et autres sources<< Le peuple est le seul sur lequel nous puissions compter pour préserver notre liberté. >>
Enfin pour sortir de cette Crise de débiles Autistes, il faudrait que la Grèce ou son PEUPLE sorte de l’Europe fascisante de l’Elite financière comme tous les membres de l’Europe d’ailleurs!
Nous avons un model qui a dit “MERDE” à l’Oligarchie financiere et ce model c’est la véritable démocratie, c’est à dire la VOIX du PEUPLE, c’est par exemple Le NON MASSIF de l’ISLANDE !
Voter pour la Gauche ou la Droite ou encore pour les verts, c’est voter pour du vent , une illusion démocratique, vous votez en France toujours pour les mêmes, derrieres les comiques de la gauche ou de la droite et aujourd’hui des verts, c’est et ce sera toujours l’Oligarchie financière!
Sortir de l’Europe et changer le système Européen en donnant la primeur des lois et des finances au Peuple avec une véritable représentation du peuple cette Europe là n’existe pas encore, cette Europe là est plus démocratique.
La démocratie d’aujourdhui n’a même pas l’essence même de ce mot!
cordialement,
Nervyoko votre commentaire
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Alan Grayson Sends Angry Letter To AIG Credit Facility Trust, Demands All AIG Emails Be Made Public
Submitted by Tyler Durden on 03/19/2010 08:01
It had been a little quiet without Alan Grayson these past few months. Too quiet. The Florida Democrat is now back with a bang after sending a letter to the representatives of the AIG Credit Facility Trust demanding that all AIG emails over the past decade be made public, as well as all company models and internal accounting documents. Yet it is the flourish of the narrative, which reminds one of Dan Loeb in his iconoclastic prime that is the centerpiece of the most recent, and every other letter. Where else can you find pearls like: "It is beyond outrageous that this company, which taxpayers capitalized after Wall Street used it as a slush fund, hides nearly all relevant facts from its owners, the public." We are most enthused by Grayson (and others) finally picking up on a key theme - if you want something analyzed independently and objectively, just open it up to the broader public, and screw all corrupt internal commissions. Crowdsourcing is the only way to get anything done these days. Also, the crowd wonders, is it too late to replace the top two posts in the current administration with Grayson-Kaufman (in alphabetical order)?
*note* Rappel, ce Monsieur Grayson montrait l'aspect louffoque de la perte de 9000 millards de dollars perdu par la FED (la banque mafieuse privée qui emet de la monnaie devenu banque centrale en 1913...)*fin rappel*
March 18, 2010
AIG Credit Facility Trust
Trustee Peter A. Langerman
Trustee Chester B. Feldberg
Trustee Jill M. Considine
Arnold & Porter LLP
399 Park Avenue
New York, NY 10022
Dear Mr. Langerman, Mr. Feldberg and Ms. Considine,
I write to request that you turn over to this office, and the public, e-mails backed up on AIG’s servers, including internal accounting documents and financial models developed by the company in the last decade. The public owns AIG. We bought it, for an initial down payment of $182 billion. You are the representatives of the public, through your positions as the three trustees of the AIG Credit Facility Trust.
The public is unhappy with the purchase. In March, 2009, a poll found that 82% of the public wanted bonuses to AIG employees returned. This didn’t happen. We do not know who is responsible for the company’s collapse, or whether they are working now at other banks or for the Federal government. We do not know if they got bonuses, if they were committing fraud, whether there were kickbacks from counterparties, or if there was any significant restraining role played by the regulatory community. We cannot separate the bad decision-makers from innocent employees, because we simply do not know what went on. You can address this problem, by releasing to us and on the internet, with reasonable discretion, all or sustainably all of the emails and documents that describe the web of relationships and practices behind AIG’s failed business.
Last year, I asked former AIG CEO Ed Liddy to give me the names of the people who destroyed AIG and cost taxpayers tens of billions of dollars. He refused. I asked the Government Accountability Office (GAO) to look into the matter. The GAO wrote that it didn’t have the authority to do an audit. I requested that the Special Inspector General of TARP look into the problem. I was told that the problem is too complicated.
The ball is in your court. As experienced fraud investigators Bill Black, Eliot Spitzer, and Frank Portnoy wrote in December, 2009:
Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story. In past cases of financial fraud — from the complex swaps that Bankers Trust sold to Procter & Gamble in the early 1990s to the I.P.O. kickback schemes of the late 1990s to the fall of Enron — e-mail messages and internal documents became the central exhibits in our collective understanding of what happened, and why.
On Wall Street, winners can win, but losers must lose. This did not happen with AIG. AIG itself, AIG employees, and AIG counterparties were bailed out. It is beyond outrageous that this company, which taxpayers capitalized after Wall Street used it as a slush fund, hides nearly all relevant facts from its owners, the public. Should this information be released, it is likely that the value of AIG’s remaining businesses will be unchanged. In any event, the public and public markets will benefit dramatically from transparency, because reliable information is the cornerstone of effective markets.
I ask that you exercise prudent judgment as stewards of the public interest, and direct the release of all or substantially all emails and financial records into the public domain.
Sincerely,
Alan Grayson
Member of Congress****************
Les infos vont à une vitesse folle ces temps -ci... va falloir se calmer, déjà que les pauvres moutons que nous sommes ne sont pas habitués à tant de vérités, mais en plus si ca va trop vite , ces mêmes moutons vont regarder les distractions, plus habituelles et plus rassurantes (pub sex, filles, mensonges votation pseudo démocratique etc)... ces lâches !
Nervyoko****************
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