Friday, July 16, 2010

Friday's Fun Miscellany

Let's take a look at a big jumble of newsworthy stuff on an options expiration Friday.

Goldman Sachs' wrist-slap SEC fine is being spun as a victory for Lloyd Blankfein's skill in negotiation and strategy.  Maybe so, but I think influence peddling among Goldman alums (now lobbyists) and SEC staffers' i-banking aspirations played a strong role too. 

BP caps the Deepwater Horizon well.  I think it's going to hold.  They didn't even have to hire SpongeBob SquarePants to get the job done on the ocean floor.  Maybe a short-expiration covered call strategy on BP is a special situation worth playing.  I have all weekend to think that one over. 

Greece continues to take its austerity medicine by raising retirement ages for government workers.  Great!  Now let's do the same thing here and stick it to government employee unions, who BTW are now the majority of unionized employees nationwide. 

The Creature from Jekyll Island grows more tentacles.  The Fed is now the fourth branch of government, a development that puts it outside the Constitution's system of checks and balances.  A central bank owned by private interests that has veto authority over a broad swath of economic activity is something the Founding Fathers never envisioned.  The U.S. has entered unchartered territory with its population completely unaware of the new reality.  What did Ben Franklin say we had?  "A republic, if you can keep it." 

An overhaul of housing finance is coming three years too late.  The time to break up Phonie and Fraudie and unwind their obligations has passed.  China threatened Uncle Sam with the nuclear option of dumping Treasuries back in summer 2008 and Uncle Sam caved in.  Now Uncle Sam is stuck with the bill for supporting 95% of all new mortgages.  "Overhaul" now means just another way of disguising wealth transfer from American taxpayers to Chinese agency debt owners. 

Full disclosure:  Anthony J. Alfidi has plans for the weekend.