C.M.O. 2.13.2009

Credit Market Overview
February 13 2009

The line “Misery acquaints a man with strange bedfellows” in William Shakespeare’s play The Tempest is best now known to most of us as in its modern form as “Politics makes strange bedfellows”.

The truth behind this statement in either form gathered strength yesterday as news of a meeting hosted by (you guessed it!) Goldman Sachs with the people key to getting the toxic assets off the balance sheets of the country’s major financial institutions (you guessed it) the same people who helped put them on, met with Tim Geithner to figure out how to execute the transaction.

It took the talking heads on TV about 9 milliseconds to start screaming about how TG is too close to his Wall St. buddies and the government is, once again, handing the keys to the hen house to the foxes. Charlie Gasparino tried to make the story into the hottest thing since Jessica Simpson’s “20 pounds in eight weeks” claim.

Meantime Bloomberg quietly reported that the meeting had been scheduled for over two months and that the timing only seemed questionable due to the delay of TG’s confirmation due to that nasty tax issue and not announcing his plans on Monday, as originally scheduled, because of last minute wrangling over the stimulus package. (You think Mike has higher office in mind?)

Say what you will but if New York was a maximum security prison and you did need to get out, who else would you want by your side but Snake Plissken?

The S&P closed above a down trend line many were watching on February 6th & 9th and spent part of yesterday through the bottom of an up trend line those same people had their eye on. The buzz going into yesterday’s close was about money getting thrown at the mortgage problem with FNM and FRE getting involved to house the dreck. Anyone remember the “Superfund” set up by the EPA after the Love Canal debacle?

In CDS land, spreads ain’t buying any of what Geithner or Goldman is selling. Unemployment is rising; people who don’t work can’t spend money like they do when they are. The last time I heard Louise Yamada she was telling everyone to sell all rallies until the Dow hits 6,000 or further notice.

Enjoy the weekend.

Jim Delaney

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