Sachs: Obama Has Lost His Way On Jobs

Obama has not lost his way. His team led by Summers and Geithner are making the same mistakes that they did in the formation of the first tech bubble in response to the Asican currency crisis and the Russian debt default. The Obama Administration is serving its employers and contributors on Wall Street.

The banks must be restrained, the financial system reformed, and balance restored to the economy before there can be a sustained recovery.

Here is a perspective from Jeff Sachs of Columbia University.

Speaking of Garish Bling, the US Long Bond Is On Sale Today

Some US institutions are being compelled by new government regulations to buy long bonds to 'match duration' of their obligations per a ruling of a few years ago.

Other than that, anyone buying the 30 year bond, other than for the Fed carry trade, in an time of quantitative easing and free spending government, should be institutionalized.

The Fed bond carry trade is when the primary dealers buy Timmy's bond with Ben's money, and then sell it back to the people's short term debt in dollars via the Fed. It keeps yields on the long end down, and maintains the appearance of stability. The dealers get to front run the buys and short the sells.

It is a pyramid scheme to accomplish a short term objective.

MarketWatch
Treasurys edge up before long bond auction
By Deborah Levine
Nov. 12, 2009, 11:11 a.m. EST

NEW YORK (MarketWatch) -- Treasury prices edged up Thursday as investors anticipated the government would garner sufficient demand for a record amount of 30-year bonds sold during the session.

The $16 billion bond sale follows two major note auctions earlier in the week that were met with plenty of demand from investors.

Traders also pointed to a significant amount of maturing debt and coupon payments when the auctions settles that create a natural bid, as investors may roll that cash into the new securities.

"After the success of the first two offerings, this one is also expected to garner good support too," said analysts at Action Economics. "There remains a lot of cash to invest."

NAVs of Certain Precious Metal ETFs and Funds

Secondary offering in the equity of the CEF fund is pending, although this tends to be a wash less transaction fees because the proceeds are used to expand the base of metals held.

The premiums expand and contract in the funds depending on sentiment on the future course of gold and silver bullion prices. The premiums on the ETFs are relatively stable, representing 1/10 ounce of the metal with a discount to the spot price for management fees. There is no NAV presented because the volume of any metal that might be underlying the price fluctuations varies greatly, and can lag.

Fraud on the Street in the Purchase of 3COM

The fraud is becoming more blatant on all fronts.

Mary Shapiro and the SEC should immediately subpoena the records of options purchases in 3COM and Hewlett-Packard for this week, and look for unusually large purchases. But chances are that they will do nothing, because there is a soft partnership between the government and Wall Street.

Make no mistake. Front running and monetary bubbles are not victimless crimes, anymore than robbing a grocery store at gunpoint is a victimless crime. They take from the many to give to the few.

There are some smokey allusions to 'calendar spreads' being put forward, but this is disinformation, and does not speak to the surge in stock buying and the pattern of insider trading. It was fraud, pure and simple.

And this is just the tip of the iceberg. The basis of the SP rally on high frequency trading and a liquidity bubble is a fraud, and will be exposed as such when the bottom falls out of the market. And the people know who the primary actors are in this.

The Obama Administration is a disgrace.

Bloomberg
3Com Option Trades May Have Been More Than ‘Luck’ Before Buyout
By Jeff Kearns

Nov. 12 (Bloomberg) -- Analysts say good timing alone doesn’t account for trading in bullish 3Com Corp. options yesterday.

Volume in contracts to buy shares of the Marlborough, Massachusetts-based company surged to the highest level since September 2007 before Hewlett-Packard Co. said it would buy the maker of computer-networking equipment for $2.7 billion.

“I don’t believe in that much luck,” said Steve Claussen, chief investment strategist at OptionsHouse LLC, the Chicago- based online brokerage unit of options trading firm PEAK6 Investments LP, and a former market maker at the Chicago Board Options Exchange. “If you’re on the other side of someone buying calls and a takeover is announced, it’s like someone held you up at gunpoint. It’s like you’ve been robbed and you feel violated.”

Call options that convey the right to acquire stock for a given price by a certain date usually offer higher returns to traders speculating on takeovers. The U.S. Securities and Exchange Commission polices the options market to ensure investors aren’t engaging in insider trading.

More than 8,000 3Com calls changed hands yesterday, 17 times the four-week average. The most active were contracts conveying the right to purchase 3Com for $5 through Nov. 20, followed by December $5 calls. The shares rose 5.2 percent, the most since Sept. 28, to $5.68 in Nasdaq Stock Market composite trading prior to the announcement.

Almost 4,000 of the November $5 calls and 3,300 December $5 calls traded, with almost all of the transactions occurring at noon. That compares with a total of six puts giving the right to sell 3Com shares. Hewlett-Packard, the world’s largest personal- computer maker, agreed to pay $7.90 a share in cash for 3Com, a 39 percent premium to yesterday’s closing price.

More than 22 million shares of 3Com changed hands in the stock market yesterday, compared with this year’s daily average of 4.85 million and the most since March 2008. Trading was heaviest in the hour after 11 a.m. in New York, data compiled by Bloomberg show.

“Somebody knew something was coming,” said Stefen Choy, founder of Livevol Inc., a San Francisco-based provider of options market data and analytics. “It looks like very unusual call buying. I see this very frequently when there’s a takeover...”

Goldman Sachs Group Inc. advised 3Com on the transaction, while Morgan Stanley helped Hewlett-Packard, according to data compiled by Bloomberg. Both banks are based in New York. 3Com has its headquarters in Marlborough, Massachusetts, and Hewlett- Packard is based in Palo Alto, California...