Evening Reading – January 7, 2011

Fortune: Is Fannie bailing out the banks?

But how sharp is Freddie if all it can do is squeeze a $1.28 billion payment out of a giant customer in exchange for relinquishing fraud claims on $117 billion worth of outstanding loans? The very best its million-dollar executives can do is claw back a penny on each bubbly subprime dollar?

That seems pretty weak even given that this is Congress’ favorite subsidy dispenser we’re talking about.

New York Magazine: Lloyd Blankfein’s Secret Facebook Feed

According to a Bloomberg report, despite their firm’s recent investment in Facebook, many Goldman Sachs employees aren’t familiar with the workings of the social-networking site, since it was until recently banned in the office for productivity reasons (and most Goldman employees are, naturally, so focused on minting money they never managed to create profiles on their own time). Which is why, the news service explains, an executive recently held a special training session to walk them “through the basics” of Friending, Liking, and Making Sure You Save Your Drunk House-Party Photos As Private. That they expect us to believe this shareholder-pleasing nonsense is, frankly, an affront to our intelligence. This is Goldman Sachs. They’ve secretly been on Facebook the whole time, stalking and super-poking and creating complex derivative packages based on everyone’s Likes list. How do we know? We took a screen-grab of Lloyd Blankfein’s news feed right before new security measures were put in place.*

The Slope of Hope: Everything is Just Super!

FT Alphaville: Bernanke bashes the budget

Unsurprisingly there’s little that’s unsurprising in the testimony.

FT Alphaville: Sovereign CDS, un petit complexe de Napoléon

Should the Republic of France really be trading as a credit two notches above junk?

Five-year credit default swaps on the French sovereign were trading at 110bps at pixel time, according to Markit.

FT Alphaville: And the financials all went down on Massachusetts

As we have already noted, Wells Fargo and US Bancorp on Friday lost what could turn out to be a highly critical case regarding the general legality of bank foreclosures in the United States.

FT Alphaville: Peak smokes

Waitjustaminute!, we hear you shout. Even if there is that kind of decline, it won’t necessarily continue on a smooth path right down towards zero. We don’t know whether a hardcore of people will be attracted to smoking, or other possible discontinuities (smoking is banned worldwide by 2030, or whatever) for instance. Much as we simply don’t know if China’s GDP really will smoothly overtake the United States’ in 2032 in projected market exchange rate terms, as predicted by PricewaterhouseCoopers in a report out on Friday.

FT Alphaville: Ill(inois) behaviour in the municipal markets [updated]

Turning to thee, then, Illinois, your fiscal lumberjacks have been chopping away at your commercial tree on Friday.

FT Alphaville: The Irish covered bond exception

According to Societe Generale’s covered bond team it is, after all, technically impossible to restructure an Irish covered bond.

FT Money Supply: PBIGS?

Do we need a new acronym? It is now more expensive to insure against a Belgian default than it is against an Italian one. The comfortably distant notion adopted by richer European countries of a “eurozone periphery” should be deeply challenged by troubles in Brussels.

The Big Picture: Top 10 greatest trades of all time (?)

It is rather incomplete, leaving out Felix Zulauf’s Japan short in 1989, any Bullish trade in 1982, numerous stock specific trades (Long Apple, Short Enron, etc.), the many trades against the Dot Com bubble, in favor of Treasuries (1982-2010).

The Big Picture: A Victory for Rule of law, Property Rights

The legal question we asked yesterday “Can Banks Foreclose on Mortgages They Do Not Own?” has now been answered.

No, they cannot — at least not in Massachusetts:

The Big Picture: Succinct Summation of Week’s Events

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