Confused and Theft

by Larry Levin

We expected some action today and we got it - sort of. There was certainly more volume than there has been lately; however, the range was small. In the end, the S&P500 put in a day-session range of just 16.70-points; we were expecting 30+.

Prior to the open the market was sharply lower on the terrible GM news but opened sharply higher on the "it could have been worse" mentality regarding a private payroll report. It then dropped sharply from the open, which led to a very high volume but tight range trade. The high volume eventually led to a sharp rally that abruptly reversed into a sharp decline, which just as abruptly reversed again (having fun yet?). This rally to 917.00, however, sharply plummeted ~10-handles...then exploded to new highs just minutes before the close. Trading that was sort of like trying to drink a beer on the Tilt-A-Whirl: messy.

In the end the market closed higher but was confused during the day. And no wonder - the news is confusing too. Causing the uncertainty were overall opposing reports from GM, private payroll data, and further contradictory reports regarding bank capital needs vis-a-vis Tax-Cheatin-Timmy's so-called stress tests.

I have been calling GM Government Motors for good reason; the massive handouts to the company, and the near certainty of being taken over by the stooges in Congress. Last night we learned GM is indeed bankrupt and is getting more help from the aforementioned stooges in Congress. Oops, my apologies to the idiot Reps & Congressmen. This is coming from the equally corrupt morons in the Treasury. GM will not be allowed to go into Chapter 11 reorganization until it fleeces the taxpayer further.

In a bid to "pay back" Uncle Sugar Daddy (formerly known as Uncle Sam) GM will be swapping what it owes the American taxpayer with worthless pieces of paper known in some circles as "stock certificates." I hear these can be a good investment if the underlying firm has a profitable business plan, but this is another story.

Much like the Federal Reserve's Helicopter-Ben printing up counterfeit notes out of thin-air, known as $US dollars, GM is printing up another 60 BILLION shares of stock. The Treasury will accept this newly issued stock and call it even. GM is expected to steal another $2.6-billion to take the total plunder to $18-billion. When this is done GM can breathe easier, for once it eventually enters Chapter 11 sometime in the future, it can clear the books by telling the American taxpayer to go to hell. After all, it will just be an unsecured lender that is subordinate to the demands of the UAW.

For those of you who think that that portrayal is too harsh, think again. Chrysler is NOT REPAYING its bailout booty. With the approval of George Bush, the Treasury, the Federal Reserve, 99% of the idiots in Congress, and yes...President Obama...Chrysler has stolen $7.2-BILLION from the US taxpayer. It doesn't have to pay back any of it. This is theft on an unimaginable scale (notwithstanding the theft of inflation).

And when a company like Chrysler gets away with a monstrous score/heist like this it's because of one thing and one thing only: that's the way government always wanted it! Just remember that this tax season when the IRS flags your return for a questionable $800 deduction. Not only will your life be turned inside-out by the audit, but you have to PAY for the theft committed by Chrysler. Sadly I can hear it now, "Excuse me Mr. Auditor, but I think my shotgun needs a cleaning. I'll be right back."

Senator Bob Corker of Tennessee, who took the lead among Senate Republicans in "challenging" the auto bailout last December, said he was not surprised that Chrysler would not be paying back the money. "I've known for sometime that with the capital structure of the company and the situation it was in, we would not be paid back," he said. "There were several secured lenders ahead of us, and they're not getting most of their money."

Really? You KNEW you were screwing the taxpayer for $7.2-BILLION but that was OK? And exactly when are secured lenders "secured?" In the deal that Obama tried to screw the Chrysler bondholders in favor of the unsecured UAW - that was OK? Said another way, the secured lenders weren't secured when it comes to favoritism practiced by the White House. EXCUSE ME PRESIDENT OBAMA, BUT WHY AREN'T TAXPAYER FUNDS MORE SECURE THAN THE UAW???!!???????

But none of this mattered to Mr. Corker and all of the others in Congress who got to play mean-and-nasty in front of the cameras. They were going to protect your money they said....ahahhhahahahahaaaaaaaaaaaaaaaaaaaaaaaahahahahahahahaaaaaa! Give me a break! The auto hearings were just another dog-and-pony show for the slack-jawed yokels that keep reelecting them. Mr. Corker and his partners in crime knew they were screwing the taxpayer in advance and it was business as usual.

Do you now understand why I refer to these Congressmen as clowns, bozos, and idiots?

With the approval of the aforementioned power brokers in DC to fleece the taxpayer in favor of their bullsh*t altruistic "save the economy" reasons, why would GM pay back one cent? Aren't GMs handouts heaping steaming piles of "altruism" too? Indeed, much larger piles than Chrysler's. So it's surely safe to say that the President will allow GM to screw the taxpayer even further by allowing it to keep its stolen plunder like Chrysler has.

"Change we can believe in."

When GM starts the process to swap debt for so-called equity, the dilution to current shareholders will be so massive that GMs shares will be worth 1-cent. Worthless. Bankrupt. I wonder what excuse will be used then to keep GM (and Shitibank) in the Dow. Much like accounting rules do not apply to banks anymore, the rules that govern when a Dow company is delisted do not apply to the favored; GM, Shitibank, and GE.

There is more to write about today, but I think I'll stop here.



Previous Day's Trading Room Results:

Trade Date: 5/6/09

E-Mini S&P Trades*
(before fees and commissions):

1) Engf buy @ 8:50am at 909.00 = -1.75 (1 lot)

2) OTF sell @ 10:00am at 906.00 = b/e (1 lot)

3) OTF buy @ 12:00pm at 898.00 = -1.75 (1 lot)

4) Engf sell (jump) @ 1:40pm at 916.00 = -0.50 (1 lot)

5) OTF buy @ 2:00pm at 914.25 = +1.00 & -2.00 (2 lot)

6) Algorithm positions (3)...combined Secret's and Algo total...-5.50


Electronic (YM) Mini-Dow:

1) None today



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