Rick Santelli at CBOT Rallies for Capitalism (2008 on CNBC Video)

Rick Santelli and traders at the Chicago Board of Trade rallied for capitalism today on CNBC. Rick thinks Thomas Jefferson and Ben Franklin are rolling over in their graves with the current mortgage subsidization plan. He says there's a Chicago Tea Party in July lol. Respect to Rick Santelli. Also I hear Andrew Jackson would be shooting people up right now since he was strongly opposed to the National Bank. Then there's the argument that the global economy would collapse if there was no intervention. What do you think?

General Motors 2009-2014 Restructuring Plan (Full Video/Document)

Here is the actual General Motors 2009-2014 Restructuring Plan and full briefing video. It looks like they need double the funds to stay solvent.


"DETROIT (Reuters) - General Motors Corp said on Tuesday it could need a total of up to $30 billion in U.S. government aid -- more than doubling its original aid -- and would run out of cash as soon as March without new federal funding".. more

"DETROIT (AP) — General Motors Corp.'s restructuring proposal says the company may need up to $30 billion in government loans as it implements a survival plan that includes cutting 47,000 jobs and closing five more U.S. factories"..more

The stock has been bleeding ever since they got their first round of capital. Today the stock broke an important support level. The common will keep getting diluted with debt-to-equity conversions and Govt ownership priorities. We'll see what happens here, either they file Chapter 11 with Govt assistance or limp along with $30 billion in aide and restructure out of court.. Chart Source: stockcharts.com.



For more in depth analysis of the plan go to Zero Hedge.


GM Plan - Free Legal Forms


On a similar note read this next article. The whole supply chain is dying. Auto Suppliers Seek $25.5 Billion Government Bailout

E-mini March '09 Dow, S&P Overnight Futures Sell Off. GM, Chrysler Face Treasury Deadline and Wal-Mart Reports Earnings.

It's Government vs. Free Market Capitalism at this point. Every move made by the Government is affecting the market. Tomorrow is a big day. GM is set to receive $4 billion in aid, GM and Chrysler will present their viability plans to the Treasury and Obama will sign the $787 billion economic stimulus bill (1, 2, 3). GM is trying to renegotiate deals with the UAW and its unsecured creditors to avoid a bankruptcy filing. Also Wal-Mart reports earnings before the bell and Moody's might downgrade banks with units in eastern Europe (source).

I was watching the E-Mini March '09 Dow Future (YMH9) and the E-Mini March '09 S&P Future (ESH9) both sell off about 2% tonight. Looking at the charts they broke through some important technical levels. The March S&P Future MUST hold 797 to attract buyers. Also we're at an inflection point in the VIX. If volatility spikes from here the Dow and S&P could retest November lows. We'll see how the equity markets react to the news tomorrow. Anything can happen.!

Chart source: Optionsxpress.com

E-Mini March 2009 S&P Future




E-Mini March 2009 Dow Future


John Paulson: Hedge Fund Manager MVP 2007-08, Congressional Testimony Video

Most hedge funds performed poorly during '07-08 (chart below) but lets not forget the stock market generals who positioned their investors to weather the crisis.

HFRX Global Hedge Fund Index (as of 2/15/09) (Bloomberg)

John Paulson (easily confused with former Treasury Secretary Hank Paulson) gets the 2007-2008 MVPM (Most Valuable Portfolio Manager) Award from this blog. Why? On a risk/reward basis not only did Mr. Paulson's hedge fund Paulson & Co time the market perfectly for the subprime meltdown, he also bet with a small amount of capital and hardly any leverage. For more detailed information you should read all of the articles scattered below. He wasn't the only one betting against the housing market. I remember Doug Kass, Gary Shilling 1, 2, and Roubini were predicting this publically on CNBC, with conviction.

Starting in 2005/6 Paulson wanted to short the housing market and since he couldn't short houses he shorted the subprime mortgage index, or ABX (Chart: 7/30/07 - 1/30/08, markit.com) via credit default swaps, debt protection on subprime mortgages. The risk premium, or spread pricing default risk on these securities were very cheap in 2005. As the credit crisis gained momentum banks and other institutions rushed to buy protection on these securities which widened the spread. Paulson killed it. His funds were up "$15 billion in 2007", his "older Paulson Credit funds rose 590% while the newer one rose 350%" WSJ source.

His streak didn't end in 2007. The Paulson Advantage Plus fund was up 37.6% net in 2008 (the S&P lost 36.9%). He also made some interesting plays in the merger arbitrage speace. The full Paulson & Co. 2008 Year End Report can be found here (Scribd report via NYT DealBook), it's a must read.

Plenty of people have been hating on Paulson claiming what he did was criminal profiting from the crisis, but lets not forget he invests for pension funds, endowments and foundations and I'm sure they're all glad they didn't have money with Madoff. He also donated $15 million to the Center of Responsible Lending, which also brought questions... It looks like Paulson & Co. set up a recovery fund which I believe includes, or will include IndyMac Federal Bank. Paulson manages $36 billion.

Also he was at the Hedge Fund hearing on 11/13/2008 testifying before Congress. Thought you might be interested to hear what he had to say. Video via C-Span.org.  Also if interested, watch the biggest hedge fund managers George Soros, Ken Griffin, James Simons and Falcone testify before congress here.



Links:

READ THIS: Trader Made Billions on Subprime (WSJ) 1/15/2008

Get Shorty: The man who has bet £800m against British banks (Guardian.co.uk)

HFRX Global Hedge Fund Index (Bloomberg)

Investor consortium to buy IndyMac for $13.9bn (AltAssets)

John Paulson, Proud Short (Felix Simon/Portfolio.com)

The Man Who Made Too Much (Portfolio.com)

John Paulson’s Funds Shine in the Gloom (DealBook NYT)

Hedge Funds Lost Record 18.3% on Misjudged Markets (Update3) (Bloomberg)

Paulson & Co., Brevan Howard, Caxton, Touradji post strong gains in 2008 (MarketWatch)

Sun Hung Kai, Paulson to launch distressed fund (Reuters) 1/16/09

Distressed Debt Specialists See "Bonanza Year" in 2009 (A.E. Feldman)

Hedge fund chief pessimistic about UK property (FT.com)(June, 2008)