Manic Melon

The Greatest Tour Ever!

Lance is back, and confirmed for the tour.

Levi is strong, and just won his third tour of California.

Alberto Contador is strong, and looking to get some payback for the raw deal Team Astana received in 2008.

I'll be working part time from July 4 through July 26... so I can watch the 2009 Tour de France.

In addition, I've suggested the idea that my team take their vacations over the same period, and they have taken advantage of this idea and planned time off.

As such, NPS will be open over this period, but working a reduced schedule, with much less than normal capacity. I'll likely work from home over this period. For existing clients, we will focus on site updates and small modifications over this period, and we'll schedule this period as 'booked' for large or new development work.

New projects of course will be handled with care, and timelines will be set to work around our summer vacation period.

We currently have no work scheduled for July (we tend not to work more than 2 months out). By serving over 3 months notice of our vacation, I trust that any planned or unplanned projects can have their schedules set in such a way that NPS provides better than expected performance in summer of 2009.

Was today's market turmoil the pretense to the fact that friday 10/10 the Lehman Brothers Credit Default Swaps settle out?

The Fannie and Freddie CDS settlements were between 91 and 95 cents on the dollar, but Lehman's settlements are likely to result in HUNDREDS OF BILLIONS in losses.

More: http://bigpicture.typepad.com/comments/2008/10/lehman-cds-unwi.html

Update from the WSJ:

NEW YORK -- The final result in the settlement of the credit default swaps on Lehman Brothers was even lower than a disappointing early estimate, which leaves dealer banks facing higher than expected payouts on multi-billion dollar insurance contracts.

The recovery rate on the bankrupt firm's senior debt was fixed at 8.625 cents on the dollar, just below the 9.75 cents published in the first estimate Friday. That means the sellers of insurance on these defaulted bonds are on the hook for the remaining 91.375 cents. That's well above the approximate 88 cents envisaged earlier this week, when increased demand for paper to present in return for compensation inflated the market price.

The low final rate qualifies this as one of the most expensive defaults ever in the credit derivatives market. Following the default of Italian food company Parmalat back in 2003, its debt was valued at just below 10 cents on the dollar.

The result nevertheless shouldn't come as a painful surprise for the sellers of protection on Lehman.

Since Lehman's Sept. 15 bankruptcy filing, there has been considerable anxiety that dealers who had underwritten some $400 billion of credit default swaps on the bank would be caught short in a massive payout.

But sharp market moves in the value of these insurance-like contracts would have obliged most sellers of these insurance-like contracts to post additional collateral to cover their potential losses. As a result, they should have sufficient funds set aside to handle their liabilities in this settlement.

"Worries over ex-broker-dealer exposures and their knock-on impact are misguided," said Tim Backshall, senior credit analyst with Credit Derivatives Research.

What's more, the result is to the benefit of those banks that were buyers of the CDS.

"Keep in mind that the extra few billion to be paid will wind up in the hands of lucky buyers, making it a zero-sum game in reality," said Tony Crescenzi, strategist at Miller, Tabak & Co.

Step 1: While congress has dropped the ball, the FBI and SEC are cleaning up after them. They're asking the tough questions, announcing tonight they're investigating Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Countrwide, and 20 other companies.

After they find out that their demise was the result of risky business practices and excessive leverage, maybe it will be understood that only the end of these bad business habits will cause an end to our credit collapse. We're about to dump 700 billion dollars of fuel onto this fire, so I'm happy to see that an investigation is now beginning. Sadly, I fear the results of the investigation and announcement that these companies were simply risky and poorly managed, can't be solved by financial bailouts.

Step 2, in case you want to know, is use this ill conceived bailout to sneak in the right to audit the infamous Federal Reserve! This private bank (you won't find them in the government section of the phone book; they're so NOT federal that they have to pay for stamps; oh, and there is no reserve... only DEBT) is asking that the treasury have the right to purchase assets at whatever value it decides from banks in trouble, without right to review in court or congress any of the activities. As if we have no control the purse strings already, this effectively hands the suitcase over to 2 people, neither of which are elected to their positions.

Needless to say, I'm concerned.