By: Money_Morning Jack Barnes writes : Someone dropped a bomb on the bond market Thursday - a $1 billion Armageddon trade betting the United States will lose its AAA credit rating. In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world. The massive trade wasn't placed in bonds themselves; it was placed in the futures market. The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01. The value of the trade was about $850 million dollars. In simple terms, if that was a direct bond buy, no one would be talking about it. However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio. You only do this if you see an edge. This means someone is confident that the United States is either going to default or is going to lose its AAA rating. That someone is willing to bet the proverbial farm that U.S. interest rates will be going up. I believe what happened is a debt-ceiling deal was done in Washington and leaked to a major proprietary trader. Everyone knows the debt negotiations in Washington have been an extreme game of brinksmanship between political parties, but now someone knows how that game played out. This had the hallmarks of one of the largest bond shops in the world knowing something the rest of the market didn't. The number of shops or even central banks that can take on this level of market risk is extremely small. Some that come to mind are hedge fund manager John Paulson, Bill Gross's PIMCO, and the U.S. and Chinese central banks. Paulson already scored big - about $6 billion big - on a similar trade years ago when he bet against subprime mortgages, the investments that helped bring down Lehman Bros. and many other investors. Whoever was behind it wanted a trade on ASAP, and didn't care about the ripples they would cause. The $1 Billion Armageddon Trade Placed Against the United States Bond Market
The Hypocrisy of Criticizing Iran for Supporting Terrorism |
Coincidentally, Iran condemns the U.S. for supporting anti-Iranian terrorism all the time. Do the accusations have merit? Take, for example, recent moves by U.S. officials to remove Mujahedin-e Khalq from its terrorism registry, which would qualify it to receive U.S. funding, despite what Iran calls "a compelling record of terrorist activities." Also note that U.S. officials during the Bush administration "suggested re-arming MEK and using it to destabilize Iran." Is this not actively supporting and attempting to provide safe haven for terrorism? Or take instead the "cyber-terrorism, commercial sabotage, targeted assassinations, and proxy wars that have apparently been under way in Iran." Do these qualify as acts of terrorism? No, because they are committed by America.
Let's broaden the analysis. At this very moment the U.S. is actively supporting and fighting a war in Libya on behalf of a rebel group who has been committing acts of terrorism and reportedly has ties to al Qaeda. In Somalia, U.S. money and weapons are indirectly funding the U.S. designated terrorist group al Shabaab. In Afghanistan, U.S. money and weapons have also been funding insurgent groups deemed terrorists by the U.S. government. In Colombia, the U.S. is not only funding and arming paramilitary terrorist groups with atrocious human rights violations, but is also funding the corrupt government who commits horrible acts of state terror on the Colombian people.
If any of this qualifies as funding and cooperating with terrorists – and it quite obviously does – I'm not really sure where the U.S. gets off criticizing Iran for allegedly doing the same thing on a comparatively infinitesimal scale. It's also important to note that my parallels have been kept mostly to non-state terror, but if we include the state terror America supports it begins to reveal America's well earned place at #1 top supporter of terror on planet Earth. Even still this barely scratches the surface.
It should also be noted that this isn't merely about hypocrisy and being principled and consistent. American policy is currently in violation of its own laws which prohibit providing material support or resources to terrorists. This means America should be in the process of prosecuting its own leadership, instead of, say, attempting to justify aggressive actions against Iran for behaving just like America.
