Most everyone is aware of the five year provision in the GSE's sub-ordinated debt, whereby in the event that the GSE's get bailed out, interest payments can be postponed for five years.
By looking at Ackman's letter below, (since he was a purchaser of credit default swaps) it's obvious that the seller of the CDS, may in this event, be allowed to postpone payment for five years in a worst case scenario, or at best, sold CDS swaps to a now Treasury equivalent! Why do you think Ackman wrote the letter for the world to see?
Who sold swaps on the GSE's debt? They are the big winners! And Ackman? He gets a head butt by the bull! The bulls will make what the bears will lose!
And what do the bears do now that the "depression" scenario is off the table, and the banks and brokers ramp in their face, and the monolines ramp in their face, and the market ramps 400 points in their face in the first couple minutes?
They will try and take their shorts off, but they will compete with the bulls and mutual funds, who now see this as a giant bell ringing at the bottom.
Friday afternoon, the minute they announced the Fannie and Freddie bail-out, I said you had better buy the S&P futures, because we'll have a "bodacious" rally.
And I "choose" those words carefully! But after showing Gisele's bottom, I suppose you thought I was talking "Ta Ta's." I was talking about "Bodacious the bull!"
Maybe these bearish hedge funds don't get it, but an Ivy league education doesn't tell you why Brett Favre hawks Wrangler jeans. It's the jeans of the rodeo!
And the biggest star of the rodeo, was the most dangerous bull in the world, "Bodacious!"
And that's what this market is to all those bearish, short and under-invested.
The most dangerous bull in the world!
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