Tuesday, February 10, 2009

NY Lottery dumps Treasuries

Even the NY Lottery is selling Treasuries. Why bother? We have the green light to speculate, and now today, Treasury will announce they will guarantee losses from the biggest speculators in the world-Hedge Funds.

But they will dress up this guarantee in the TALF!

The New York Lottery is proposing a gamble where the odds aren’t always in its favor -- moving its $1.3 billion prize fund into investments such as stocks, corporate bonds, real estate and hedge funds and out of the safety of U.S. Treasuries.

New York would be the first state lottery among the 20 largest to shift to pension fund-style investments from Treasuries, according to annual reports. Treasury bond yields have fallen to near record lows as investors seek safety amid the global credit crunch.

And what are the TALF terms?

Credit extensions under the TALF will be in the form of non-recourse loans secured by eligible collateral. TALF loans will have a three-year term, with interest payable monthly. TALF loans will not be subject to mark-to-market or re-margining requirements.

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