That Reminds Me, I Need to Short Some Treasurys

pic credit: RS Janes

h/t Mark Gongloff via Twitter

Eric Cantor reminds me a lot of my creepy neighbor who lived in our apartment complex when I was in middle school, whose name also happened to be Eric. He drove a Grand Am so I thought he was cool (forgive me, I was 12) but he was also really sleazy in that "get away from my daughter" sort of way. You could never really identify what it was about him that was so creepy, and girls maybe fell for it but he was the kind of guy who had no game so he'd run it on 12 year olds just to feel better about the fact that girls his own age wouldn't give him the time of day. Even at 12 I knew what a creep was.

At 30, I definitely know a creep when I see one.

Speaking of, why isn't the MSM all over this like my creepy neighbor on my 12 year old tail?


Last year the Wall Street Journal reported that Cantor, the No. 2 Republican in the House, had between $1,000 and $15,000 invested in ProShares Trust Ultrashort 20+ Year Treasury EFT. The fund aggressively "shorts" long-term U.S. Treasury bonds, meaning that it performs well when U.S. debt is undesirable. (A short is when the trader hopes to profit from the decline in the value of an asset.)

According to his latest financial disclosure statement, which covers the year 2010 and has been publicly available since this spring, Cantor still has up to $15,000 in the same fund. Contacted by Salon this week, Cantor's office gave no indication that the Virginia Republican, who has played a leading role in the debt ceiling negotiations, has divested himself of these holdings since his last filing. Unless an agreement can be reached, the U.S. could begin defaulting on its debt payments on Aug. 2. If that happens and Cantor is still invested in the fund, the value of his holdings would skyrocket.

"If the debt ceiling isn’t raised, investors would start fleeing U.S. Treasuries," said Matt Koppenheffer, who writes for the investment website the Motley Fool. "Yields would rise, prices would fall, and the Proshares ETF should do very well. It would spike."

Listen, we're talking a 20 year Treasury ETF. Even the most bearish of government debt bears (*coughmecough*) can't possibly believe we won't have it figured out in 20 years time. If this were a 2 year fund it might be a different story but the Chinese will always need to park their dollars so long as we keep buying their crap and I just don't see it.

TBT is up 2.12% from last year. Whoopie ding dong. Someone call me when it's up 1000%.

Still, this is pretty sketchy. Like I said, I know a big fat weird creepazoid when I see one. But if this comes as a surprise to anyone (I know, we're getting jaded here), those folks obviously aren't paying attention. And? And did you guys also know we get all our Treasury guys from Goldman Sachs?! OMG! Shocked, I tell you!

Remember, kids, we're talking about a dual citizen of Israel and the U.S. here who once vowed that he and his GOP colleagues would protect and defend Israeli interests against his own Government and who also happens to be a Congressman, and a powerful one at that. Is anyone - and I mean anyone - surprised by this?

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


wcv said...

You getting some liberal in you, JDA?

Shorting Treasuries is a no-brainer, and it doesn't require default to pay off. All it takes is for long rates to head higher, which is exceedingly likely under any number of scenarios depending on our two biggest creditors and enemies, the Dirty Fed and China.

Frankly, I'd question Cantor's competence if he weren't shorting Treasuries.

I get some liberal in me all the time, WCV. Maybe it's rubbing off.

I think that's called a win-win.

wcv said...

I don't think it's the rubbing off.

I do that all the time and I still like Cantor.

I'm wouldn't rule out rubbing one out to him.

wcv said...