For 'Da Bulls, that is.

Well it appears that Moody's "mistake" is garnering more than a bit of attention. First, from US lawmakers:

"U.S. lawmakers on Wednesday urged the Securities and Exchange Commission to investigate a reported coding error that may have led Moody's Corp to incorrectly assign triple-A ratings to some complex European debt products.

Sen. Charles Schumer, a Democrat from New York, and Rep. Paul Kanjorski, a Pennsylvania Democrat, said the matter deserves close scrutiny, especially if U.S. investors were impacted."

US investors were certainly impacted. Whether US investors bought the products or not the failure to contemporaneously notify the marketplace when the "error" was discovered extended the credit bubble and had an impact, irrespective of whether one can assign a specific dollar amount to it.

Connecticut's AG, in the meantime, isn't asking "if", he's looking at this from a more "ordinary" perspective - that is, whether there was fraud involved either originally or in covering it up:

"'We have been aware of allegations that, in effect, there was a cover-up of these ratings inaccuracies and defects in the models applied to these complex structured securities,' Blumenthal said in an interview today. 'The question is whether the defects were purposeful' and whether Moody's subsequently sought to hide the errors, he said."

Funny how a State AG office is interested in the facts, while the US Congress plays footsie.

Let's hope that Mr. Blumenthal hasn't visited any high-priced hookers, lest his reputation and investigation get short-circuited as Mr. Spitzer's recently did.

The "let's investigate this as a criminal matter" meme appears to be gaining ground:

"On April 30, the SEC sued Larry Langford, the former county commission president and now Birmingham's mayor, for fraud in allegedly accepting $156,000 from a local banker while refinancing the sewer debt. Langford denies any wrongdoing.

JPMorgan spokesman Brian Marchiony declined to comment for this article.

The Federal Bureau of Investigation has raided financial advisers in California, Minnesota and Pennsylvania to get files. In January 2007, Charlotte, North Carolina-based Bank of America Corp. agreed to cooperate with federal prosecutors in exchange for leniency. Bank of America spokeswoman Shirley Norton declined to comment."

Price fixing allegations... I guess that making money the old-fashioned way (that is, stealing it) may have made a comeback - and these are the very same bankers that Bernanke and Company are "trying to help."

Sounds great, right?

Stocks went in the toilet yesterday due to The Fed releasing minutes that said what everyone already knew:

• Price inflation is way above desired levels, and threatens to become "expected" (that is, "inflation expectations" are becoming unhinged.)
• The Fed policy rate is a blunt instrument that can't fix insolvency problems, nor make bad loans into good ones.
• GDP growth is slowing if not outright negative.
• Unemployment will likely be significantly higher than it is now.

Now go back and read my "Year In Review" ticker again.

Is any of what The Fed said "news"?

No.

So why did the market sell off by more than 200 points - for the second time in a week, based on "news" that wasn't news, and was in fact what people have been saying now for several months?

Simple - "the slope of hope."

That is, you have pump tards all over national television and in print trumpeting how its a "generational buying opportunity" in various sectors, "the market has bottomed!" and "buy buy buy or be priced out forever!"

Speaking of which, Dickey Boy Bove was on "Fast Money" last night and he admitted he might have been "a little bit early" on his "generational buy" call.

Uh huh. Here's the video if you want to watch it (its part of the way in.)

As some of you know I savaged Mr. Bove a couple of months ago in The Ticker here; he got very testy with me in email and we subsequently spent quite a bit of time going back and forth via email and well north of an hour on the phone.

Well, I'd have called him again today, but you see, I can't. Punk Ziegel was acquired and the email address I had for him no longer works. Oh well.

In any event the bottom line is that now he seems to think that many of these "generational buys" in fact have more (hidden) losses that are going to blow up in their face.

Gee, isn't that what I've been saying now for quite some time? I heard "I was early" on Fast Money but what I didn't hear is that myself, Merideth Whitney and others who have consistently said that he is absolutely full of crap were in fact right.

Funny, that.

Oh, and "early" on Wall Street is code for "I was wrong", but its the coward's version of that phrase.

The latter you never hear from so-called "analysts."

Oil blew off Wednesday while Treasuries blew up, at least to a minor degree.

Is the new flight to safety into commodities? It sure as hell wasn't into Treasuries!

Would anyone be surprised if that was the case?

At least when you buy a barrel of oil, you know you're getting a barrel of oil! When you buy a Treasury Bill or Bond, are you getting that, or are you getting a cyanide-laced balance sheet at The Fed that threatens to detonate and take down the value of your holdings?

The Fed has intentionally contaminated its balance sheet, debasing the stability of US Treasury debt, and then Congress is surprised when, instead of flying to safety in Treasuries, people look for a different option?

I'm not surprised at all - the obvious dislocation this can cause in things like oil prices ought to be clear to anyone with an IQ larger than their shoe size.

Congress spent another day attacking "speculators" and generally making lots of noise about high oil prices, but none of these idiots has bothered to think for more than 30 seconds about what is really going on here.

This is not about speculation.

It is about the fact that Mr. Bernanke, aka "The Wizard", has debased the former "safe haven" for money, that is the Treasury market through his "alphabet soup" games, and Paulson and Congress have done their part by blowing $450 billion in stimulus checks and housing bailout proposals. The result of all of this is that people are now looking for somewhere else to run to when threatened by fear in equities, and right now that "somewhere else" is OIL!

This is what happens when Ben and Congress try to save their banking buddies from having to take their marks and eat their losses. You generate yet another problem; you simply can't toss around nearly $1 trillion all-in without seeding horrifyingly bad consequences throughout the economy, and to think you can do this sort of thing without creating dislocations far and wide is the height of arrogance.

To Congress: Get off your butts, go into the restroom, and look in the mirror for your villain in regards to oil prices. The reason we saw a nearly $5 spike in oil Wednesday is specifically due to your stupidity in passing the stimulus and housing bailout bills, along with allowing The Wizard to twiddle system liquidity by throwing $250 billion in extra cash out there while exchanging nearly half The Fed's balance sheet (to the tune of $400 billion!) for used toilet paper. Now add in Congress' $450 billion between the housing and stimulus bills and voila - $1 trillion of economic dislocation comes to the fore, all centered in the Treasury market.

The consequence of this is that when the equity markets get jittery the money can't go into Treasuries as it judges them unsafe.

The money thus goes into commodities instead.

Congratulations Senators and Representatives - you created the mess you are now bleating about, and not one of your so-called "witnesses" had the balls to stand up and tell you the truth.

You folks up in Washington DC better wake the hell up and listen to what the market said to you Wednesday about the relative safety of Treasuries .vs. Oil and the consequences of your actions.

Should the concept of "Treasuries are no good when in search of safe harbor" gain traction the bond market dislocation that I have been warning about will occur with cataclysmic results.

Vesuvius is rumbling and spitting smoke while Congress and Bernanke are living in Pompeii having a party.

Time may be running out to do the right thing.