So much fun and so many games the past week I hardly know where to begin! A week ago Friday The New York times reported that a secret "source" had released information that Altria Group would buy smokeless tobacco maker UST in a deal worth over $10 billion. The deal was to be anounced on Monday or possibly sooner. UST's shares exploded 25% higher to nearly $68/share before Altria Group issued its own statement claiming that the deal was "pure speculation from our perspective at this point. As a matter of policy, we don't comment on speculation of this kind." Their response caused a small and very temporary 4% panic in price before quickly recovering back to its earlier highs. I guess people really don't believe anything the management teams of these companies spew out anymore, positive or negative! Obviously, traders believed the "source" over Altria Group's statement. But to all our dismay, Altria Group couldn't outright lie about such a large deal occurring, could they? Well, there is the possibility that they hadn't even thought of buying the company until all the hoopla was released to the media. However, over the weekend they suddenly seemed to have decided they just HAD TO HAVE IT and quickly managed to work out a deal to buy UST for $10.4 Billion anounced early Monday morning! You gotta love it! One guy leaks the news, another guy working for the company outright lies and denies out, and others yet made millions in strategically timed options trades worth 600% more the day after they bought them! You'd think someone would end up in jail over all this, (yeah right)! Just another slimey fun filled day on Wall Street.

Of course, what's that compared to the huge booboo made by the media when they recirculated an old 2002 headline that airline UAL Corp was filing for Chapter 11 Bankruptcy protection. UAL's stock almost immediately tanked by 75%, with other airline stocks dropping in sympathy by 20% or more. Once the media realized the mistake and set the record straight, all the stocks shot back to their earlier highs of the day. What a trip, ya gotta love it! So much for due diligence. The dust is still settling on this one, and you can only wonder who got rich from it, and if anyone will be held accountable for it! (yeah right!) And we won't even get into all the rumors going around that Lehman has found a possible buyer (NOT) with some really deep pockets and an even larger set of cahonas...

And finally, we would also like to announce that the American People are now the proud owners of Fannie Mae and Freddie Mac, along with about $5 trillion dollars of mortgage obligations! This pretty much wiped out the value of their stocks - (oh no wait, no, that wasn't due to fraudulent accounting practices, it was those bad evil short sellers that did that!). Now, we can arguably state that the government had no choice but to take these steps in order to avoid the greater threat of a massive systemic collapse. However, it still begets some greater questions, such as whether we ever needed Fannie, Freddie, or even Sallie in the first place. People have managed to finance their schooling and buy houses long before any of these entities existed. But oh what fun it is when more people can access these same goods and services using cheaply available credit, which over time causes demand to dramatically increase out of proportion, forcing prices to skyrocket through the roof. Eventually, the whole stack of cards unfortunately and inevitably collapses as prices finally break, the entire system deleverages, and prices eventually return back to levels in line with actual incomes - (oh no, how can we milk that?!!!) Mortages and loans would still continue, just at a much more cautious and risk-adjusted level. And as a result of this newly-found prudence, prices would also be much more reasonable, and would also dramatically reduce the risks to lenders. NINJAs, option-ARMs, $0-down mortgages, and other financial timebombs would likely cease to exist if companies knew they had no chance of any kind of government bailout or back-stop.

And of course, who'll be next? Already the auto industry is set to press Congress for $50 billion in low-interest auto loans, which they say are "NEEDED" to modernize plants and make more fuel-efficient vehicles (and to keep paying all those expensive union members their cushy wages, and to make more bad car loans to prop up earnings so management can get even bigger bonuses). Who needs to think about risk versus fiscal responsibility anymore when we can just milk the tax payers? Well, yeah, maybe just you little people with your little businesses! Don't like it? File for bankruptcy and join a union!

Given that the SEC and the government found that Fannie Mae's ex-CEO Franklin Raines committed massive outright fraud in order to make his $100 million PLUS in salary and bonuses, not to mention the bribes (oops, did I say that out loud?) all the political "lobbying" made by these institutions to keep the regulators off their backs, you would think this shmuck would end up in jail, or at least executed at the hand of some disgruntled group of defunct mortgage holders. Heh! Maybe if he wears a skirt and tries baking some cakes like Martha Stewart. You know who's with the in-crowd, don't you... Also tells you a lot that this guy used to be President Clinton's budget director. So much for democrats being "for the people", whether it was simply a discounted loan, or some extra campaign funds, it looks like they were all in on the scheme one way or another.

Ironically enough, despite the government taking on all of these huge debt obligations, talk has now turned to deflation as commodity and asset prices across the board are dropping through the floor. Truly amazing the power of credit. Understand that we are not so much deflating as we are deleveraging, as all these institutions that have overleveraged themselves dump all their best assets in order to raise as many dollars as they can in order to clean up their crappy balance sheets. Once this works its way through the system, and the banks are once again willing to lend money on more reasonable terms, that's when we'll really begin to pay for all this crap. So what if all these shananigans cost tax payers TRILLIONS just so we can make a few millions, pass me the pork, bitch!