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When I read this morning that ultra right-wing House Majority Leader Eric Cantor was hyping the announcement by Standard and Poor's in order to send out new hostage threats regarding the debt limit, it reminded me that I had read something a while back about Eric Cantor losing a bunch of money trying to short U.S. Treasury Bonds.

Sure enough, I found the story from last year, and in 2009 Eric Cantor reported that he bought $1-15,000 worth of shares in ProShares Trust Ultrashort 20+ Year Treasury ETF. Now I am not a financial guy, but I believe this ETF rises in value whenever the value of the 20-year U.S. Treasury Bond falls (i.e. a short or "ultrashort" position is a bet against a particular financial vehicle performing well).

I wanted to see if Cantor still holds this bet against the U.S., so I pulled up his financial disclosure statements. Alas, the most recent one is from 2009 (here--warning--.pdf file), the same year the above info comes from. However, after looking through his financial statements, I think the story gets better:

In 2009, Eric Cantor didn't make a whole lot of investments, most of what he bought were Vanguard Mutual Funds of a very general sort, and what I think indicate these are getting bought in some sort of retirement fund that is not actively managed (e.g. I have a Vanguard 401K through work, and Vanguard makes it fairly easy to put your money in their mutual funds every month--while making it decently more annoying to actively manage your 401K).

Picking individual financial products is more trouble than buying mutual funds. When Eric Cantor took the trouble to pick individual investments,  he chose the following:

$1-15,000     ProShares Trust Ultrashort 20+ Year Treasury ETF (TBT)
$1-15,000     iShares Barclays TIPS Bond Fund (TIPS)
$1-15,000     WisdomTree International Basic Materials (DBN)
$1-15,000     SPDR S&P Metals & Mining (XME)

So yeah, that acronym TIPS ring a bell? It should if you read Paul Krugman..
TIPS, as I read it is basically the interest difference between nominal U.S. Bonds and Treasury Inflation-Protected Securities.

Eric Cantor's bet on the iShares Barclay's TIPS Bond Fund is ANOTHER bet that U.S. Treasury Bonds will lose value (relative to inflation). That story from last year is actually twice as bad as it sounds.

There are huge implications here:

1. When Eric Cantor had a spare $2,000 to $30,000 laying around, he didn't just go and buy some extra shares of Exxon or FOX stock or gold or whatever average wingnuts buy, he actively sought out a way to bet that U.S. Treasury Bonds would decline in value. He literally bet against America.

2. Eric Cantor is in the Republican leadership, and has been making open threats that he may push the United States toward defaulting on their bond obligations. If he does this, he has set himself up to profit from it. This is a really big conflict of interest.

Now maybe I'm crazy, but I try to invest my own money in ways that reflect my own values. Now I'm not perfect, and I have owned stocks like GE and a number of oil and gas stocks where the company values didn't mathc my own perfectly (I used to work in O & G and I feel I can value the companies better than I can other sectors--my recent strategy has been taking proceed from O & G I sell and buying FAN, etc. with them), so I can only imagine that Eric Cantor's individual stock picks reflect his values, and those picks say he is betting against America.

P.S. The next time Eric Cantor gets up there and issues hostage declarations, he needs to be asked if he is still set up to profit from a default on U.S. debt. Further, every article about raising the debt limit that references or Eric Cantor should note his huge conflict-of-interest.

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