Comments on: Morgan Stanley 4Q Loss Bigger Than Forecast: China Invests $5 Billion

By: Yves Smith

Yves Smith — Thu, 20 Dec 2007 04:22:00 +0000

Steve,

That’s very helpful. Heard another element of the same trade from an MS guy tonight; will use it in a quickie post.

By: Steve

Steve — Thu, 20 Dec 2007 04:18:00 +0000

During the conference call, Mack said the losses were attributable to just one prop desk (and none of the analysts said, `Oh, just like Amaranth, right?’). The position was described as long $14B super senior, short $2B mezz. Wow, nice desk limit (was that you, Ms. Cruz?). And Kelleher actually said they went long the $14B `to cover the cost of negative carry’ on the short position! Priceless.

By: newsman

newsman — Wed, 19 Dec 2007 21:10:00 +0000

How come you have to be Chinese to invest at 9 percent on this deal? I have a small sum I would be willing to offer when my 3-month CD rolls over. I too would not demand a seat on the board or a role in management.

And I would settle for 8 percent as long as my position was senior to the chinese.

Or do you think the principal risk would be unacceptable even under my terms?

By: NC Jim

NC Jim — Wed, 19 Dec 2007 19:43:00 +0000

Do you have John Mack’s address so I can send a turkey for the holidays? (a real one – not the TanMan). Don’t want his family to suffer.

Seriously though, I suspect that we will see increasing sales of businesses and (more importantly) infastructure to private equity and SWFs as states and local communities seek to close revenue shortfalls. Look for roads and bridges to be converted to toll facilities and then sold.

Selling off the family jewels is a time honored way to survive when one cannot live within ones means – and the US cannot and has not.

By: a

Wed, 19 Dec 2007 19:41:00 +0000

So Morgan Stanley is selling 10% (?) of the firm to get 5 B USD so it can pay out 10 B Usd in bonuses this year.
Have these IBers lost all sense of reality? Perhaps MS could sell all of itself to the Chinese, so we can let it go bankrupt with a happy heart and be done with the pests.

By: Techfun

Techfun — Wed, 19 Dec 2007 18:42:00 +0000

Yea he means the one early in this line: Due to Morgan Stanley's *igger than expected losses, Morgan Stanley chairman John Mack will not take a bonus this year.

By: Anonymous

Anonymous — Wed, 19 Dec 2007 18:27:00 +0000

That’s not the one he’s talking about.

s/.igger/bigger/

By: Yves Smith

Yves Smith — Wed, 19 Dec 2007 18:20:00 +0000

Thanks so much. Typos aren’t my strong suit to begin with, and the entry template hides the latter part of long headlines.

By: mndean

mndean — Wed, 19 Dec 2007 18:12:00 +0000

Better reread your post, there’s an awfully embarrassing typo in it.