Jim Grant, who writes and publishes Grant’s Interest Rate Observer, is a rare figure on Wall Street: extraordinarily well versed in financial history, literate, possessed with a Victorian sensibility, which is very much on display here. His essay today in the Wall Street Journal is very much worth reading (and appears to be accessible without […]
Read more...When I read this Bloomberg story, “Blackstone Risks Hedge Funds’ Return as LBO Lending Evaporates,” my first reaction was “conflict of interest”. My second was “lawsuit”. Everyone casts a blind eye at arrangements like this until the returns falter. My third was that everyone interview seemed extremely reluctant to say anything critical of Blackstone. That […]
Read more...I had a sneaking suspicion when Merrill announced the sale of its sake in Bloomberg for $4.4 billion that the quarterly loss had to be in that range, despite forecasts that the loss would be in the $1.5 to $2 billion range. Bloomberg is too good a business to sell unless there was a pressing […]
Read more...Has Goldman gone over the line of permitted behavior, particularly now that the SEC has decided to go after firms who may have contributed a bit too actively to share price declines of troubled brokerage firms and banks? The Wall Street Journal, in “Goldman Is Queried About Bear’s Fall,” says that the CEOs of Bear […]
Read more...Erin Callan, the recently demoted CFO of Lehman, may simply have regarded her new post at Credit Suisse as a great opportunity. But let’s fact it, who wants to be getting a bonus consisting significantly of Lehman stock if you have other options? From Bloomberg: Erin Callan, the former chief financial officer of Lehman Brothers […]
Read more...The time has come to announce the formation of the Banana Republic Club. Membership is open, with the sole requirement being that nominees correctly discern behaviors in advanced economies that resemble those of corrupt developing countries, which for sake of convenience are referred to as banana republics. Members are eligible to receive a Carmen Miranda […]
Read more...With the financial system on the exam table, it has been more than a bit troubling, that certain questions are neglected in serious academic/policy debates. The discussion of possible remedies focuses on regulatory solutions, everything from requiring mortgage brokers to be licensed to increasing financial institution capital requirements and having much greater harmonisation, as the […]
Read more...We recently wrote about a long overdue shot across the bow from the Senate Banking Committee about initiatives by the Treasury and now the Fed that amount to a regulatory land grab. Why do we think Congress should have done more, sooner? Because the proposed action put the Fed in the position, as with the […]
Read more...Paul Kedrosky posted on a report published in a Swiss paper (he courteously provided the English translation) of the results of a study prepared for hedge fund Bridgewater Associates that projects that total losses to the financial system from the credit crisis will reach $1.6 trillion. Note that losses taken to date are only $400 […]
Read more...Readers no doubt recall that the Federal Reserve loaned $30 billion to JP Morgan against certain Bear Stearns assets to, ahem, induce the bank to go forward with the deal. The arrangement got reworked on the fly, and in the end, the Fed loan was reduced to roughly $29 billion as JP Morgan agreed to […]
Read more...Readers may recall that this humble blog, thanks to the information provided by a former senior person at Lehman, reported that some of the investment bank’s wondrous deleveraging (it was well distributed across products, geographies, and credit quality) was due to asset sales to newly formed hedge funds, R3 Capital Partner and One Williams Street, […]
Read more...Lehman’s days are looking numbered as the crisis of confidence continues, measured both in its stock and credit default swaps prices. The reason is simple: Lehman, despite its protestations otherwise, needed either to shrink its balance sheet more or raise more equity. Despite its claims that its $28 dollar stock sale was oversubscribed, we heard […]
Read more...Perhaps it’s merely the result of drafting in a bit more haste than usual, but the latest offering by Nouriel Roubini, “The delusional complacency that the “worst is behind us” is rapidly melting away…and the risk of another run against systemically important broker dealers,” is unusually heated in tone, to the point where it distracts […]
Read more...In a revelation that will further damage the securities industry’s tarnished reputation, Bloomberg reports that Wall Street firms were touting auction rate securities to retail buyers as a safe investment at the same time it was warning issuers that the market was on the verge of serious trouble. Normally, investor disputes with brokers are subject […]
Read more...Readers may recall that last we ran a post last week on Lehman’s 2Q earnings announcement, its conference call, and some questions raised by an e-mail from a former Lehman managing director. To recap: the investment bank reported a gross asset reduction of $147 billion, net of $70 billion (we consider the $70 billion the […]
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