Can't get enough of proxy access coverage? Check out Steve Bainbrige's take here and the Business Law Prof blog's insights here.

$$$ How to Get Rich In Dollars [LoSC]

$$$ "I'm a VP for an international investment banking firm who only does 2 things - work and work out. I appreciate a woman who can take some initiative and imagination in the bedroom. Plus, you'll be amazed at how turned on you get describing it. I just did this for the 1st time a few weeks ago, and things worked out fantastic. The email I received was out of this world, and our subsequent meeting was equally impressive." [craiglist]

$$$ Paul Kedrosky [WallStrip]

Brought to you by Financial Times

To the tune of lowered income, increased spending and plummeting value of the dollar, major indexes down on the day. The DJIA down -17.31 to 13895.63. The S&P 500 lost -4.63 to close at 1526.75and the Nasdaq fell -8.09to 2701.50. Random Index spinner: Hang Seng Index: up 77.32 to close at 27,142.47.

Personal consumption expenditures declined 0.1% compared to last month. Excluding food and energy the PCE rose 1.8%. Construction spending increased by 0.2% defying expectations of a -0.3% slip.

On the NYSE Friday, 1,337 stocks up and 1,984 down, totaling 883.5 million shares traded.

The euro was at $1.4261 from $1.4147 against the dollar – closing at another high. The dollar was at 114.78 yen from 115.65 yesterday. Crude closing at $81.63 and after reaching a 27 intraday high, gold closed $750.50.

For more market action FT Alphaville

Warren Buffett has once again—for the fourth time—reduced Berkshire Hathaway’s stake in PetroChina, to 7.99 percent from 8.21 percent. Though he claims it’s just about money, Buffett’s actions are indicative of a desire to distance himself from a company which human rights activists have a problem with because of its investments in the Sudan, a region that is currently going through a restructuring of its population. Just as nauseatingly, the sale also hints at Buffett’s intent to raise cash in order to buy up a bunch of Bear Stearns (though that has less to do with a dwindling interest in genocide than it does the early stages of dementia). The man cannot be helped. We are done.

Earlier: Why Doesn’t Warren Buffett Want To Fund Genocide Anymore?

Somebody Save Warren Buffett From Himself, Bear Stearns

Buffett Further Cuts PetroChina Stake [AP]

The myth of shareholder democracy holds a powerful sway over public opinion. The comments we’ve received on our two articles on the proxy access rules now up for comment at the Securities and Exchange Commission demonstrate that people continue to be bedeviled by the misguided analogy with democratic political regimes.

One of the mental levers the mythologists of shareholder democracy use to make their case is a kind of demonology of corporate managers. Although corporate insiders, especially chief executives, have demonstrably lost power in recent years to shareholders and independent directors while the risks of running a public company have increased, the continued climb of executive pay seems to have convinced many that executives are somehow fleecing shareholders. The evidence for this is underwhelming, however. While bad characters exist in executive suites and board rooms, they hardly justify enacting wide-ranging corporate governance reforms. Bad CEOs make bad law.

It’s important to remember that our system of corporate governance has generated enormous wealth for shareholders and workers over the years, bringing us unprecedented prosperity. We should exercise caution when seeking major reforms, especially when the costs of those reforms will be difficult to measure and the reforms will be next to impossible to reverse. By creating a uniform, national rule for proxy access, the proposed reforms would shut off jurisdictional competition and experimentation between the states. Worse, the proxy access reform is clearly viewed by many of its proponents as a first step in what they view as a revolution in corporate governance. There will be more to come. The proxy access reforms are precedent not a final resting place.

Some of the most thoughtful criticism of our first essay came from Beth Young, who I believe is the author of the Shareholder Proposal Handbook and a senior research associate at the Corporate Library.

We rough up Young’s objections to our articles after the jump.

Former Fed Chairman-cum-author/Deutsche Bank consultant Alan Greenspan said in interview with BBC Radio that he and other regulators were fully—blithely actually—aware of the risks imposed by the complex financial derivatives that helped to fuel the recent market turmoil that’s messed with your shit. So why wasn’t any action taken prior to last week? Because you knew the risks involved, and if you didn’t, you’re dumber than Greenspan had previously thought.

“I must admit that I do not have considerable concern about the net worth of [wealthy individuals investing in hedge funds] going from $40 million to $5 million, which in many cases is what has happened,” he said. In fact, he saw the whole thing as the perfect opportunity to teach you a lesson, not unlike the time he illustrated the dangers of binge drinking to a bunch of middle school students by standing idly by while they downed shot after shot of tequila, saying only to a concerned-looking aide, “this is the only way they’ll learn. Nothing like the memory of a good stomach-pumping to make ‘em think twice about that next drink.”

Oh, and there’s maybe going to be a recession. Maybe.

Greenspan: Recession chance less than 50-50 [CNN Money]

Whoever said sexism isn’t alive and well in America has been asleep behind the wheel or living under a rock for, well, forever. Now, before you get all PC on us, save your breath. The glass ceiling here at Dealbreaker is not only buttressed by myself and Bess Levin – but John Carney smiles down on us and his other female minions from time to time sitting on his glass thrown in his ivory tower.

In addition to Dealbreaker, Neiman Marcus management has an interesting division of how they divvy up “allowances” to their CEO’s. Karen Katz, President and CEO gets an annual $25k allowance for clothing while CEO Burton Tansky doesn’t get jack. He does however, get a $12k car allowance (will that even get you a Ford Festiva?). James J. Gold, president of Bergdorf Goodman received a $167k “cost of living” adjustment for relocating from Texas to New York and an additional $296k for NY state taxes. Footnoted.org poses the question – are women simply more focused on clothing while men are more focused on cars and taxes?

Dealbreaker.com gets to the heart of the matter – men get more tail when they drive a hot car. Women can only get men to listen to them if they dress slutty.

On how men and women differ… [footnoted.org]

The New York Stock Exchange has released it’s calendar for 2008 and 2009. Get excited because in 2008 there will be two extra trading days! It’s a leap year, giving us an extra day in February. And there is one less holiday on the schedule—this year we honored the death of Gerald “stagflation” Ford by refusing to work. Unless a former president dies this year, we should have one more day of trading.

Leap years tend to outperform other years, with particularly strong Augusts. Of course, leap years are also presidential election years, which may have more to do with market performance than that extra day in February.

Click chart for larger version.

NYSE Euronext Holidays & Hours [NYSE]

By now you know the rumor that Bill Gates has lost his mind and is considering an investment of $300-500 million for a 5 percent stake in Facebook, which would value the social networking site at twice what Rupert Murdoch paid for Dow Jones. (Making trashtastic MySpace worth $11-12 billion, according to Lehman Brothers analyst Vijay Jayant.) The fact that ‘book CEO Mark Zuckerberg was spotted Tuesday in Seattle, according to ‘Fortune’ reporter/stalker David Kirkpatrick, gives weight to the rumor, and lowers the chances that it’s not all some horrible joke and/or plot by Steve Jobs to make Bill Gates bad.

But since we’re still holding out hope that Microsoft isn’t planning on parting ways with a truckload of money for a website filled with worthless plug-in applications and at which one user can “poke” or “tickle” another and then laugh to him or herself about it, we’re going to come up with a more plausible explanation for Zucks’s visit to Washington and stick with it. The continued existence of the Bill & Melinda Gates Foundation, and the disenfranchised who so desperately need its help, depends on this rumor being bull shit. So you tell us:

The real reason Mark Zuckerberg has been seen in Seattle is:

a. Tonight’s Bryan Adams with George Thorogood concert at the WaMu theater

b. For a naughty game of hooky with David Kirkpatrick, who writes that, having “gotten to know [Zuckerberg],” who is “driven by a conviction that what he is doing will make the world a better place” and “is a nicer person than Gates,” has come to the conclusion that “it may be…worth quite a few hundred million for any company to get into bed with Mark Zuckerberg.”

c. Adidas shower shoes.

d. Coffee date at flagship Starbucks with Kofi Annan to discuss how Facebook can get involved in the Arab-Israeli conflict.

e. Annual pilgrimage to Brandon Lee’s grave in Lake View Cemetery.

f. a. and b

g. a. and c.

h. a and d.

i. a and e.

j. b and c.

k. b. and d.

l. b. and e.

m. c and d.

n. all of the above

o. none of the above

Zuckerberg Sightings Fuel Deal Speculation [DealBook]
Facebook CEO visits Seattle, Microsoft schemes [Fortune]

Copyranter's seminal Pure Horseshit™ Award. [copyranter]

Sears Holdings doesn't seem to be working out. Eddie Lampert was supposed to be the next Warren Buffett, and Sears Holdings the next Berkshire Hathaway. But this week shares in the company hit a new 52-week low after investors digested poor earnings performance, bad news on same store sales and worries that we might be entering a rough sector for the entire retail sector.

The logic that boosted Sears Holdings from a $50 per share company to a $200 per share was built on the value of its real estate. Lampert was said to have a plan to leverage the underlying real estate assets of Sears Holdings to make other investments, basically turning an old fashioned retailer into a twenty-first century hedge fund or private equity firm. But with consumer sentiment down and real estate deflating, the real estate to investment company play looks a lot less feasible.

Even as short interest in most NASDAQ stocks fell in September, short interest in Sears Holdings shot up by almost 15 percent. Short positions stood at about 13.7 million shares in mid-September, nearly 10 percent of the outstanding stock in the company. This puts it up there with short favorites, for lack of a better term, like Crocs, Lulumon and Pet Smart.

So does Lampert, who Business Week once called an "investment wizard," have some magical plan for Sears Holdings? Will Skull & Bones somehow rescue the company with a Dear Island strategy? Lampert is supposedly obsessed with protecting his downside. So when we think about the future of Sears Holdings we can't help but ask: What Would Eddie Do?

Well, if we can't have Sears Holdings, at least we'll always have the Mets, right? Hello? Anyone still listening?

Sometime in the next few weeks, Securities and Exchange Commission chairman Chris Cox will likely have to decide how he will vote on a pair of competing rules on shareholder access. One “proxy access” rule would shift power from boards of directors to cliques of outside shareholders by permitting certain shareholders and groups of shareholders to include in company proxy materials proposals for amendments to bylaws that would mandate procedures to allow shareholders to nominate board of director candidates. The other preserves longstanding rules that make it difficult and costly to for dissidents to mount proxy fights.

The SEC’s commissioners are evenly divided along partisan lines on the question. The Democratic commissioners favor increased proxy access. The Republicans favor the status quo. Cox holds the deciding vote. Which way will Cox vote? We’re not in the predictions game. But if we take Cox at his word about his own agenda at the SEC, it seems clear that he should vote against the new proxy access rules.

After the jump, we look at how the new proxy access rule hurts ordinary investors.

Bond Traders Begin to Get Up Off the Canvas (WSJ)
It really is looking like the whole liquidity crisis was nothing more than a really bad dream. Maybe we have Ben Bernanke's aggressive actions to thank. This time the committee to save the world was just a committee of one. Well, two if you count Ben Bernanke's consiglieri Jim Cramer. Anyway, banks are finding it easier to sell debt again, as they've been able to unload twice the volume of First Data debt than they had originally anticipated. It's not totally clear why that is. Maybe it's due to the return of liquidity, or maybe it's just that everyone's quote screens started working again, so they can price these deals.

The Long Petard: The New York Times and Sarbox (The American Thinker) (via Ideoblog)
This may come off as a bit of applied nitpickery, but The American Thinker does a good job explaining how the New York Times, long a fierce advocate of SarBox, may have violated one of its principles through its decision to give MoveOn.org an ad at a discount rate, and how it dealt with the followup inquiry. Clearly the Times is in bad need of better internal controls.

AMR Draws Fire From Iceland (Forbes)
Shareholder activists in Iceland urged AMR yesterday to unlock value, and were behind a much talked about report that suggested AMR's frequent flyer unit had more value than the airline itself. That's hilarious, although a little confusing. Sort of reminds us of when people used to say that GM's lending arm had more value than the car operations. Yes, but... that lending was for people buying GM's cars (that, and mortgages, which, well, we know how that turned out). Anyway, interesting to see Iceland step up to the Shareholder activism game. We thought the only thing they did there was hydrogen energy and selling the genome of its populace.

Greenspan's Memoir Racks Up Sales (WSJ)
Quite surprising that folks are actually reading Greenspan's book. Maybe they'll be interested in something that would really help them understand economic conditions these days. May we suggest this?

$$$ That Maria painting. [thestreet.com]

$$$ Banker Needs Swedish Nanny for Self [craigslist]

$$$ Jefferies figures out a way to pay for all those dwarfs. [Investment Dealers' Digest]

More news from planet LBO. Despite the rocky news on Archstone this morning, things are looking up this afternoon. The banks financing Kohlberg Kravis Roberts & Co. buyout of First Data Corp began selling around $10 billion of the deal’s bank loans.

As predicted, the loans sold at a discount. But at 96 cents on the dollar, the banks seemed to have little trouble placing the loans. Most have now been purchased by investors, DealBreaker can report.

The success of the First Data loan sell-off is being greeted as a welcome sign that there’s still life in leveraged loan land. “It's a significant event on the road back to normality,” a London based hedge fund bond manager tells Bloomberg. “It shows that investors at least will accept a market clearing price and that wasn't the case a month ago.”

KKR Banks Selling $10 Billion of First Data Loans [Bloomberg]

Do you remember what you were doing on 9/11, pre-8:45 am? I was in math class, trying to come up with a totally bull shit but failsafe excuse for why I hadn’t done my homework. You were probably doing something like that too. A reason you hadn’t sent your associate that model. A justification for why your fund dropped 47 percent in two weeks. Then, something happened, and the world changed. I won’t get into it here, but suddenly, we all had the ultimate excuse on our hands, one that could work in any and every situation. One that put “my alarm didn’t go off” and “there’s been a death in the family" to shame. You know what I’m talking about—9/11. And we’ve used it in sickness and in health ever since (usually in health, because “I’ve got a head cold” is a pretty good excuse on its own). It’s almost, dare we say, the silver lining to a very unfortunate event.

Today we kiss that silver lining good bye. A dangerous precedent has been set, and Morgan Stanley is to blame. The bank agreed to pay $12.5 million to settle charges that it failed to provide arbitration plaintiffs with e-mails it claimed were destroyed on September 11, 2001, when, in fact, it was discovered that the e-mails had been saved on backup files, more or less ruining it for the rest of us. So, thank you, Stan O’Neal Phil Purcell. For a whole lot of nothing. We all now have our work (to get out of work, among other things) cut out for us. Ass.

Morgan Stanley to Pay $12.5 Million in E-Mail Case [Reuters]

Brought to you by Financial Times.

Tomorrow is the last trading day of Q3 and we expect to see some increased volatility in trading Friday. Today saw the highest rise of the Nasdaq since July despite weakened new-home sales which declined 8.3%. New home purchases have slowed to a crawl - 795,000 its lowest level in 7 years with prices declining by the most since 1970. Did someone say more interest rate cuts??

Market movers: Sallie Mae’s stock climbed to its highest level in six months amidst expectations of a new takeover agreement. Exxon and Chevron also saw plenty of action as crude prices continue to rise.

Major index numbers as follows: The DJIA up 32.51 to close at 13910.66. The S&P 500 rose 5.18 to 1530.60. The Nasdaq ascended 9.23 to 2708.26 to it’s highest since July 19th. The Russell added 4.89 to 814.01. The 10YR Note also up 13/32 to close at 4.573%. Random index spinner of the day: CAC 40 Index up 42.60 to close at 5,733.37.

Total number of shares traded on the NYSE 1.18 billion with 2,215 in the green and 1,078 seeing red. The US Dollar flexed it’s muscle moving up to $1.4147 from $1.4125 against the euro. The greenback up ten yen cents or whatever the heck you call it from 115.55 yesterday to close at 115.65.

Tomorrows numbers to look out for: Construction spending and Consumer sentiment both at 10:00 ET.

Stay up all night with FT Alphaville

“On the Money” is going, going, gone.

The official word is that on October 10th the show will go on “hiatus”—and, as it turns out, that word has nothing to do with shenanigans on the Kennedy compound. It means, we think, that the show is pretty much canceled but no one wants to tell Melissa Francis.

The New York Times TV Decoder blog has the scoop.

The program’s pending departure is one of a series of programming changes CNBC is planning, as the Oct. 15 debut of the Fox Business Channel draws near. In place of “On the Money'’ at 7 p.m., the official said, CNBC is moving in “Kudlow & Company,'’ which can currently be seen at 5 p.m. In its place at 5, CNBC is installing “Fast Money,'’ the traders’ roundtable led by Dylan Ratigan, which currently appears at 8 p.m. — and still will, in rebroadcasts.

We’ll miss OTM. What the New York Times describes as “hip and almost flip approach to the day’s business news” was just about our speed. The show had an edge to it that a lot of the more sober daytime programming on the network lacks. It was probably the only show on the network that was produced in the traditional news magazine sense. We’re hoping it comes back after some sort of redesign. Or that Fox produces something like it.

But, of course, there are more serious matters at hand. And most of them are about OTM host Melissa Francis. “Left to be determined is the next assignment for Melissa Francis, the anchor of ‘On the Money,’” TV Decoder reports. Memo to CNBC: Pay attention.

CNBC Jettisons ‘On The Money,’ Shifts Kudlow and Ratigan [New York Times]

In 2004, Basis Capital was named Macquarie Bank Ltd.'s "Skilled Manager of the Year." In 2005, "Fund of the Year." In 2006, Basis fell off the legitimate awards circuit radar, but we've heard reports that while vacationing in a small village just outside of Melbourne, manager Steven Howell entered a Vanilla Ice lookalike contest and won. So that's something. In 2007--yesterday, in fact--the Australian hedge fund took home the George Washington "I Cannot Tell A Lie" "Award" for being totally upfront and truthful about the piss-poor job of managing their clients' money they've done this year.

BC said Wednesday that its Aust-Rim Fund--the one not currently seeking bankruptcy protection--is down 50% this year, following what numbers men characterize as a "pretty much abysmal" summer. (In August, the firm closed its flagship Yield Fund, which is thought to have lost as much as 80% of its value, though managers Steven Howell and Stuart Flower claimed they were unable to "accurately estimate" the value of units left in the fund.)

Securities and Exchange Commission Chairman Chris Cox holds the swing vote in one of the most important questions of corporate control currently being considered by the government. Sometime soon he’ll have to decide whether to support the proxy access proposals put forward by the Democratic commissioners or cast his lot with Republican proposals to maintain the status quo.

As is so often the case, at the heart of the matter is a confused concept. In particular, the concept of shareholder democracy seems to have broken out of its academic box and run rampant through the minds of some otherwise sensible people. Fortunately, the proxy access proposals are the subject of two of the most important articles published today—one from law professor Lynn Stout in today’s Wall Street Journal and the other from Larry Ribstein on Ideoblog.

Stout takes the argument for shareholder democracy head on, arguing that the “proposed proxy access rule is driven by the emotional claim, unsupported by evidence, that American corporations benefit from ‘shareholder democracy.’" Current shareholders, who are only temporary owners with easy entrance and exit strategies, have incentives to exploit and loot a company for immediate gains—which is exactly what some well-known activist shareholders have been urging on public companies. A stronger shareholder franchise will only acerbate the problem, Stout says.

What makes US companies function so well is the fact that they are managed by strong central boards and run by powerful managers. “Successful corporations are not, and never have been, democratic institutions. Since the public corporation first evolved over a century ago, U.S law has discouraged shareholders from taking an active role in corporate governance, and this ‘hands off’ approach has proven a recipe for tremendous success,” Stout writes.

Ribstein is less enthusiastic about traditional models of corporate governance. In fact, he thinks that the traditional public corporation may be on its way out—or at least in for some real evolution. But he agrees with Stout that attempts to force change on corporations through a new national regulation on proxy access are a very bad idea. “[T]he reason why the SEC should keep its hands-off here has more to do with the appropriate limits of SEC power than with the substance of the proposal. This is a matter of internal corporate governance which should be for the states,” Ribstein writes. “There is no justification for making this a federal matter unless you buy in to the shareholder democracy myth.”

What neither Ribstein nor Stout touch on today is the actual mechanism for the disfunction of shareholder democracy. Both understand that it won’t work as promised but they don’t spell out the reasons why. But fortunately you read DealBreaker, so you are about to learn why.

Clearing up the puzzle of shareholder democracy after the jump.

Kenneth Heebner’s CGM Realty Fund is liquidating its positions in SL Green Realty Corp - Manhattan’s largest office landlord.

"You're seeing a retrenchment in the private-equity, hedge-fund and brokerage businesses, and there could be a lot of layoffs,'' Heebner, 66 told Bloomberg in a recent interview. "That could have a devastating impact on high-end residential real estate in New York. Appetite for office space will also decline."

More from the Heebner after after the jump.

Apparently we’re “snickerers.”

We like to think we’re more belly-laughers. But we like this description of why DealBreaker is important: “Because every classroom needs a kid in the back row, throwing spitballs.”

Sorry. We’re getting ahead of ourselves. Let’s back up. Market Mover Felix Salmon has posted “An Interactive Guide to the Econoblogosphere.” It maps out the econblog space into a number of categories and isn’t afraid to pick favorites. We’re not only Salmon’s favorite back of the class clown blog. We’re also the only one.

After you check it out the guide, stop back here and let us know if you can figure out exactly who is doing what in the icon Portfolio assigned to us.

The Econoblogosphere [Portfolio]

Filing annual reports and auditing financial statements according to US GAAP standards is excruciating for all public companies but for NEC electronics, it’s become a debilitating factor in their American depository receipts trading on our exchange.

The company formerly known as Nippon Electronic Company’s ADRs will no longer be traded on the Nasdaq as of today. Not only are they unable to file their Form 20-F for the fiscal year rounding up in March ’06, they announced their US filings dating back to 1999 are unreliable.

According to a report by CNN Money, the NEC said a restatement (of their annual report) "is not practicable" because of the complexities involved in determining the necessary adjustments. We previously reported that the Europeans are also taking issue with our accounting principles and filing standards and realize we’re seeing a trend here.

Are our accounting standards REALLY that difficult? Is this our problem or theirs? Have our accounting rules become so arcane they're driving companies away from us? A bunch of you have your CFA designation – tell us what’s going on here.

Nasdaq Takes Step to Delist NEC Corp. [Wall Street Journal]

NEC Will Not File Fiscal 2006 Report [CNNMoney.com]

The rumor about Syndicated Leveraged Finance analysts at JPMorgan, currently in training, being rounded up and told “there will be people leaving this group” has been given not necessarily legs but perhaps (very small) feet. While out for sushi last evening, our dinner companion received an email that read:

I won’t send this to her directly but since I know you’re out to dinner with BL, feel free to pass along that I’ve heard the same rumor about the SLF guys. Good, I say, less JPM dicks at Snafu when I get my drink on at five. Don’t put my name on that. Describe me only as being “in the know” and “an employee of Barclays.”

And another, less crazy tipster writes today:

Confirmed JPM analysts rumor, though I’ve heard the senior guys are also planning on cutting non-first year analysts.

Want to get something off your chest pertaining to Jamie Dimon's toy soldiers but feeling similarly gripped by paranoia? Shake it off and let us know.

There’s no doubt that Planet LBO is a calmer place now than it was through much of the summer. But it’s not exactly terra firma yet. One of the shakiest deals in the pipeline is the buyout of real estate investment trust Archstone-Smith Trust. Lehman Brothers and Tishman Speyer are putting just $500 million of their own money into the $21 billion deal, with the rest coming in the form of bridge equity and debt.

Yesterday Lehman Brothers and Bank of America began their attempt to sell $3.15 billion of the $4.96 billion bank loans financing the debt. The loans consist of a $750 million revolver and a $2.4 billion term loan, each priced at 300 basis points over LIBOR. But word is that they are running into resistance from investors who are surprised the debt is not discounted more heavily.

Reuter’s Jonathan Keehner reports that banks are offering the term loan at 99 cents on the dollar, and this has some would be investors balking. As Keehner gently puts it, the one cent hair cut prices the loans substantially “above where other recent buyout financings have closed or been discussed.”
Not everyone is being so delicate.

"Archstone is a good company, it's got great assets, and bankers probably thought they could sell at this price," said a buyside analyst tells Keehner. "But my initial view is that a lot of deals are coming in at the mid-90s, and this is coming in at 99 cents on the dollar. It looks rich to me.”

We’re told the situation is beginning to look hopeless. And part of the problem may be Lehman’s conflicting interests. As both the buyer and one of the lead lenders—a dual role that many banks considered a win-win situation in happier times—Lehman may have put itself between a rock and a hard place.

Let’s go to the Keehner tape again, this time from Reuter’s Dealzone blog. “Either way Lehman takes a hit: as a principal, renegotiating on any terms could hurt potential profits. But by also banking the deal, Lehman otherwise risks having the debt clog its balance sheet or sold at a loss,” Keehner writes.

Archstone loans appear priced at pre-crunch level [Reuters]
Lehman’s double trouble in Archstone [DealZone]

With Ben Bernanke doing as he’s told, you’d think there wouldn’t be much for CNBC pundit Jim Cramer to go batshit crazy over in public, right?. Wrong. You clearly underestimated the depths of Cramer’s dementia. Last night at a Gin Lane party for the man who knew about the News Corp./Dow Jones deal eleven years before it happened, Baird Jones asked Cramer if he’d ever wear a hairpiece. This was the response:

"I would rather blow my head off . . . Never, ever, ever . . . They are phony. They are horrible. Same with hair transplants. I like cornrows when they are in an Iowa field . . . I would never even dye my hair. The only thing I have is my authenticity. No, no, no!"

And sources tell DealBreaker Cramer was later heard telling a group of revelers outside the men’s room that he still cannot get over the fact that back in the Holocaust, Hitler didn’t round up Europe’s hairpiece-affixing men when he was gathering the gypsies and Jews. “I said to him, ‘Adolf, they are just as offensive, if not more. Don’t phone this one in'.”

One wonders if Cramer’s nephew, having inherited the Cramer male pattern baldness gene, shares the philosophy. After all, it’s not like he needs hair to impress anyone—he’s got the iPhone.

Too Much Gin [New York Post]

Congratulations to Tom Hudson, whose hedge fund ended its proxy battle with Angelica, a healthcare linens company, after Angelica kowtowed to the Jolly Rogers’ demand to explore a possible sale. In July, the Pirate team, which owns approximately 9.8 percent of Angelica, told the firm to put itself on the block or prepare to go to war, and nominated two of its own to the board. Angelica stated yesterday that has given its financial adviser Morgan Joseph* the green light to pursue a sale. Hudson then withdrew his nominees for the board, based on the assumption that Morgan Joseph will have time to work on a deal, what with inner-office bitching between associates and analysts taking up a large portion of the day.

Though a previous proxy fight with energy company Aquila saw Pirate distributing buttons and t-shirts, circumstances of late, including but not limited to managed assets falling to $375 million from last year’s $1.802 billion, rendered the free-gift with purchase deal too costly. Why nobody thought to offer burned copies of Michael Bolton’s greatest hits is beyond us. Hindsight.

Pirate Ceases Fire on Angelica [HedgeFund.net]

*heh.

It's not everyday you get to watch a girl get naked with a chairman of the Federal Reserve. But some folks on Lexington Avenue wound up doing exactly that recently when they found themselves side by side with former chairman Paul "Ben Bernanke is a Bitch" Volcker while a voluptuous blond showed her own discount window to passersby in the window of an art gallery.

What was going on? This morning Ben Widdicombe of the Daily News explains how all this came to be.

"It turns out Volcker (who led the Fed for eight years under Presidents Jimmy Carter and Ronald Reagan) is the uncle of the lady in question, performance artist Lisa Paul Streitfeld," Widdicombe writes.

Ugh. Performance art. It's like pornography but even more boring. Usually involves women you don't necessarily want to see naked who insist on getting that way and then smearing stuff on their bodies. Surely this isn't what Volcker's niece was doing.

Except that it was. And is. Streitfeld is currently performing one of five chapters in her performed "novel" The Alchemy of Love. You can watch video versions of four of the chapters on the novel's blog. Of course it has a blog. Or you can stroll by The Lab, an art gallery in the Roger Smith hotel and see the thing live. It runs through September 29th.

If you run into Volcker, remember to ask him what he think the prospects for inflation are now that the Fed is back in rate cutting mode.

His interest is purely avuncular [Daily News, third item]
Alchemy of Love blog [Blogspot, of course]

Bear Stearns shares shot up over 8% yesterday after reports surfaced that the Wall Street bank in serious talks with Warren E. Buffett about selling the Oracle of Omaha as much as 20 percent of the firm. But is Warren really riding to the Bear’s rescue? We're skeptical.

It’s hardly news that Bear Stearns has been out shopping a 20% stake to potential investors. There’s been talk of several US bidders and, of course, a Chinese take-out bank making bids. But does Warren make sense? That old guy made out decently with Salomon Brothers but he still hates on them. Yesterday Bess quoted him as saying he how much he found the “brash Salomon culture of big egos, big risks and even bigger salaries to be out of step with his down-to-earth demeanor.” Do you want to be the person who sells him the story that Bear is totally different? We’d rather tell him why Bess Levin was called DQ in high school than try to explain Bear’s internal culture to him.

More importantly, there's little about Bear Stearns to suggest that Buffett would look to put in that kind of money. Trading below book value? You're going to tell us anyone knows what Bear Stearns book value is? Even Bear Stearns admits its guessing about the value of some of the assets it owns. Reliable revenue stream? This company makes much of its money trading securities.

It's also hard to see what Buffett brings to Bear Stearns apart from money and a reputational boost. Bear Stears needs a large cash infusion and a partner that can help it build global exposure. How does Buffett add value to the business? We don't see it.

Probably the strongest point in favor of the rumor is that Buffett is unpredictable. And so that wascaly wabbit might have something this wacky up his sleeve. Just when you thought he was buying trains, he turns around and buys traders.

Yesterday, CNBC’s “simple country reporter” Charlie Gasparino sounded a skeptical note. Nothing we heard would cause us to think that the Old Man of Omaha is anywhere close to buying a huge chunk of Bear Stearns. We do a lot of rumor sorting here at DealBreaker, and we call bullshit on this rumor.

Yale Endowment's Performance: A+ (WSJ) Yale Beats Harvard—in investing. Ba dump bump. Yeah, that was too easy, but I’m only wearing one contact and you would’ve gone there, too. The Yale Endowment posted a 28 percent return for the fiscal year ended June 30, leading the academic world in investment performance for the tenth straight year, and increasing its total value to $22.5 billion from last year’s $18 billion. Though the Crimson’s endowment is significantly larger, at $34.9 billion, it only saw returns of about 23 percent, and as Yale’s chief investment officer David F. Swensen always says, “it’s the motion in the ocean that counts.” The second-best-performing school was Amherst College, which was up 27.8 percent to $1.7 billion, followed by UVA (25 percent, $4.3 billion), Harvard, MIT (22 percent, $9.9 billion), and Johns Hopkins (19 percent, $2.8 billion). University officials would not specify which assets it held or which ones performed the best, but many believe alternative investments, of which Swensen is said to be a big fan, were to thank.

Analyst cuts Merrill Lynch on possible $4B writedown (AP via CNN Money) Goldman Sachs analyst William Tanona said in a note yesterday that Merrill Lynch will have a horrible third quarter. Citing a possible $4 billion writedown in assets, Tanona cut his profit estimate to 15 cents per share from $1.95/share, and lowered his target price on ML to $94 from $108. Though the distressed financial markets have left everyone in bad shape, the AP, playing everyone’s favorite parlor game of “Who’s the biggest loser on the Street,” noted that things look the worst for Merrill because its fiscal third quarter covered more of the downturn in the market than the banks that already reported (Merrill’s Q3 ended September 30, Goldman and Morgan Stanley’s on August 31). ML’s stock dropped down to $69.91 after the note came out, bouncing back slightly to close down 37 cents at $71.75.

BA ditches Boeing jumbo for Airbus A380 (Reuters) British Airways cut its blood brothers bond with Boeing’s 747, forged over several decades, when it announced its switch to Airbus’s new A380 superjumbo. In a mixed plane order worth up to $8.2 billion, BA will be replacing 34 of the airline’s older longhaul planes with 12 superjumbos from Airbus and 24 787 Dreamliners from Boeing Co. BA Chief Executive Willie Walsh denied that there was any political pressure to buy parts that will be manufactured in Britain. "There was absolutely none," he told reporters. "There was no contact, be it formal or informal. The decision was made in the best interest of British Airways. In the engines, the choice of Rolls-Royce was because British is best."

Chuck Norris's Tears Might Solve Credit Crunch (Bloomberg) We’ve always counted “Walker, Texas Ranger” among our top three heroes. For a while, they balked at the idea of devoting an entire column to him on their “serious business website,” but today we get down on our knees and thank god Bloomberg has seen the light of day, and come up with an entire page of gems such as, “Chuck Norris subprime collateralized debt obligations still trade at 100 percent of face value,” "Chuck Norris charges the Bank of England a penalty rate for borrowing. And guarantees its deposits,” and “Chuck Norris doesn't buy gold to hedge against inflation. Gold buys Chuck Norris to hedge against inflation.” (“Chuck's iPhone never needs recharging” wasn’t so good.)*

The Mideast Money Flows (New York Times) Carlyle and other U.S. buyout firms are looking to the Middle East, they claim because it’s a great place to invest. The real reason, which nobody else will tell you, is because you can’t beat Dubai’s public school system.

$$$ Day in the life: JPM trader [IvyGate]

$$$ FOR MEN MAKING $500,000 OR OVER - A QUESTION FROM A REAL WOMAN [craigslist]

$$$ Halo 3: And the Geeks Shall Inherit the Earth [thestreet.com]

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Up, up and away. Major indexes pressed close to record highs. It's like we're erasing August from the calendar.

The DJIA up 131.61 to 13910.26, not far from its record close of 14000.41,The S&P 500 up 11.03 to 1528.24. The Nasdaq up 18.08 to 2701.53. The Russell up 6.12 to close at 809.12. The 10-YR Note remains unchanged on the day.

Durable goods orders numbers out today with a decline of -4.9% to $219.53 billion. Orders for nondefense capital goods (excluding aircraft) fell -0.7%. While commercial planes orders fell -41.0%. Transportation orders down -11.2%.

The dollar gained some momentum on the euro $1.4126. The greenback also up against the yen at 115.50. Crude up 77 cents to close at $80.30.

Total number of shares traded on the NYSE today: 1.27 billion. With 2,161 rising and 1,150 declining by market close.

Hunker down for the night with FT Alphaville

Warren Buffett’s petition for membership to the egalitarian brotherhood of People Who Are Fucking Nuts has been officially accepted. Last year, he decided that Berkshire Hathaway-owned Geico would not take part in the Caveman sitcom. Last week he reduced his company’s investment in genocide to an embarrassingly trivial 8.93 percent. Today comes the news that he’s in serious talks to buy a stake in Bear Stearns. Three times = a trend, this one being WB’s insanity.

The New York Times reports that Buffett first approached James Cayne about the purchase last month, when the bank’s stock was about to celebrate its one-year low of $100. Deals have faltered in the past because the bridge player (first, CEO second) has often insisted on premiums as high as 40 percent above share price from outside investors. This time, and no one can say for certain but it may have something to do with two failed hedge funds, a 61 percent decline in third quarter profits and the fact that BSC can no longer afford its much-needed cleaning staff, Cayne is reportedly holding out for a premium of only around 20 percent.

Bear’s shares jumped on the rumors of possible sale this afternoon, with the stock trading up over 8 percent. Punk Ziegel analyst Richard Bove upgraded BSC from “sell” to “market perform.” Spokesmen for both Bear and Buffett declined to comment, which generally means they’re up to something, though CNBC’s Charlie Gasparino said that he “doubts” the reports are true. (Gasparino also noted with what sounded like hurt feelings that “Jimmy Cayne has not returned my calls,” presumably because it’s a beautiful day for golf.)

In 1987 Buffett took a 12 percent stake in Salomon Brothers, a move he later regretted, finding the “brash Salomon culture of big egos, big risks and even bigger salaries to be out of step with his down-to-earth demeanor.” Hopefully he can be reminded of the bad taste SB left in his mouth, which not even a dozen Oreo Blizzards could purge, before it’s too late. Carney's got the keys to his house-- everyone meets there tonight at 8 for an intervention (power of attorney papers have already been drawn up). We lost him on the Sudan. Let’s not lose him on this.

Earlier: Why Doesn’t Warren Buffett Want To Fund Genocide Anymore?

Buffett Among Those Said to Consider Bear Stake [New York Times]

It is over. Sallie Mae has just said that JC Flowers is pulling the plug. A representative of the buyout group led by Flowers apparently informed them of the news today. The buyers have told Sallie Mae that they won't close the deal under the terms of the merger agreement.

But it's never really over till the fat girl sings. And in this case, the Delaware Courts will be the ones making the fat girl noises. Sallie Mae says it doesn't believe that the buyers have any contractual basis for terminating the merger agreement. It "intends to pursue all remedies." Read: sue the Flower children for the $900 million break-up fee.

There are still some who are saying that the deal could close on new terms but that looks highly unlikely now. This break-up is too public, and Sallie Mae's lawsuit threat too obvious, to lead us to think its very likely that the buyers and sellers are going to come to new terms. (But, you know, we've been wrong before. We're just whiskey-soaked reporters speculating on a hypothesis.)

And the Bess Levin Award for unintentionally dirty headline writing goes to whoever it was at Big Charts who came up with this one: "PRIVATE-EQUITY SUITORS OF SALLIE MAE SAY THEY WON'T CONSUMMATE $25 BILLION DEAL."

Text of SLM press release after the jump.

Update: Yep. It's over. This post has the honor of almost certainly being the last thing ever published on this deal before the world learned that it wasn't happening. That's special.

That’s what folks are wondering today. Now that First Data has closed and Harman International Industries and Genesco have fallen apart, eyes are on Sallie Mae. Which way will it go? Will the buyers call a MAC and bail on the deal?

The MAC speculation arises from legislation Congress passed this summer that expands financial aid to students while cutting back on subsidies to student loan lenders. But the odds of the deal falling apart went way up this morning when Bank of America chief executive Ken Lewis made comments that seemed to indicate that the legal changes were causing the buyers to re-evaluate the price they agreed to pay for Sallie Mae.

"We obviously have seen the change in the (education lending) laws. We are trying to assess the impact that might have on the price," Lewis told the Charlotte Observer. Bank of America part of a group of investors led by buyout firm J.C. Flowers & Co. that agreed in April to by Sallie Mae.

Shares of Sallie Mae sunk on the news. And the price of bond insurance for Sallie Mae’s debt sunk to the lowest levels since July.

Things could get ugly. If the buyers do call a MAC, the sellers may well sue. This morning’s Deal Journal outlines the legal argument that Sallie Mae might make if the buyers tried to walk away. “At stake is the $900 million reverse break-up fee the buyers are on the hook for if they want to walk and can’t prove a MAC,” Deal Journal writes.

Sallie Mae shares fall on Lewis comments [Charlotte Observer]
Sallie Mae Credit Protection Costs Fall Amid Buyout Doubts [CNNMoney.com]
Sallie Mae CEO’s Counterattack Against Waffling LBO Buyers [Deal Journal]

Real estate blog Curbed recently sat down with an investor in the field to discuss whether or not Andre Balazs’ High Line-squatting Standard Hotel is symptomatic of a developmentification of Manhattan that’s turning the island into a place where only utterly lame (but sufficiently rich) people will live. A simple ‘yes’ would’ve sufficed, but the expert, perhaps going through some sort of personal problem or maybe having had the unfortunate pleasure of drinking at Joshua Tree last night, took it one step further.

Fuck it, I say. Manhattan is one big joke. I think they should let highrises go up anywhere at this point. What's the point of communities on the island anymore?

Everyone's so priced out, does it matter anymore?

If you want a neighborhood/community, move to Brooklyn.

Let Manhattan be just one big bullshit skyscraper. Tower of Motherfuckin' Babel. But for douchebags.

And the Lord spoke and said, "Let us make sure these douchebags do not understand each other, less they build a Tower of Douchieness. Let one douchebag not understand the other." And thus the languages of Goldman, Lehman, and Morgan were formed and the Lord saw it and it was good.

First of all, this tower already exists, and its name is Windsor Court (and on the UES, Dormandy). Second of all, and we’re just passing this along, analysts from Merrill Lynch and Bear Stearns would like to know, “Hey, why weren’t we included on that list?”

Investor Rant: 'Manhattan is One Big Joke' [Curbed]

Piranhas are nasty little fish known for their sharp teeth and an aggressive appetite for meat and flesh. And today the Commodity Futures Trading Commission announced that it had hooked one of the little buggers.

In a case first brought by the the CFTC in May, a federal court in California has fined Robert Joseph Beasley and his firm, Longboat Global Funds Management, for committing fraud by misrepresenting certain investments held by his commodity pool, Piranha Capital. The CFTC claimed the defendants had Piranha Capital loan $4 million to other Beasley controlled entities without letting investors know that Beasley was running them. They say Beasley misled investors about the security of the loans, and then didn’t collect interest or principal on them. He then allegedly used the value of the unpaid interest payment to calculate his fees. Nice work if you can get it. And not get caught.

The order imposes restitution totaling $13.8 million, of which Beasley is responsible for $4.5 million. The order also requires Beasley to pay a $500,000 civil monetary penalty and Longboat to pay a $1 million penalty.

“One has to wonder about a firm that names itself after a flesh eating fish,” the hedge fund newsletter FinAlertnatives quips.

CFTC Press Release [CFTC]
CFTC Fines ‘Fishy’ Hedge Fund Firm For Fraud [FinAlternatives]

Geoffrey Raymond, the greatest artist of our time, who brought us such masterpieces as “Big Lloyd I (.6 Billion)” (a rendering of Lloyd Blankfein), "Big Jim I: Get Up (I Feel Like Being A) Sex Machine" (Jim Cramer), and “Big Dick I (Hundred Million)” (Dick Grasso), is at it again. This time it’s Maria Bartiromo, whose portrait will be exhibited in front of the NYSE and around Wall Street for the next ten days, and available for purchase on eBay until October 6 (minimum bid is $4,999).

For his latest venture, Raymond chose to interpret the CNBC anchor as the Virgin Mary, which doesn’t seem like much of a stretch to us, if detailed accounts as to what went down on the Citigroup jet and the tips we get from the chippies in our Christian youth group about “how to be a bad girl while maintaining that you’re a good girl at the same time” are to be believed. Raymond, whose work has been described as “early crazy,” also uses the space to weigh in on the alleged friction between Bartiromo and Erin Burnett, because nothing drives the art market like a good catfight. Check it out today (the first 100 passersby will be given the opportunity to jerk off on their favorite part. Credit Suisse employees—you really have no excuse not to).