$$$ Schwarzman’s School Ties [DealBook]

$$$ Vote on whether Tim Sykes has discovered the secret formula for the stock market. [TimSykes.com]

$$$ Sorry Guys, Today Didn’t Happen [LoSC]

$$$ The Boeing Company (BA)

Who remembers that Craiglist ad from the 28 year old Goldman banker looking for someone to lavish with his (pretax) $722k bonus? I’m going to go with all of you because, frankly, it/he was unforgettable. The Viking stove, the custom-made oak dresser, the amazing dinners, the shopping, the great wine, the getting each other off fabulously and, of course, the baby’s arm aren’t things one lets recede from his/her consciousness so easily. Sure, the whole thing turned out to be fake and from the mind of someone named the Cajun Boy who does not really work at Goldman Sachs or at any other financial institution, including Bear Stearns, for that matter, but did anyone give a shit? No, us included. In fact, we were so taken by the imposter— “real” name: Thad— that we asked him if we could reprint parts of his journal on DealBreaker so that you all could live vicariously through his fabulous life. He said yes, if it would help him “score ass.” So if you enjoy the following installment, show your gratitude.

I seriously can’t believe that I’m about to let the following words cross my lips, but this is my diary and the purpose of a diary is for purging the soul and unburdening yourself of any albatrosses that may be weighing you down, right? It’s also great for endearing yourself to a large swath of the female segment of the banking industry when parts of your diary just so happen to be published on a widely read Wall Street website, but that’s neither here nor there. The fact of the matter remains…

Your jobs sucks. That’s why we spent part of the afternoon combing through our Career Center in search of the most interesting jobs. There are dozens to choose from, all categorized according to specialization. But one special one has been selected as our Job of The Week.

A multi-strategy hedge fund is seeking an experienced risk taker to trade the mortgage credit space with a particular focus in subprime. Feel free to bring your whole team.

Not content to sit idle while their peers at Citadel and Stark Investments lose millions of dollars by backing movies like “Evan Almighty” and “Poseidon,” Elliot Associates has gotten some of that, agreeing to provide at least $1 billion to co-finance 75% of Universal Pictures’ films over the next four years, with Relativity Capital. Relativity is the private equity firm which has gotten some great press lately for convincing defenseless hedge funds to put their green in paper bags and light it on fire via 12-terrible-flicks-at-a-time package deals. Elliot is the firm that, earlier this week, accused Cedar Hill of espionage. Do we smell a craptastic spy film summer 2009, sure to make just as much as “Blond Ambition,” if not a dollar more? Methinks yes.

Earlier: How Katherine Heigl’s Rack Nearly Sank Bridgewater

Relativity, Elliott Hammer Out Movie Deal [FINalternatives]

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It is, officially, on.

A dissident investor stepped up pressure on The New York Times Co. Friday, formally proposing its own slate of four directors and saying the company needs to take more drastic action to compete online.

Harbinger Capital, an investment firm that now owns about 19 percent of the company, filed its own proxy statement with the Securities and Exchange Commission listing its nominees for directors to be elected at the Times’ annual meeting April 22.

The Times has already filed its own full slate of director nominees, but has said it was still considering whether to accept Harbinger’s candidates.

Fund Nominates 4 for N.Y. Times Board [Associated Press via Breibart.com]

Politics, of course.

The unadulterated euphoria you-know-who experiences while mainlining cream filled gold sponge cakes every day at 3 is about to be compromised.

So far, only 160 billion of losses have been disclosed. UBS sez it’s going to get a lot worse.

UBS sees financial crisis leading to industry wide losses of 600 bln usd investment research warned that the financial crisis is far from over with more losses and a stronger impact on the real economy ahead.

‘Our global banks team estimates that total industry losses in this financial crisis should reach north of 600 bln usd of which listed banks and brokers should account for ‘only’ 350 bln usd,’ the bank writes.

UBS sees financial crisis leading to industry wide losses of 600 bln usd [CNNMoney.com]

Peloton Blames Wall Street Lending Crackdown for Fund Collapse (Bloomberg)
A London-based hedge fund is blaming tightening credit standards on Wall St. for its collapse. The $1.8 billion fund says that because of, you know, stuff, it just can’t get a loan anymore. And it will need to liquidate. Sounds like a market for lemons if the company is to be believe: “Credit providers have been severely tightening terms without regard to the creditworthiness or track record of individual firms, which has compounded our difficulties and made it impossible to meet margin calls.” Anyway, a worthy read.

Man Financial and the Core Club contra-indicator… (Footnoted)
Shoulda known something was going to be up at Man Financial. As Michelle Leder points out, this is the company noted memberships to the Core Club in its filings. And its CFO left abruptly in January.

Headed Toward an International Robot Arms Race? (Industrial Market Trends)
Just something to ponder over the weekend.

The Latest Carbon Prices (Alex Kirtland)
Meant to link to this earlier, but Alex Kirtland offers up a surprising chart of carbon offset prices. Check it out. Let’s just say, if there were anything like a true market price, it sure as hell isn’t showing up. The price to offset a metric ton are all over the place. It also means that there’s probably a way to make money on this, although liquidity and fungibility would both probably be an issue. But if you could.

Financial Firms Face $600 Billion of Credit Losses, UBS Says (Bloomberg)
So far they’ve lost just $160 billion.

$$$ Inside Loeb/Weill/Blankfein’s new apt. [Daily Intel]

$$$ Mel Karmazin’s Own Private Reality [Deal Journal]

$$$ I’m currently working as an admin assistant in a law firm, but I would like to start working at a hedge fund company. I have a friend who started working at a hedge fund company, and she is making really good money - just as an assistant. I’d be willing to perform discreet blow jobs in your home or office for the chance to have a REAL interiew for an open position. [craigslist]

Oh, man I love sports metaphors. Eddie Lampert do too.

If you’ve ever had a few drinks with fund managers, and followed them with a few more, you know the conversation inevitably turns to performance. Usually it will begin with some fantastic trade but, depending on the crowd, it often winds up with some feat of physical prowess, death-defying daring or sexual triumph.

But the hands down best story we’ve ever heard is the story of the fund manager who beat Michael Jordan in a one-on-one game of hoops. Until now we considered it an urban myth. Something guys told themselves in the dark hours of the night to reassure themselves that their degrees in physics didn’t really make them clumsy nerds.

But the story is true. John Rogers, founder and CEO of Ariel Mutual Finds, the nation’s largest minority-run mutual fund, beat Jordan during a stay at Jordan’s Senior Flight School, a fancy basketball camp for people with a love of the sport and a lot of money. Chris Ballard at Sports Illustrated’s Fan Nation blog got his hands on the video tape and tells the story.

Details after the jump.

Many of you received shit bonuses, no bonuses, or, worst of all, UBS bonuses this year, but surely there’s someone out there who can cough up the cash to buy Michael Jackson’s Neverland Ranch, yes? Yes! Say it with me like you mean it! Say it, Andrew J. Hall! Say it, Dan S. Loeb (15 CPW is déclassé, just walk away)! Say it, Citi prop desk, who couldn’t get the money together if their lives depended on it but whose collective child/adulthood dream, nonetheless, is sleep where Jacko ‘N Kids hath slept!

Here’s the scratch: Mr. Jackson has less than a month to come up with the $24.5 million dollars he owes on the property that Fox Business reminds us was “at the center of his child molestation case” and then wonders—leadingly, in our opinion—who would want to make the buy? Pretty sure we just offered three serious suggestions but to reiterate: Andrew Hall. Dan Loeb. Citi prop desk. YOU. Though Jackson recently refinanced the estate and netted out $35 million cash, experts say it’s not enough to pay his obligations and the mortgage, especially considering he’s already blown a sizeable chunk of change on pop rocks and an ice cream truck. If that’s the case, the whole thing (land and buildings, rides, trains, art, curtains, cock rings, skin bleach), valued at $50-100 million will go to auction on March 19th for the bargain basement starting price of $24.5. This is a no-brainer.

Alright so it would appear we jumped the gun a bit earlier re: Dobbs vs Blankfein. Dobbs didn’t actually say he wanted to rough Blankfein up but he did indeed invite the Little Fella to step into the ring, challenging the CEO to “say it to my face, not to my back, Partner” (we’re in the Old West now). He also called Blankfein a “moron” and a “hot shot,” which we’re pretty sure he meant in the derogatory sense. Then he held up his fists in a threatening manner (if you’re threatened by middle aged men who probably have Type II diabetes) and said “Seriously. Come on down. Open invitation.” So, actually, we maintain that he does want a physical fight. Judge for yourself after the jump, and if you see LB today, pass it on that Dobbs wants to rearrange his face. He’ll come around eventually.

Another rogue trader has caused huge losses at a major financial institution. MF Global Inc., which is largest broker of exchange-traded futures and options contracts, has said it set aside $141.5 million to cover losses caused by a trader who “substantially exceeded” trading limits in his own account. The FT identifies the culprit as Evan Dooley, a broker at the Memphis office, and reports that the trades were carried out at the CME Group in Chicago. Wheat traders in Chicago say he took a large short position on Tuesday night that backfired when the market turned the following day.

MF Global blames a failure of “retail order entry systems.” We have no idea what that means. It sounds a lot like when our tech people tell us that our email has gone down because of “core switch failure” but they’re reversing the polarity so everything will work better from now on.

There’s a serious question about how many of these rogue traders are out there. We hear about them when they take losing positions but apparently no one who “substantially exceeded” his or her trading limits has ever made money for his firm. At least, that’s what you’d have to believe by the absence of disclosures about gains from rogue traders.

“How come ‘rogue trader’ disclosures are always losses?” Kynikos founder Jim Chanos asks.

It’s a good question. Is it even plausible that rogue traders always lose money? Or are risk management practices generally far more lax than is commonly believed? Are there lots of these “unauthorized trades” that we never hear about because they either make money or don’t lose that much? From what we understand about SocGen,it seems at least plausible that they were all too happy to look the other way when Jerome Kerveil’s trades were making money.

Rogue wheat trader loses $140m [Financial Times]
MF Global Statement [Wall Street Journal]

So Lou Dobbs challenged Lloyd Blankfein to a fistfight last night on his show, based on Blankfein’s suggestion to Dobbs’s boss at CNN that he ought to fire LD’s xenophobic ass? And MSNBC reported the request for a duel on “Morning Joe” today? And sources close to the Little Guy say he’s been dropping hints he’ll accept? We tack on skepticism not because we don’t want to believe all of these magical things did and will indeed occur, but because we don’t want to feel the same searing pain of disappointment we experienced the last time something like this came up and both parties (Andersen Cooper, Vikram Pandit) pussied out at the last second (and because we haven’t yet added “Lou Dobbs Tonight” and “Morning Joe” to our regular line-up). Obviously we would be eternally grateful to anyone that can give us some level of assurance here (Dobbs/Morning Joe clip, recently acquired Gold’s Gym memberships, Myoplex receipts, recorded conversations with Charlie Gasparino re: what it feels like to be hit in the face/how one would go about shattering another man’s knee-caps with minimal effort, etc.).

It looks like the Wall Street Journal’s James Stewart got caught up in the auction-rated securities trap. And he is not happy about it.

Last year, when some money-market funds turned out to hold some mortgage-backed securities and faced a liquidity crisis, their sponsors stepped in and redeemed the shares at face value. This seemed the only decent course, not to mention a good investment in customer loyalty.

But when I asked a broker at Merrill Lynch if it would do the same for owners of these money-market equivalents, the answer was “no” — not after the multibillion-dollar write-offs Merrill has taken on illiquid assets. Merrill Lynch and the other big banks that sold these shares have stopped making a market in them, which is a major reason the auctions have failed.

Merrill Lynch, when asked for comment, told me: “We are offering our clients loans which can give them liquidity.” It wasn’t yet clear whether these would be interest-free loans, which they certainly should be, in my opinion.

He ends the column by calling for the SEC to investigate. “At least two states are investigating, and I would expect them to be joined by the Securities and Exchange Commission,” he writes. Since we know SEC enforcement lawyers get their tips from newspapers, you can bet someone has opened a file on this. And with Merrill Lynch playing a central role in Stewart’s story, they are probably on the top of the SEC’s list.

Risks of a ‘Safe’ Investment Are Found Out the Hard Way [Wall Street Journal]

Felix Salmon is skeptical that there is a market demand for bond ratings the differentiate between various issuers. His skepticism, however, is built on a simplistic image of who invests in bonds. To Salmon, it seems that muni bond investors are mostly old ladies in tennis shoes who buy bonds when they aren’t protesting water fluoridation. With this image in mind, he simple can’t believe that there would be a market demand for muni bonds to be rated relative other muni bonds rather than corporate bonds.

Our response begins with the observation that the alternative is simply implausible. If there is no market demand for the relative rating of muni bonds, why on earth is it happening? Jesse Eisinger hints at some kind of grand conspiracy between the ratings agencies and bond insurers but doesn’t really have any evidence for this conspiracy other than the fact that because he rejects the idea—on some principal that’s never been articulated—that there’s a market demand for relative ratings, he think there must be a conspiracy. This is question begging and violates Occam’s razor.

What’s more, Salmon’s image of bond investors is inaccurate. They are a heterogeneous lot made up of households, mutual funds, pension funds and banks. Even if a good deal of the investors are uninformed, the demand by sophisticated investors at the margin is enough to create the demand for relative bond ratings. Many of these investors have been so sophisticated that they created a demand for services which provide them with the underlying ratings of muni bonds regardless of bond insurance. In short, muni bonds are not the simplistic retail customers Salmon thinks they are.

It may help to take a look at why muni investors require such granular credit analysis. The reason is relatively easy to understand: municipalities have far less and less consistent financial transparency than corporations, especially public corporations. We can see this in the different ways bond prices respond to ratings downgrades. In the publicly held corporate sector, bond prices often don’t move much after a ratings change because the ratings are late to the game. The information driving the ratings change is typically already reflected in the bond prices (as well as the stock price). But for municipalities the situation is very different. Without an equity market and free from many financial disclosure rules governing public companies, muni investors are dependent on the ratings agencies to discover information about the financial health of muni issuers. This makes muni investors far more focused on ratings showing small gradations in issuers health than corporate bond investors.

Sears Holdings Reports Fourth Quarter and Full Year 2007 Results
Has it really been a whole quarter since the last time we talked about a rough earnings report from Sears. It must’ve been. Net income of $426 million was down significantly from $811 million in the year-ago period. The money line: “Our fourth quarter and full year results continued to be negatively impacted by the worsening economic conditions faced by both our customers and competitors, as well as increased markdowns taken to clear excess inventory.”

Movie Revenue Dynamics (Art De Vany)
We linked to it earlier, but Going Private had a really beautiful rant about the whole hedge funds in Hollywood thing the other day. And in case you missed it, you should definitely check out this awesome chart put together by the NYT depicting 20 years of box office data. It’s NSFW, but only in the sense that if you’re like me, you could get lost playing with it for hours. And the above link is a further discussion, with a chart showing the whole randomness and chaos of the industry.

An unfortunate lack of clarity (Free Exchange)
The job of economic advisor to a Presidential candidate has to be a thankless one. Seriously. You sit them down, explain how stuff like free trade and lack of regulations is actually good in the long run, and the candidate nods all serious, like they really get it. Job done? Then the next day, you see them at the debate and their denouncing free trade, or if not denouncing, pretending to be seriously confused on the matter. How does the candidate look the advisor in the face after having ignored them so roundly in their previous meeting?

Pilots’ Battles Over Seniority Play Havoc With Airline Mergers (NYT)
We’ve been talking about this pilot seniority issue for awhile, and it’s the chief reason we’re always skeptical of airline merger rumors, even when the news media says that a deal will occur literally any second now. The NYT takes a good look at the issue of seniority, and explains how it really gets in the way. Megan McArdle argues that this is the fundamental issue with unions: it’s not that they fight for higher wages, but that they create structural inefficiencies.

Which hedge fund lost a “metric fuckton” (not to be confused with the somewhat larger “Imperial fuckton”) on their energy desk over the last several days?

$$$ Sailfish Drowns In Credit Crunch, Redemptions [FINalternatives]

$$$ The War on Error [Going Private]

$$$ Blackstone doesn’t need banks. [Bloomberg]

$$$ JPMorgan begs to differ. [Bloomberg]

From the Horse’s Mouth [CNBC]

The (non-embeddable) video above ends with Erin Burnett riding a hobby-horse around set. What’s there to add? Just a slight clarification (the head of the riding-stick on which Burnett gallops is that of a unicorn, not an actual horse, though it follows the hobby-horse construct. We’ll call it a Unicorn Stick ‘til you come up with something better) and some instructions (this clip should be viewed backwards, beginning with Erin Burnett shoving the Unicorn Stick between her legs and humping it around the set. The rest is denouement… and bad puns. Fox Business CNBC programming is getting racier every day).

It looks like Credit Suisse is getting ready to front-run the financing syndicate for the pending $20 billion buyout of Clear Channel Communications. Reuters reporters Jonathan “Keen Eye” Keehner and Brit beauty Megan Davies are reporting that a source tells them the Swiss bank has called potential investors regarding a chunk of the loans and asked what price they would be interested in paying.

Lenders typically attempt to make a coordinated effort to bring loans to market but Credit Suisse has already shown that it is willing to break with this practice. It previously sold off its commitments to the acquisition funding of Harrah’s Entertainment Inc.

DealBreaker has been told by sources that Credit Suisse is eager to move its backlog of loan commitments so that it can participate in the financing of new deals at a time when the balance sheets of competitors may still be weighted down by unsold leveraged loans.

CS looks to sell Clear Channel loans - source [Reuters]

When Wall Street withdrew its support for auction-rate securities, many investors discovered their cash is trapped. Their brokers told them their investments in instruments that were marketed as cash-equivalents were suddenly illiquid. Issuers who depended on the securities for financing are being told by their banks that they must refinance, and of course hand over deal fees to the very institutions that allowed the markets to collapse. And now many want to know why the auctions were in such dire condition that the banks decided the cost of supporting them was not longer acceptable.

“How long did they know the auctions were on life support?” one investor with nearly half-a-million dollars in now illiquid auction-rate securities asked DealBreaker.

Not only did the Beard of Understanding land some prime modeling gigs on the success of his Times spread, but he’s reached the penultimate step toward being named Most Popular girl in school (all that’s left to do is blow the editor-in-chief of the year book, who tallies up senior superlative ballots). A new CNBC survey of “Wall Street professionals” shows a waning faith in the economy at large but a waxing faith in he who would sooner say the ‘r’ word than engage in that or any other hair removal process. Thirty-nine “money managers, investment strategists, and professional economists” gave Ben a “B” for his work this month, up from January’s “B-.” It would’ve been an “A-” but Charlie Gasparino’s mechanic said he was “less than impressed” with the Chairman’s work, and failed his Harvard ass.

Fed Chairman Doing Better, But the US Economy Isn’t [CNBC]

We get called contrarian often enough that we’re nearly resigned to the label. From our perspective, of course, we’re not contrarians at all. We’re so deficient when it comes to having a decent respect for the opinions of mankind that we aren’t even aware of the prevalence or rarity of the positions we take. If we seem contrarian, we suspect it’s just because so many others are wrong so often.

The debate over municipal bond ratings is a good example of this. Over at Portfolio—published out of an august tower located in Times Square—they are convinced that Moody’s, Fitch and the like assign ratings that are too low to municipal bonds. This supposedly forces our towns, cities and states to pay higher interest rates or purchase bond insurance to achieve higher ratings. Jesse Eisinger, who holds the esteemed title of Senior Writer at Portfolio, estimates that this costs municipalities around $5 billion a year.

Hint: A former hedge fund manager, this guy once accused the S.E.C. of raping him.

Despite being told by shareholders in general to hit the bricks and by one in particular (Salvatore Cordello, real name) that he’d turned the bank into a “casino,” Marcel Ospel (proverbially) chained himself to the front door of UBS this morning, where he vowed to remain until this so-called “financial crisis” is over. Ospel also made it clear that he’s not in this to make friends (telling the crowd of 6,500, “Popularity isn’t the benchmark by which I or the board of directors measure our actions”), nor is he in this to make money (“As you probably already know, results aren’t the benchmark by which I or the board of directors measure our actions, either”) a motto the sources in our head tell us he ripped off from Stan O’Neal. Though he chose not to offer any specs on how exactly he plans to put this Swiss bank back together again (we’re hoping for more write-offs, that shit’s adorable), Ospel promised to make sure “UBS gets back on the road to success, right after this rousing game of Trader Face or O-Face.”

UBS Chairman Focuses on Turnaround [WSJ]
Trader Face or O-Face? [Details]

A friend o’ the fired fills us in:

“It’s more than just a hiring freeze - yesterday in IBD an MD, VP, and Associate were shown the door in Industrials and two Associates were canned in NR.”

Could be. It’s what we hear, anyway, from several job-seekers told recently that the Masters were unable to start or continue the interview process. That’s all we’ve got at the moment (obviously we encourage you to share any harder or softer information at this time). For now, let’s just try and send some positive vibes Goldman’s (and really everyone’s) way, with a little something we like to call:

If it’s a day that ends in the letter y, it’s probably time to learn about problems in another dark corner of the credit markets. On the lesson plan for today are financial creatures known as variable interest rate entities. These were known as special purpose vehicles, or SPVs, until Enron tarnished that designation for off balance-sheet assets and liabilities. Rather than quitting the SPV business altogether, Wall Street simply adopted a less familiar name and kept right on keeping on.

Now bond research firm CreditSights tells us that VIEs may contribute as much as $88 billion in losses for financial firms. Goldman Sachs, which has done so well in avoiding the worst of the self-harming habits of Wall Street, has warned that it may incur as much as $11.1 billion of losses from VIEs. That’s just a few hundred million short of Goldman’s earnings for all of last year.

So what went wrong with the VIEs? Stop us if you’ve already heard this one. They are loaded up with assets such as subprime mortgages, and financed with commercial paper. As their assets get downgraded, investors shy away. The banks have agreed to back the VIEs with line of credit, meaning they wind up buying the commercial paper and notes from the VIEs when no one else will. The troubles of the bond insurers, of course, play a role. If Ambac gets downgraded or split, the assets of the the VIEs will likely have to be written-down. So, yes, once again the off-balance sheet liabilities find their way back onto the balance sheets of the banks.

“The disclosure on VIEs is hopeless,” S&P’s Tanya Azarchs tells Bloomberg. “You have no idea of the structure or how that structure works. Until you know that you don’t know anything. It’s like every day you come into the office and another alphabet soup has run off the rails.”

Update: A reader asks a fair question: what’s the difference between a SIV and a VIE? Well, we used to actually do some work structuring these things back in the days before DealBreaker. The way we remember it is that SIVs are actually a subcategory of VIEs. What we think is being discussed here is another type of VIE, the asset back commercial paper conduit or ABC paper conduit. Although officially off balance sheet, the ABCP conduits are usually backed by credit lines from the banks (whereas SIVs weren’t usually officially backed by the banks). When they can’t roll over their short-term commercial paper financing, they can turn to the banks to refi. This means they are less risky for outside investors but more risky for the bank parents. Got it?

Goldman, Lehman May Not Have Dodged Credit Crisis [Bloomberg]

In a filing with the Securities and Exchange Commission on Monday, Merrill Lynch said its cash flow statements for 2005, 2006 and the first three quarters of 2007 were wrong. The statements overstated cash provided by derivatives financing transactions. But, lucky for them, they made another mistake, overstating cash used for trading liabilities. So no big deal, right? Take a little from here, add a little there. It offsets.

Except that we have no idea what this means. What exactly did Merrill get wrong? The actual filing is extremely vague about these errors and it would be helpful to know how and why these were made. It’s hard to be confident that Merrill understands its exposure to various derivatives if it only discloses non-specific errors and provides no detail. Anyone care to venture a guess what Merrill’s mistakes were?

Merrill 8-K [ML.com]

Toll Brothers Swings to Loss (WSJ)
The big homebuilder, whose properties you sometimes see in NYC, reported a loss of $96 million, down from $54.3 million. Net signed contracts in the quarter fell 50 percent to $375.3 million. None of this sounds too surprising. The company did do a $153.3 million after-tax writedown, so it sounds like they would’ve otherwise been profitable, which may be the biggest surprise, unless we’re misinterpreting. Here’s the announcement. Here’s one of the reasons the company is having a rough go of it, according to Robert Toll: “Ceaseless talk of a recession continues to dampen the mood of consumers in general, whether or not a recession actually occurs. For home buyers, we believe this drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines.” Hey Rob, want us to stop talking recession? Make some money! See it goes both ways.

2008 Dem Nominee (Intrade)
If the markets are to be believed, HRC didn’t do anything to help her case at last night’s Dem debate. The former first lady now trades at a mere $.16 on the dollar — Obama trades at $1.00 minus that. We didn’t watch, suffice to say, past the first two minutes, since we had an unwatched episode of The Wire on the on-demand deck. Man, The Tribune Co… where will they cut costs next?

Sustainable Industrialized Food? (Check Out)
Ok, so we’re totally addicted to a new blog. It’s the Check Out blog and it’s a group blog written by product buyers at Wal-Mart — officially sanctioned of course. And it’s actually provocative, which is unheard of for a corporate blog, save a few. It was the first source to disclose that Wal-Mart was dropping HD-DVD, and today it talks about the book The Omnivor’s Dilemma, and how that relates to Wal-Mart’s items. Is it all a lot of PR? Concievable, but it’s got a certain fresh quality to it. Other recent posts have to do with toy safety and Apple TV.

Roubini: Recession May Last Up to Six Quarters (Big Picture)
Whenever they trot out a real bear, you know, a bear’s bear, it’s Nouriel Roubini, who’s been calling for a deep recession for some time. Over at Big Picture, a video of him predicting that a recession will last for six quarter. Okay, that’d be rough, but that’s just like a year and a half. We can get through that, no? By the way, the prognosticators at a buyouts conference also put the credit crunch end at about 18 months, so maybe there’s some wisdom of crowds going on here. Or maybe this just seems like a safe number. Not too long, not too short.

$$$ Deals: The Return of Billion-Dollar M&A?
In our M&A Roundup for the week ended Feb. 24, five sizable transactions make acquisitions seem in vogue again — at least for now. [CFO.com]

$$$ Massage exchange? [craigslist]

$$$ LifeCell Corp. (LIFC) [WallStrip]

Although it looks like MBIA is now out of the woods, rival bond insurer Ambac’s fate is still murky. Reports indicate that the ratings agencies are now considering the rescue plan worked out by banks and state insurance regulators. The plan may be revealed as early as this week, and will probably involve splitting Ambac in two to segregate the municipal bond insurance business from the less healthy business of insuring riskier credit products.

Last week Holman Jenkins pointed out that segregation is unfair to customers who bought insurance on CDOs because it would “retroactively award municipal clients privileged status at the expense of other clients with equal claim on the insurers.” Bill Ackman, who has been shorting the bond insurers for years, raised a similar point. Indeed, Jenkins expects that the policy holders left with guarantees from the suddenly even more precarious side of the business will launch lawsuits to prevent the break-up.

There’s also a much stranger objection to the segregation plan, one stemming from an objection to the very existence of municipal bond insurance. We first heard about it in Portfolio, of all places. In the latest issue Jesse Eisinger argues that municipal bond insurance is a scam, and it’s victims are municipal governments. This will no doubt come as a surprise to state regulators and treasuries who have been on knife’s edge fearing that the collapse of the bond insurers would make raising money costlier or, in some cases, perhaps impossible. If the governments are the victims here, why exactly are they working to keep the victimization going?

Unless you work at Merrill, where you could be coughing up blood and they’d tell you to swallow and get back to work (in their defense, iron is a necessary nutrient).

A congressional hearing set to showcase the vocal stylings of Stan O’Neal, Chuck Prince and Angelo Mozilo with showstoppers on how they lost their companies trillions of dollars but still made out like bandits themselves has been postponed due to the sudden death of the tan one’s mom. We know what you’re thinking but let us be the first (and only?) to say there probably wasn’t any foul play at hand, considering that it was Crocodile who forfeited $37.5 million in payments tied to the BoA deal while Prince and O’Neal decided to keep their $68 million and $161 million, respectively, i.e. Moz is the least likely candidate among the three to pull a stunt. The timing is helpful, though, considering he hasn’t yet come up with a plausible explanation to account for the missing singles his staff wasn’t able to find the time he threw $500,000 in small bills out a plane window over a cattle ranch in Montana, and made them pick up the scratch during a blizzard. That one’s going to take a few days. A half-assed “Strippers” isn’t going to pass the sniff test.

Congress’ executive pay hearing postponed [CNN Money]

Yesterday a cameraman for the Free Press caught two members of the audience napping during an FCC hearing on net neutrality at Harvard Law School. Now we don’t blame them for snoozing through a meeting about net neutrality—our eyes glaze over just thinking about it—but it does raise the question: why would you go to an FCC hearing if you are bored by that type of thing?

Portfolio’s Sam Gustin has answered the question: they were there because cable giant Comcast paid them to be there. Comcast had planned to pack the meeting with its local employees, and had paid some people off the street to show-up early and hold places in the line for the employees.

“Some of those placeholders, however, did more than wait in line: they filled many of the seats at the meeting, according to eyewitnesses,” Gustin reports. “As a result, scores of Comcast critics and other members of the public were denied entry because the room filled up well before the beginning of the hearing.”

Money can’t buy you love, but it can buy you napping bodies to keep your critics at bay.

Comcast Astroturfs the Old-Fashioned Way [Portfolio.com]

New York-based hedge fund Elliot Associates filed suit today against Cedar Hill Capital Partners, claiming Cedar schemed to “literally steal [proprietary] software in order to use it for its own trading activities,” an act Elliot deems “nothing short…of corporate espionage.” The software in question is used to analyze fixed-income securities for trading CDOs, and according to the firm, took upwards of two years and millions of dollars to develop. Shed some light time: Elliot manages around $10 billion so it wouldn’t be so far fetched to think Cedar Hill might want some of that. Then again, the firm is run by Paul Singer, who a quasi-reliable source tells DealBreaker is “John Nash-paranoid.” (Who isn’t?)

(It’s times like these that I can’t help but thinking since it’s sort of a fact that at least half of you snakes are going to pull these stunts anyway, why not level the playing field from the start and just say, “Anything goes,” like Ultimate Fighting and whatnot? Then we could spend less time having these petty little arguments and more time trying to guess how many phone books Adam Sender has to sit on to clear the dashboard— standard Price Is Right rules apply.)

Elliott Sues Cedar Hill For Spying, Stealing [FINalternatives]

Sympathies to my Starbucks junkies in the audience who need it between the hours of 5:30 and 8:30 pm—the drug pushers are closing up shop for three hours tonight to re-train the 135,000 baristas that didn’t get fired last week on how to make your bullshit drink. CEO Howard Schultz said he thinks the tutorial will “foster enthusiasm [among] employees” which is an interesting take on the situation. (He also noted that the evening’s event is “a bold demonstration of our commitment to our core and a reaffirmation of our coffee leadership” which I’d been more inclined to buy if they could offer some level of assurance that ritual sacrifice will be involved.) The opportunistic leeches at Dunkin’ Donuts, in order to “ensure that no coffee lover is denied a delicious espresso-based beverage” will be selling lattes, cappuccinos and espresso drinks for the Suck It Starbucks promotional price of 99 cents from 1 p.m. to 10 p.m.

Speaking of Dunkin Donuts, after the jump, a word from DD spokeswoman Rachael Ray. Don’t bother with headphones; this is something you’ll want everyone within earshot to enjoy.

I legitimately have nothing to say today. No matter; excelsior is my motto. Something is going on, pertaining to balls—you’re all getting shorn after closing bell. No more curly Qs on our watch. Kidding. I think. The Times reports that less of you are playing golf. Something about the game being too time consuming. Balderdash. How do you expect to ever become the CEO of some bank and lose the place billions and billions of dollars without golf? Jacking off on the job playing Text Twist ain’t going to do it. Nor will building towers of cards. So…get on out there a-sap. It’s a slippery slope and whatnot. (If you’re worried about missing my next post because you can’t bring electronics on the green, I’ll give you a preview of what’s to come: Rachael Ray hand-job tutorial.)

More Americans Are Giving Up Golf [NYT]

Who remembers that Craiglist ad from the 28 year old Goldman banker looking for someone to lavish with his (pretax) $722k bonus? I’m going to go with all of you because, frankly, it/he was unforgettable. The Viking stove, the custom-made oak dresser, the amazing dinners, the shopping, the great wine, the getting each other off fabulously and, of course, the baby’s arm aren’t things one lets recede from his/her consciousness so easily. Sure, the whole thing turned out to be fake and from the mind of someone named the Cajun Boy who does not really work at Goldman Sachs or at any other financial institution, including Bear Stearns, for that matter, but did anyone give a shit? No, us included. In fact, we were so taken by the imposter— “real” name: Thad— that we asked him if we could reprint parts of his journal on DealBreaker so that you all could live vicariously through his fabulous life. He said yes, if it would help him “score ass.” So if you enjoy the following installment, show your gratitude.

On my seemingly never-ending checklist of things to do in 2008 has been to hire a personal assistant, preferably someone young, hot, eager and equipped with a vagina. Since my busy work and social schedule has made the completion of such a task exceedingly difficult, I recently decided that my buddy Gabe, heretofore jobless, thus he spends his days on splayed out on my sofa watching porn when he’s not lunching with headhunters, would be the perfect candidate for the job, at least on an interim basis. So to Gabe I’ve outsourced such peasant tasks like making restaurant and car service reservations, arranging for my laundry to be dropped off and picked up, interviewing candidates vying to be my personal chef, etc. But seeing that I hate to see Gabe so overextended, not to mention that the stress of the job really has affected his attitude and his resulting sourness has cast a pall over our friendship, I decided recently that it would be in our best interest for me to also get Gabe a personal assistant. Besides, having only one personal assistant is so 2006. Not coincidentally, I’ve also long yearned to have a monkey, ever since I saw Clint Eastwood kicking it with Clyde in Every Which Way But Loose to be precise, so I killed two birds with one stone and acquired a chimpanzee to be Gabe’s personal assistant.

His name is Bernanke.

No, just messing (that would be quite the story though, wouldn’t it?) But now that I have your attention, how ‘bout you take that survey again, the one we put up Friday but which was inaccessible after 11 due to technical difficulties? I know it’s a gigantic favor to ask so, in a show of anticipated gratitude, I’ve arranged for Carney to streak naked through Bear Stearns at approximately 2 pm, making stops at all relevant desks (we’ll have an intern following him with a camera and a clip up shortly thereafter). This one-time gift is predicated on at least 10,000 filling out the quick and painless form found below, so forward it to your friends and get cracking.

Survey [DealBreaker]

The Securities and Exchange Commission is on a three case losing streak in its attempts to sue hedge-fund managers who close out short positions with stock bought through private placements.

Bloomberg reports:

Since October, judges in three cases rejected the U.S. Securities and Exchange Commission’s argument that closing out short positions with shares bought in private offerings is illegal. The SEC sued hedge-fund managers that engaged in the transactions.

“If the SEC losses are ultimately upheld, they’re going to result in funds’ being able to short more easily,” said Steven Siesser, a partner at law firm Lowenstein Sandler in New York who counsels placement agents and investors in sales of “private investment in public equity,” or PIPEs.

The federal agency also argues in the three cases that the managers violated insider-trading laws by shorting stock before a private sale was announced. Prosecutors make a similar claim in a criminal case.

It’s vaguely reassuring to see courts discovering that there may actually be limits to insider trading laws.

SEC Struggles to Pin Insider Trading on Fund Sales [Bloomberg]

Home Depot Is Hurt By Weak Housing Market (WSJ)
A rough quarter for Home Depot, as net income fell by 27 percent in the face of a weak housing market. Sort of takes the wind out of the bull argument, that when people aren’t spending their money on buying new homes, they’re spending their money on renovation, so Home Depot wins either way. Admission: we haven’t actually heard anyone say that specifically, as far as we can recall. The release is here, with more discussion on outlook.

Jury Convicts Five of Fraud In Gen Re, AIG Case (WSJ)
In case you missed it yesterday, the gov’t won five convictions in the multi-year case relating to General RE and AIG over fraudulent transactions. When the allegations first came to light, even Warren Buffett’s sterling superb reputation took some knocks in the media, and Hank Greenberg, who didn’t have any media love to begin with was totally trashed. He was an unindited co-conspirator in the case. Ominously, prosecutors say they plan to work up the latter. A couple of the execs face prison sentences of up to 230 years. Makes Jeff Skilling’s sentence seem pretty light, eh?

Food maker CEOs face House grilling (CNN)
We love the subtle pun in the headline, especially because this story has to do with the heads of companies involved in tainted beef. Anyway, we’re sure this hearing will get at least as much attention as the steroids one did.

Pfizer to End Lipitor Ads by Jarvik (NYT)
Apparently the creator of the Jarvik artificial heart didn’t have the chops to talk about heart-related matters on TV. After drawing fire for the ads, Pfizer has pulled the contested Lipitor ads featuring Robert Jarvik off the air. There’s lots that seems ridiculous to us about this one, but this may be the most ridiculous: “One television ad depicted Dr. Jarvik as an accomplished rower gliding across a mountain lake, but the ad used a body double for the doctor, who apparently does not row.” Yes, that’s apparently a slice of the scandal. So before you get on Lipitor for your cholesterol, be mindful of the fact that DR. JARVIK DOESN’T ROW! IT’S A BODY DOUBLE!

$$$ Vegetable Capital Ripens [Going Private]

$$$ Reminiscences of a Stock Operator: Maria Bello And Me [Tim Sykes]

$$$ What to Get for Your First Monoline Bailout [LoSC]

We like to end every week with a special gift for our readers: we’re finding you a new job. So we spent part of the afternoon combing through our Career Center in search of the most interesting jobs. There are dozens to choose from, all categorized according to specialization. But one special one has been selected as our Job of The Week. Sadly, on Friday we had technical difficulties that prevented us from posting a job for you. But we’re back now, and so is the Job of the (last) Week.

Citco is seeking several hedge fund accountants and operations specialists with strong mortgage knowledge and experience at all levels to help them service new mortgage funds and hedge fund clients. Party like it’s 2005 all over again!

Mortgage! Mortgage! Mortgage! [DealBreaker Career Center]

Those watching the E! channel’s Oscar pre-show last may have noticed that Gary Busey interrupted Ryan Seacrest’s interview with Jennifer Garner by screaming “Ryan! Ryan Seacrest! I’ve been looking for you for years!” and proceeding to suck on Mrs. Affleck’s neck. Some of you may have wondered what that was all about. (Who would want to suck where Ben Affleck hath sucked?) The answer, not surprisingly, lies with SAC Capital.

Recall that in early December, Busey had a gig as a shrimp puff waiter at the Stamford-based hedge fund’s holiday party. While others on the waitstaff shied away from Big Guy SC, prefering to serve less intimidating lower ranked employees, the Buse went right up to BGSC, who was standing alone outside of the kitchen where the caterers come out with fresh platters and said, “You look like a guy who enjoys the finer things in life, like the puffiest shrimp puff I’ve got.” And handed him the biggest, flakiest, most tastiest looking sucker on the tray.

While devouring said shrimp, the BGSC couldn’t help but notice that this particular waiter stood out from the rest, not only because of his gumption in serving the boss, but because he was bat shit insanity manifest. There was only one thing left to do—offer him a job. “SAC could use a guy like you, Gar,” he said while grabbing another puff. Which is how Gary Busey came to co-manage SAC’s healthcare portfolio.

And in fact did so well with pharmaceuticals, that by mid-January was given the reins of media as well. Which brings us to last night. SAC, known for its aggressive style of information gathering, set the Buse loose on the red carpet with Stevie’s specific instructions to “Go get us some dirt. And some of those delicious-looking cheesity cheesey canapés” (to which the Buse responded, “I’m not your fucking shrimp puff boy anymore. But I’ll see what I can do”). Hence, last night’s seemingly “crazy” performance. Classic SAC.

Earlier: It’s Entirely Possible That Gary Busey Was At Last Night’s SAC Holiday Party

Gary Busey Scares The Crap Out Of Jennifer Garner And Ryan Seacrest [Jezebel]
Crazazy Busey Calls In To “Innocent” Seacrest [TMZ]

The bond insurers have all rocketed today on the expectation that a bailout from the banks will be announced any time now. But this has hardly tempered the words of their critics. Everyone from Bill Ackman to Warren Buffett has criticized bond insurers for guaranteeing complex derivatives whose underlying risk they seem not to have understood. Even the core business of the insurers—guaranteeing municipal bonds—has come under fire.

In this month’s Portfolio, writer Jesse Eisinger argues that bond insurance is a racket, basically a tax-payer rip-off carried out by the collusion of bond insurers, Wall Street firms and credit rating agencies. It s a pretty extraordinary claim, for which Eisinger offers no real evidence other than the allegations of a Attorney General who hopes to be the next Eliot Spitzer and a claim that the ratings agencies consistently assign municipal bonds ratings that are too low.

We often stay up nights wondering if our billionaire fundy friends are secretly hemorrhaging money, seconds away from being forced to shutter it up and call it a day. So it’s nice when we can, for instance, check Third Point off the list. Founder Dan Loeb finally closed on his $45 million, 10,674 square foot penthouse at 15 Central Park West, paid for in cash. We take that to mean things are fine, for now. Joy! We’ll sleep a little better tonight, except for that nagging feeling that Pirate Capital’s Jolly Roger is headed into a shit storm, a sense we get not from any sort of P&L intel, per se, but because sources tell us Tom Hudson is three months behind with rent on his mausoleum.*

15 CPW ALERT! Loeb’s $45 M. ‘Panorama’ [New York Observer]

*The “powers” that be around here want me to tell you that I’m just kidding about the delinquent payments. We’re sure Tom has all his affairs in order.

We’re on record as skeptics of the great backdating scandal of 2006. But just because you think something was unduly scandalized by an over-eager financial press and over-zealous regulators doesn’t mean it didn’t happen. And there is clear evidence that backdating occurred. In fact, in some sectors—we’re looking at you Silicon Alley tech—it seems to have been a quite common practice.

Now one of the finance professors whose 1997 research helped scholars and reporters at the Wall Street Journal uncover the option-backdating scandal may have discovered another form of backdating, Zubin Jelveh reports on Portfolio.com. It seems that some 20% of chief executives who donate stock to family foundations have suspiciously well-timed the gifts. They make the donations prior to declines in their company’s stock, which suggests that they are either front-running bad news by donating based on insider information or are marking their donations to dates before the announcement of bad news. The former looks like something like insider trading and the latter like backdating.

You know, you get rid of Chuck Prince and the humility at Citigroup just comes a flooding through. The bank which, as you know, has lost hundreds of billions of dollars, has gotten rid of one of its corporate jets (the Falcon 2000) in an effort to inch its way toward profitability. Everyone, please, a moment to acknowledge this gargantuan sacrifice.

Earlier: You Will Never Please Meredith Whitney

Cutting back at Citigroup… [footnoted]

Countrywide said yesterday that it has cancelled the ski trip to Avon, CO that it was supposed to sponsor this week, wherein associates of the lender were to chill at the Ritz-Carlton Bachelor Gulch resort, enjoy $140 caviar and $105 Kobe steak, and have a good laugh about all the people they’ve screwed. “In light of recent events,” the company called off this and all other previously scheduled funfests for the rest of the year.

While the news is extremely disheartening to the little guys who won’t get to go skiing for free, it comes as a relief to Crocodile Mozilo, who’d been dreading the trip for months. Insiders say not a day would go by that Leather wouldn’t work some woe is me line into conversation about how doctors have said it’s in his best interest to take vacations as close to the equator as possible. “He’s been practically giddy all morning on the news,” Hollywood Tan employees tell DealBreaker. “Dude can barely keep the smirk off his face, and told his secretary to cancel all meetings for the day to make time for extra sessions on the bed for the base he needs to work up for Macapa.” To make it up to those looking forward to Colorado, Mo’ Hazard is said to be planning a jamboree at his home in June, out of pocket. The planned activities (lying by the pool, baby oil massages, telling each other that melanoma is a myth) are a little self-serving, but they’ll take their enforced fun and they’ll like it. (Anyone seen applying SPF will be fired on the spot. I shit you not. Don’t even think about putting it on in the car, he can smell “that poison” a mile away.)

Countrywide Puts an End to Ski Junket [NYT]

Who’ll be the first to follow in Russia’s Staff Spread footsteps? We’ve heard rumors that senior executives at Merrill think it would be a great way to boost profits, but there’s the problem of getting it by Thain, who doesn’t much care for such things. Goldman’s GSIP, Global Alpha and GEO could probably get the green light since they’ve freed up the time for shoots what with not being busy executing profitable trades. And not to be discounted is a desktop calendar of SAC Capital’s (male) Little Steves, which wouldn’t be that hard to slap together in a hurry, considering Big Steve already has negatives on them sprawled out on bearskin rug in the top drawer of his nightstand. Anyway. Give us your best guest. (In related news, half of Bear is set to appear, under the art direction of CEO emeritus James Cayne, in Swank, which is an adult magazine, if you’re pretending not to know.)

Germany’s HSH Nordbank plans to sue UBS over losses on a $500 million CDO portfolio, accusing Marcel Ospel’s bank of violating fiduciary responsibilities by selling, instead of low risk assets, shitty, high risk ones. The Krauts, crying into their steins, complained that “that the world’s largest asset manager…appears to have condoned actions which benefitted only itself,” which is something that hardly ever happens at these places. On the bright side, UBS shareholders can finally be pleased with management for making a decision that benefitted UBS.

HSH Nordbank sues UBS over exposure to sub-prime danger [Times Online]

Barclays Plc second-half profit may have fallen twenty-one percent on asset writedowns but you needn’t pity the UK bank, which is about to acquire a controlling stake in Russian pin-up calendar manufacturer Expobank. Yes, for the bargain price of about £200million, Barclays will be the proud owner of the retail and commercial bank which has lately gotten into the business of peddling employee ass— the Russian lender has released a 2008 calendar featuring its female workers from top to bottom (by which I mean senior executives to secretaries, but also tits to toes). Senior chief economist Julia Kovyneva, senior manager Maria Guterman, network sales manager Yevgenia Trusilova, they’re all there, lounging on a bed, topless with cupcakes and bending over a kitchen counter, respectively.

Now I know what you’re thinking—the last time you posed for those sorts of photographs with the firm’s name stamped at the bottom, it didn’t go over so well with the higher-ups. Something about “embarrassing the company” with your trampy ass, yes? Are these girls going to get fired? No. The calendar was the brainchild of Expobank chairman Kirill Yakubovskiy, who wanted the pictures/slogans (“We work under your personal request,” “Expobank tries to find unusual and creative ways in everything,” “We’ll bend over backwards and forwards to make you happy,”etc) to reflect the bank’s dedication to “interacting with [its] clients.” I’m no client, but I think they got the job done. Judge February, March and April for yourself, after the jump. NSFW, unless you work in a whorehouse or a Russian bank.

The Wall Street Journal’s influential Heard on The Street column calls Goldman Sachs “pricey compared with other Wall Street securities firms” and predicts After that Goldman’s long run of climbing earnings may be coming to and end. The M&A slow down, so carefully documented in our weekly M&A wrap-up, should hurt revenues from fees while exposure to leveraged loans may drag down profits.

“Goldman could post in mid-March its smallest quarterly profit in three years,” HotS writes.

Analysts have been hammering away at Goldman for the last few weeks, predicting a climb down from its elevated status on Wall Street. While no-one thinks we’re going to have a surprise subprime write-down, many think the widening credit market crisis is finally about to take a piece out of the Goldman Sachs money mint.

So do the analysts and HotS have it right? Or does Goldman have yet another surprise up its sleeve, like when they revealed they had gone short subprime and made a bundle? Over to the right, at the top of the center column, we’ve created a poll for you to cast your vote. Goldman: long or short? You decide.

Goldman’s Profit Magic May Be Fading [Wall Street Journal]

Electronic Arts makes another bid for Take-Two (MarketWatch)
The CEO of Electronic Arts said a while back that he thought the era of consolidation in the video game industry was rapidly coming to a close, because there just weren’t that many possible big deals left out there. Well, there is still one. For the second time, EA is making a $2 billion bid for Take-Two, the maker of several violent titles, plus a really great game about Ping-Pong (seriously). Not surprisingly, Take-Two rejected the offer (of course… you can’t accept a hostile offer), but too early to say how this will play out.

Iridium: 7 Years Out Of Bankruptcy, Satellite Communications Player Eyes A 2009 IPO (TechTraderDaily)
It’s ba-ack. Iridium, the ridiculously over-capitalized satellite phone player that lost Motorola billions back in the 90s is still chugging, and now it’s profitable. Of course, it had a bankruptcy in the middle. And though Moto spent billions investing in it, the current investor group snagged it for $25 million. And now it’s less focused on pure voice, but on niche applications and on mission-critical machine-to-machine communications. But anyway, check out the interesting interview done by Eric Savitz. If nothing else, it’ll make you nostalgiac. Funny that anyone ever thought that ridiculously expensive phones, whose only advantage was that they worked in Timbuktu, would prove to disrupt a mass market.

Recession in U.S. More Likely in 2008, Economists’ Survey Finds (Bloomberg)
Good news: no recession. Or at least it’s not likely, since only 45 percent of economists see one occurring this year. And since 45 is less than 50, we’re happy. Then again, we’re not quite sure that saying 45 percent of economists see a recession happening is quite the same thing as saying there’s only a 45 percent chance of one.

In the Drama of Britney Spears, a Show Business Fortune Is at Risk (NYT)
Forgive us for having a Mainstreet.com moment here, but it really does seem like Britney Spears is careening inevitably towards bankruptcy. There’s no way she can be cash flow positive. One former financial adviser estimates her fortune at $50 million. But given the way she lives her life, how long can that last? You have to wonder whether she’s even contributing $4,000 to an IRA each year. She still has some weeks to do that, so let’s hope she gets on that.

$$$ We apologize for the paucity of posts today. The DealBreaker servers decided to take a snow-day. In fact, we have no idea when this edition of write-offs will show up. We’ll be back on at full speed on Monday. [John and Bess]

$$$ Chuck G says Wachovia, Citi and a consortium of other banks are thisclose to arriving at a deal—equity infusions and lines of credit—to bailout out the bond insurers. [CNBC]

$$$ Citigroup says more write-downs could be on the way: “There is a risk of a U.S. and/or global downturn in 2008. A U.S-led economic downturn could negatively impact other markets and economies around the world and could restrict the Company’s growth opportunities internationally. Should economic conditions further deteriorate, the Company could see revenue reductions across its businesses and increased costs of credit. In addition, continuing deterioration of the U.S. or global real estate markets could adversely impact the Company’s revenues, including additional write-downs of subprime and other exposures, additional write-downs of leveraged loan commitments and cost of credit, including increased credit losses in mortgage-related and other activities. Further adverse rating actions by credit rating agencies in respect of structured credit products or other credit-related exposures, or of monoline insurers could result in revenue reductions in those or similar securities.” [SEC]

$$$ Morgan Stanley: Market Hero? [Deal Journal]

$$$ There’s an old saying on Wall Street: “When a man retires, his wife gets twice the husband and half the salary.” Maybe at some point that just gets old.

We deserve some sort of prize for holding out a full five days to post about the nude pictures of Lindsay Lohan in New York Magazine. New York got some twenty million page views in the first two days, according to Jeff Bercovici. So much traffic that it crashed the website.

New York Magazine was started by writers and other disreputable literary types but soon fell into the hands of Rupert Murdoch thanks to a hostile takeover. When it happened, some were scandalized. Now it looks like a practice run for Murdoch’s takeover of the Wall Street Journal. Murdoch sold the magazine in 1990 to to K-III Communications, a partnership controlled by KKR’s Henry Kravis. The magazine did well for several years but Kravis was not exactly a hands-off owner. He reportedly fired an editor over the magazine’s coverage of his friends and Wall Street associates.

In 2003, New York was sold to Bruce Wasserstein, the Cravath attorney turned investment banker turned private equity baron. Wasserstein installed the best magazine editor alive, Adam Moss, to head the magazine. And that guy got Lindsay Lohan to pose naked for all of us, once again confirming his place at the top of the magazine editor heap. In short, we all have private equity to thank for bringing us this historic triumph.

Even better, there is an important tax lesson to be learned from all this. At least, that’s what we’re told by the folks at MainStreet.com, the money blog version of Parade magazine. How exactly are Lindsay’s assets taxable? We’re not quite sure we want to answer that question this early in the afternoon. But here’s how MainStreet.com gets there:

Unlike Hollywood starlets, most people are not stripping for the public, but there is a good chance that their financial records could undergo a shocking undressing. (Yes, we know it’s stretch, but go with it, dearest readers.) According to Surviving an IRS Tax Audit, nearly 50% of all taxpayers will be audited during their lifetime. While the initial notice in the mail can be cause for concern, an audit from the IRS doesn’t mean the worst as long as people know what to expect and are prepared.

At least they admit it’s a stretch. A-plus for effort, kids.

After the jump we bring private equity and Lindsay Lohan together in a much more intimate way. It’s NSFW, which is internet-speak for “totally awesome.”

Editor’s Note: That picture represents Lindsay on Portfolio, which seemed appropriate since Portfolio’s media writer was expounding on Lindsay. That’s our story and we’re sticking to it.

Lindsay Lohan Nude [New York]

Naked Lindsay a Web Home Run for ‘New York’ [Media Matters, Portfolio.com]
Naked Lohan Makes Us Think of Taxes [MainStreet.com]

The IRS says Nicolas Cage owes $3.3 million that he tried to write off as personal expenses (including meals, gifts, limos, costs associated with his Gulfstream 1159A, and, hilariously, “security needs”). Can’t say we didn’t see this coming. When career choices like “National Treasure” and the sequel to “National Treasure” mean the freebees don’t come to you, you get out there and you get the freebees yourself. The only question is, why go to the trouble of having to BS your way through tax paperwork when you could straight up just steal whatever you deem rightfully yours, a tactic I would think Cage would be all for (like Lon Varney, he fancies himself a badass, ‘cept Lon Varney’s actually had the gumption to get out there and do it, on several occasions). Anyway, next time. For now we think someone (Universal, The Weinstein Company, whatever) should make a movie with all tax evaders. Cage. Snipes. The rotting corpse of Lee Marvin. It’s how they pay their debt to society. A gay remake of “Steel Magnolias.” The RCOLM (rotting corpse of Lee Marvin) could be Olympia Dukakis. Loeb could finance. Marin could review. I’d pay $12 to see that. As would all of you.

Remake Of Con Air? [Forbes via Guardian]

Favor time! The ad people in this asylum would like you to take a second or five to fill out the survey below. Do that for us, and as a thank you, we’ll continue to provide you with free content. Sound good? Good.

Now for something unrelated (though in my mind everything connects). The Guardian ran an item today that wondered aloud, “Can Rupert Murdoch’s nascent Fox Business network get any less classy?” and proceeded to mention two previous DealBreaker posts (“Art Cock, Sans Smock” and “Hot Sluts Are The One Thing Fox Business Can Do Right And They Can’t Even Do That”) in what appeared to be the G’s effort to say “no.” While we appreciate the link love, we have to say that A. We don’t think FBN is class-less (apologies if we’ve given that impression) and B. Trying to prove that FBN is a whorehouse is like trying to nail down that J. Cayne smokes dope— wasn’t it obvious anyway? Plus, thing of it is and this relates back to point A., I think Fox’s problem is that it’s trying to be TOO classy. No need to gussy up a whorehouse. First off (and I don’t really have time for this but I’ll shoot off a few quick ideas and then it’s up to whoever’s running that place to implement), we can’t help but thinking the station needs a new name. No more “FBN.” From here on out, it’s Randy Rupert’s Chicken Ranch. There should be an orgy going on in the background of “Happy Hour” at all times, like in Caligula, and next week, Cody needs to have sex with a horse. I would also strongly encourage a Cavuto segment called “Business Bukkake.” And wouldn’t a recurring feature with “Business For Breakfast” guests called “Who Would You Do” (they pick among Wall Street leaders, dead or alive) just make sense?

Survey [DealBreaker]
A Dirty Business [The Guardian, last item]

We receive a pretty consistent stream of requests from bloggers that we add their blog to our blog roll. Readers often write in suggesting their favorite blogs be added. Our response over the past year has been to concede that our blogroll is terribly out of date—it hasn’t been changed since we set it up two years ago—and to promise to take a look at the blog and consider adding it when we finally get around to updating the thing. And for two years that day never came.

But now that day is here. As part of our rollout of new features, we’re going to add a new and improved blogroll. So if you’ve got a favorite blog that you think should be added, please write to us. Or leave a comment below. If you’re a blogger and you think DealBreaker readers would love your site, please get in touch. We’re really doing it this time, and we want it to be the most comprehensive listing of great business and finance blogs around. Send your emails to Tips@DealBreaker with the subject line “Blogroll.” Thanks!

For close to three years the Big Four accounting firms have been advising their corporate clients to change the way they account for auction-rate securities. Many companies changed the way they account for auction-rate securities on their balance sheets, sometimes classifying them as current assets and short-term investments. But some, like Continental, continued to included at least some portion of their auction-rate securities in the “cash equivalent” line.

Early last year the Financial Standards and Accounting Board decided that the “cash equivalent” designation was too open to confusion and abuse and recommended it be eliminated from cash flow statements. Many corporate treasurers and investment banking professionals who spoke to DealBreaker believe that this helped trigger the sell-off of auction-rate securities at the end of last year and the beginning of this year.

Others point to an even more recent accounting phenomenon—an advisory issued in January by Deloitte that warned auditors that “many issuances of auction rate securities have been adversely affected by the turmoil in the credit markets; thus, their current fair value is at a discount, sometimes substantial, from par value.” As auditors began to inform client corporations that they were going to have to record impairments of their auction-rate securities, corporate treasurers decided to unload this new source of credit market damage to balance sheets. Even corporations that had changed the accounting treatment of the auction-rated securities much earlier had not really paid much mind to them.

Deloitte told auditors that “because many entities assumed that these securities were economically equivalent to cash (even if they are not the accounting equivalent of cash), investments may not be on the “radar screen” as companies consider their loss exposures in the current environment.”

Once companies began to appreciate the potential for significant declines in value, they began to jettison their auction-rate securities. Suddenly, demand for these securities vanished from the marketplace, however, and companies seeking to unload them found themselves burdened with suddenly illiquid investments they once considered cash.

Auction Rate Securities Warrant Scrutiny for Impairment [Deliotte]

Florida Schools, California Convert Auction-Rate Debt (Bloomberg)
One of our favorite leading economic indicators, the actions of the Palm Beach County Schools is getting out of the auction-rate debt market. Also important, but historically not quite as meaningful: so is Seattle’s Valley Medical Center. This part is actually pretty interesting: “Palm Beach school officials started working on a conversion plan in December when rates topped 4 percent. They reached 9.75 percent this week, short of the 15 percent penalty rate. The district’s interest payment for this week’s auction was about $220,000, up from $107,000 during a week in December.”

AQR’s Biggest Hedge Fund Fell Almost 15% Through Mid-February (Bloomberg)
No turnaround yet for Clifford Asnes’ AQR, at least according to reports. The fund is down to $2.9 billion, from $4 billion in the fourth quarter, with losses of 15 percent in February alone.

Feds take a look at LV cash flow (Las Vegas Review Journal)
This got picked up on Drudge, so expect the economic implications to reverberate… word is that the Feds are going to start scrutinizing all of the cash that sloshes around Las Vegas nightclubs. And people are talking about how even some doormen pull in $500k. If true, we can pretty much guarantee that they’re not reporting income anywhere near that. Probably like a 10th. Things is, Vegas is swimming in cash. Folks come in, take $1000 out of an ATM, and anything that doesn’t get plunked down at a table, probably goes into someone’s pocket or bra, and from then on disappears in the eyes of the government. No doubt, if they really started looking into this, it would not be good for the Vegasion economy.

Microsoft to Reveal Software Secrets on Internet (WSJ)
Microsoft held a conference call yesterday during which they probably used the word “open” like 15 times. Seriously, just over and over again. Basically, the call was a love letter to Neelie Kroes at the EU, as it tries to convince her that it knows how to play nice with competitors and the open source community. To be honest, we didn’t understand all of the technological and legal specifics. But, gut check: a lot of mostly hot air. And the stock didn’t move on the news, which is probably sign that it was a non-event.

$$$ Iraq-Focused Hedge Fund Drops 4.2% In Jan. [FINalternatives]

$$$ Economicindicators.gov To Stay Open [The Big Picture]

$$$ Hi. I am a cute (former cheerleader/drum majorette in high school) 5-2. 111 lbs, light brown hair and green eyes. In my 20’s I had an on-and-off boyfriend but I got tired of him, especially after my experience with a fast-lane Wall Street guy.

After we started dating (I only found out later he was sneaking out on his wife, saying he was working late) he convinced me to practice my baton skills on his back with some floggers he’d brought along (how convenient).

I would like to find another hedge fund or similar kind of guy to practice my flogging on. I can travel and also have a beautiful rural setting with a heated play-space where I like to practice. [craigslist]

$$$ The Nerd Taint Is Even Stronger Than Imagined [LoSC]

She’s been saying it for a while but Meredith “Take No Prisoners Unless You Plan To Waterboard Them” Whitney just reiterated on CNBC that everyone sucks, imploring you to short Merrill, Citi, and UBS. She also noted that the banks are probably going to be looking at $70 billion in writedowns before adding icily (in my fantasy), “and that is a wildly restrained estimate on my part.” And of the chosen ones, she said: “They are suffering from their own success,” which you might’ve been thinking to yourself but didn’t have the Whitney brand brass to put out there. Love her! (Big W concluded her report by saying, “Because you, Goldman Sachs, you’ve been on top too long. It’s time for the Whitney Express to take you down!” She then threw down her microphone and stormed off, to which Gorilla Monsoon replied, “Goodnight, Irene.”)*

(A word of warning to the 85 Broad Mafia who may be considering retribution: If this saucy minx can take down a guy from the WWF, I think she can handle herself against a bunch of paper-pushing, numbers-fudging bitches.)

More Write-Downs Ahead? [CNBC]
Goldman Accelerates Layoffs As First-Quarter Woes Mount [Dow Jones]

*Little wrestling humor for you. You’re welcome.

Our eyes were already glazed over when we finally turned our attention to the the report released by Société Générale on the Jerome Kerviel scandal. The ocular varnish hardened to opaque as we skimmed through blather about how almost everything had gone right, everyone had done things well, and it was just a few bad eggs. It confirms much of what we had already concluded—that the back office lacked the knowledge and spine to really control the risk of the traders. “In some cases, according to the report, controllers who asked Mr. Kerviel about irregularities in his trades didn’t understand his explanations, but they dropped their inquiries,” the Wall Street Journal writes.

We woke up a bit when we read the Journal’s summary of the report: “The findings are likely to prompt widespread soul-searching within the banking sector.” Cue laughter.

But what really got our attention and tore the scales from our eyes was the chart attached to the report. Kerviel, according to SocGen, hid his real profit and loss by displaying an “official” P&L that was very small by comparison. After the jump, we bring you the chart.

Is Lehman Brothers cutting ten percent of its workforce investment banking staff, circa now? Could be. Also could not be, but we’re leaning more toward “could be” since firing people is de rigueur among the financial set at the moment. Sad, but at least shares of CROX are down 4.12%. Anyway, let us know what you hear.

It’s really disheartening to hear about consumers cutting back on spending when they should be, if anything, ramping up ridiculous, unnecessary, horrifically indulgent purchases, as if to say S a D, Nouriel Roubini. And yet they’re not, particularly in America because a. people here believe in this mythical “recession” and b. people here are pussies. Pussies that could learn a thing or two from the superwealthy in Eastern Europe, Russia, the Middle East, who currently snapping up not just yachts but thirty million dollar “megayachts” while John Devaney quietly weeps on his twenty-five foot power boat. I encourage every DealBreaker reader to get out there and pick up one of these things, whether or not you think 6,500 square feet of interior living space, 3,500 square of feet exterior space, and 15 bathrooms is a bit much. It’s not about you, it’s about the economy. If Jimmy “I’m Doing It For The Greater Good” Cayne can man up and start buying White Widow by the barrel, you can do this.

Related: When Hedge Fund Losses Hit Home

As Economy Slips, Yacht Sales Skyrocket [ABC]

Earlier this morning we discussed how changes in the way accounting rules treated auction-rate securities helped drive corporate investors out of the market. (For a rousing debate of exactly which accounting changes stamped out demand, click here.) Credit market concerns and the changes in the way auction-rate securities are treated on cash flow statements contributed to the rush out of the securities by bringing additional scrutiny to the once obscure financial instruments. At the end of 2007, many companies made the decision to shift assets out of auction rate securities as these changes were implemented for the new fiscal year.

The Apollo Group owned as much as $365 million in ARS at the end of 2007, according to a recent filing. But by February 19, 2008, all but $107 million of the ARS investments had been liquidated and not reinvested in the ARS market. Apollo says this well-timed exit was part of a plan to intentionally reduce its exposure to the auction rate securities, although they do not reveal what prompted the exit. The timing wasn’t perfect, however, and Apollo found itself unable to liquidate approximately $79 million in ARS due to auction failures.

Despite not completely exiting the ARS market, we’ll count Apollo a winner. So who’s still holding the securities? After the jump, we reveal two companies trapped by the auction failures.

It’s times like these we really regret not being able to get it together to start TiVo’ing Fox Business. Last night they had on Tim Patch, an Australian artist who uses his penis as a brush, to discuss his craft. There’s no video to be found, which is so typical of the network in that it often chooses not to save segments that could be construed as embarrassing (last week’s interview with an M&M, Tim Sykes’s appearance last night on “Happy Hour”), an obvious blow to posterity. All that remains is this screen shot (click to enlarge) a watchful reader (Stan O’Neal) was good enough to grab and send our way. The best part (and there are many to choose from) is the ticker tape at the bottom. This isn’t just some guy dipping his genitalia in oil and smearing it across a canvas—it’s the BUSINESS of some guy dipping his genitalia in oil and smearing it across a canvas. On that note, Patch (professional handle: “Pricasso”) is a businessman and businessmen can be bought—what I’m getting at is that we’ve commissioned a piece (art lover Ken Griffin agreed to float us the funds). The only question that remains is, who shall the subject be? Carney wants Bill Ackman, while I think a portrait of Meredith Whitney and her WWF husband would just be lovely. Your pick? Really think about it. This is important.

When an unprecedented number of auctions for auction-rate securities failed last week, many individual investors and corporations found themselves wondering how they had suddenly become the latest victims of the credit crunch. The immediate answer soon became obvious—the banks who had sold them on the idea that the investment were so liquid that they were the equivalent of cash had stopped using their balance sheets to support the auctions. Without the banks to prop up the auctions by buying the securities, auction failure became widespread and investors were left holding suddenly illiquid securities.

For several months the banks and brokerages had been “stabilizing” the market. Which is to say, the auctions were already on the precipice of failure and were only clearing because of the banks were stepping in to pull them back from the edge. While this kind of market-making activity has long been a feature of the ARS market, with banks soaking up excess inventory to support the auctions, it became much more extreme in recent weeks and perhaps months.

So far the banks have pinned the blame for the broad-based failures on “strains in the credit market” and “illiquidity.” That’s somewhat unsatisfying—it’s become the universal explanation for everything these days. What they haven’t said is that something more happened in the market, a fundamental shift in the demand for auction-rate securities that will not likely reverse itself in the foreseeable future.

Find out why after the jump.

The English speaking world has paid a lot of attention to the failures of Northern Rock, Countrywide and all the Wall Street institutions that have had to seek capital infusions to stay afloat in recent months. But the situation in Germany is arguably even worse. The public banks—state owned, partially state owned or dependent on public sector funds—have run into such trouble that one of the key pillars of the banking system is threatened, according to Wolfgang Reuter’s article in Der Spiegel.

“The state-owned banks are supposed to bail each other out when necessary, but the problem is that many are in trouble themselves and hardly in a position to help their peers. And things could get even worse,” he writes.

Why are Germany’s banks in such trouble? Reuter cites a “fatal mix of amateurism, greed and political protection” but what it really seems to come down to is moral hazard. Aware that they were walking a tight rope with a safety net to catch them if they stumbled, the bank managers took irresponsible risks.

Ironically, however, it was the end of state protection, required by the European Union, that sparked a huge push into the riskiest securities.

“In the days of government backing, they were able to borrow money at lower rates, which in turn allowed them to offer loans at lower rates than their private competitors. But that advantage ended in 2005, Reuter writes. “Hard up for funds, many of the public-sector banks began speculating with high-risk securities. According to a former bank executive, many ‘literally stocked up on these investments’ shortly before the cut-off date.”

Enter subprime, and you see exactly where this is going.

German State-Owned Banks on Verge of Collapse [Der Spiegel]

Like our hangover lifting slowing after our third cup of coffee, it’s too early to say that the crisis in auction-rated securities has passed. But the situation is improving for these once liquid securities that investors discovered were not quite as liquid as they had thought when the investment banks stopped propping-up the auctions for them last week. About half the auctions at some investment banks are resetting now, according to people familiar with the matter.

This is good news for some investors who need liquidity. Unfortunately, not all investors will have access to their money. The auctions that are succeeding are those that have the highest reset rates when they fail and the strongest underlying credit. Investors holding paper with lower reset rates—rates tied to LIBOR often issued by closed end funds—will likely to continue to learn the harsh difference between “cash” and “cash equivalent.” The auctions for these securities continue to fail. As short term LIBOR rates and commercial paper rates have fallen, some investors have seen their rates decline to levels less than 4 times that of those with a fixed yield of 10% or more.

The reset rates, which not many in the market had given much thought to before the auctions began to fail, have turned out to be a crucial factor. These were rarely discussed, even by the brokers and money managers who sold these securities to clients, because the auctions so rarely failed. Hedge funds, foreign capital and banks this week have shown an increased appetite for the auction-rated securities, especially those that have now reset to pay high interest rates. One investment banker indicated that hedge fund interest is up nearly 1000% percent from where it was last week.

The ARS market does appear to be stabilizing, at least a bit, and some market watchers are hopeful this is the beginning of a broader thaw. Issuers of the auction-rated securities have indicated an interest in exercising their call rights to buy back the paper. But many of the issuers, particularly municipalities, are slow moving entities so it could take several weeks to restructure their financing. And with the municipal bond market still in flux due to concerns about the bond insurers, it could take even longer.

Now excuse us while we fetch yet another cup of coffee.

SocGen Reports Record Loss on Trading, Writedowns (Bloomberg)
Actually, SocGen’s latest report doesn’t look so bad. The French bank, reeling from the actions of a single, lone, trader, with no help from anyone else, or oversight from anyone above him, says it lost $4.9 billion in the quarter. It also, btw, took a subprime hit. But really, this is the kind of loss you’d expect from most banks this quarter.

Virgin Galactic plans more spaceships (Reuters)
Richard Branson’s space company, Virgin Galactic, says it expects to build more vessels, with an eye for a commercial launch in 2010, just two years away. What’s more, it hopes to turn a profit within five years of launching, so 2015. Suppose that’s true, it’s not too hard to imagine, in 2015, Virgin Galactic being one of the few profitable civil aviation outfits — assuming he can pass along fuel prices and the pilots union doesn’t prove too much of a thorn.

French Bank Says Its Controls Failed for 2 Years (NYT)
Speaking of Kerveil, SocGen believes its controls failed it for two years, as the first “rogue” trades occurred in 2005. THe bank’s initial report also says what we just said — he was a rogue. At this point, there’s no evidence pointing to the idea that he had a partner in “crime”, assuming he’s actually found to have engaged in a criminal act, and assuming the French have the same concept of innocent until proven guilty that we have, though we’re not sure if they do.

Obama Raised $36 Million (AP)
Forget the headline number. Everyone knows Obama is a prolific fundraiser. The important fact: Clinton’s $5 million loan to her own campaign carried a 1.26 percent interest rate. Even when Romney loaned money to himself, he didn’t charge his campaign interest. See, she’s a hardcore capitalist, regardless of what folks think of her.

$$$ Deals: Private Equity Speaks Up
In our M&A Roundup for the week ended Feb. 17, private investment groups are a bit more active, although only one billion-dollar deal surfaces. [CFO.com]

$$$ Jamie Johnson: The Superrich Are Totally Psyched About Recessions [Daily Intel]

$$$ How Bad Is It? The Hillary Clinton Edition [Deal Journal]

The LA Times published an extremely moving piece over the weekend about a new crisis in hedge fund land. Managers who, after signing on to finance shit movies you couldn’t even pay former Bear Stearns movie blogger Rich Marin to go see and review, are losing money. Like, assloads of it. And they’re upset about the losing of the assloads of money, and they don’t understand the losing of the assloads of money and they want somebody (other than them) to pay for the losing of the assloads of money. Many studios have agreed to restructure deals so that in the unlikely event that “Dough Boys” doesn’t make any dough, everybody, including Hollywood, loses a little instead of just the funds/their investors losing a lot, and less conversations like the following have to take place. (Now would be a good time to tell you that I’ve got some green in RenTec. Can’t really say how I made the minimum, someone was desperate for some smokes one night when I ran into him at Matty T’s Roadhouse (Mr. Black Lung also loves mechanical bull riding, topless), I happened to have said smokes, and he owed me one…million dollars. Times five.)

Me: Simons, what the Christ? Can you explain to me why I’m losing MILLIONS of fucking dollars?
James Simons: I could tell you it was the models but really, I made a bad bet on “Dough Boys,” a slice of life comedy that serves up the story of Lou and Frank, two Bronx brothers running the family bakery. Faced with Lou’s gambling problem— of which Frank knows nothing— the shop is about to be taken from them by the neighborhood gangster. The fate of this local landmark hangs like a “pie in the sky.” Will it be a sweet dream, or a nightmare? Turned out to be the latter.

Everything’s all good now but I’m sure there were similar convos between HF guys and their pissed off clientele over the following picks:

Another day, another crisis in the credit markets. KKR Financial, which is a publicly traded investment vehicle run by Kohlberg Kravis Roberts, made headlines this morning when it asked for a restructuring of billions of dollars in short-term debt. Apparently they’ve struck a bargain with their investors to delay the repayment of the debt, which was due last Friday, until March. But reading about the story of KKR Financial is like watching the credit crunch in action.

Hint: He speaks in the third person, like all deities.

So, to all my naysayers out there, I say screw you! Yup, you heard me. I don’t have to be polite anymore—I’m not trying to get investors, I’m not trying to gain credibility. Everybody—and I mean everybody—in finance makes mistakes, but I seem to be the only one who celebrates them, detailing them thoroughly because they hold the keys to understanding the market.

Awwww yeah, it feels damn good to let it all out! How many of you industry insiders are insanely jealous right now? Sorry, but if you’re not willing to provide the exact details and thought processes behind all your investments, you don’t deserve to speak about them because you’re holding back…you people should be ashamed for you are cowards and frauds. It’s people like you that have made this industry so poorly understood and lacking in societal respect.

That’s right, no more Mr. Nice [redacted]—it’s disgusting that finance, our true national sport, gets such little love and respect. It’s all due to the arrogant, slimy and secretive ways of Wall Street that keeps some people wealthy and most people poor and uneducated.

This industry needs to change and [redacted] will see to that.

I hadn’t been keeping up with this Anthony Pellicano case at all but decided to educated myself after being shamed into it by one of my (many) private investigator friends who called me ignorant for not knowing the facts. So I spent the morning catching up and while I can’t say the story of Tony “P.I. to the stars” Pellicano’s possible use of illegal wiretaps struck me as all that interesting or something to work up a rage about, buried at the very end of one otherwise nothing to write home about article was something so contumelious that rage doesn’t come close to capturing the response it elicited (it’s times like these I really wish we had a two-way web cam situation going on; you could’ve just seen my reaction instead of hearing about it second-hand). It’s a wonder I was even able to pull it together to write this post now, but it’s something so offensive and just downright wrong that you needed to hear about it stat, no matter my mental state: Adam Sender, 5’4 hath been snubbed.

In what can only be described as a smear campaign against the Exis Capital Management founder, some hack at Fox News wrote up an article about the 244 witnesses named for the February 27th racketeering/w’tapping trial and not only took pains to list Tom Cruise’s lawyer, Bette Midler’s former manager, Sylvester Stallone, Kevin Nealon, Garry Shandling, and “Survivor” creator Mark Burnett before Sender, 5’4, who was placed second-to-dead-last and described as being “unknown to the public,” but equated Sender, 5’4, with a secretary (“More Pellicano names on Wednesday, most unknown to the public, such as hedge fund manager Adam Sender and Lilly LeMasters, a former Pellicano secretary”). Outrageous. And, really, just wrong. And something that Sender, 5’4, shouldn’t have to stand for. Since the Lil’ Guy, 5’4, is, we’re told, locked in his Kia sobbing inconsolably (his head just barely clearly the dashboard), we’ll have to take care of this for him. So listen up.

Adam Sender, 5’4, is somebody, and he deserves better billing than this. Here’s our reasoning: forget about the “53 percent return for clients after fees this year.” Forget about the hideous taste in art (a clear indicator of somebodydom, just ask you-know-who). Forget about the Hamptons church he went to battle with Goldman Sach’s Dennis Suskind over to get the place converted into a gallery to house said hideous taste in art. And just remember this:

A reader experimenting with his sadomasochistic side sent us the following two images this morning and asked, separated at birth?

A lot of people are acting all shocked and dismayed over the little slip-up that happened at Credit Suisse. Saying they can believe something like this would happen over at Bear, where Jimmy Cayne spends all the money on chips and forgets to leave an IOU, and UBS, where God retroactively punishes, and Citi, where you’ve got eight people sharing one chair and nobody can even hear themselves think, but not at CS. Bad things don’t happen to good people and bad things like multi-billion dollar mistakes certainly don’t happen to good people who live within 200 feet of the Shake Shack. I’ve got news for those of you failing to “get” how Credit Suisse could suddenly come up with this gigantic fuck-up, worthy of even Citigroup’s praise, when just last week Brady Dougan told reporters everything was cool— there never was any “error.” Well, never any error that D-gan didn’t orchestrate himself.

And no, I’m not talking about fraud. Let’s leave that up to Goldman, the professionals. Listen to D-gan’s wording from yesterday’s call: he defends the bank’s controls, saying it was a “very good sign” the “errors” were caught “rapidly, and…by our internal processes.” You can almost see him cocking his eyebrow slightly, just ever so slightly, too, can’t you? That’s because he’s got a secret— this whole thing was a drill. Not a joke, a drill. Dougan wanted to test the controls in real-time; make sure everything was up to code. Two something billion dollars was sacrificed now so that twenty something billion dollars doesn’t have to be sacrificed later. Don’t believe us? That’s fine, you’re entitled to your own (woefully misguided) opinion, and we know you’ll come around eventually. Get into my head and it’ll make sense. In the meantime, I challenge you all to come up with a more plausible explanation for what happened. It’s an impossible task but nonetheless, the best answer wins lunch at the SS, on Carney.

Credit Suisse Suspends Traders After Mispricings [DealBook]

Dougan’s Assurance of Shareholder `Comfort’ Proves Immaterial [Bloomberg]

ABC news is reporting that Hillary Clinton took a swipe at her daughter’s profession yesterday during a campaign stop in Ohio, suggesting wealthy investment bankers and hedge fund managers on Wall Street aren’t doing real ‘work.’

Now being the First Lady for eight years and a Senator from a state in which you’ve never lived, that’s real work.

Real ‘Work’? Clinton Swipes at Chelsea’s Profession [ABC News]

Forget social responsibility for business. That’s for people who wear beads, sandals and probably work in academia. In reality, the economic practices of the most successful societies in the world contribute to their success.

Companies that empower their employees to cut costs in the workplace not only improve their bottom lines, but also may foster civic engagement and contribute to peace in the societies where they operate, according to research published in the November 2007 issue of the Journal of Organizational Behavior.

In short, when businesses do well they also do good. Unsurprising but still refreshing to hear that research bears out the obvious.

How business can save the world [Boston.com]

Eric Dinallo, the former Spitzer aide who is now New York State’s insurance regulator, insists that the bond insurers are not on the verge of insolvency. But his plan to split the municipal bond business from the rest of their business only makes economic sense if it were necessary to save the companies and preserve value for the safest policy holders. So why is Dinallo so aggressively inconsistent?

What really seems to be going on is an attempt to strong-arm the banks by threatening them with the worst possible outcome of being left holding insurance that probably isn’t worth the paper its written on. If they won’t inject capital, Dinallo seems to be saying, he’ll make them pay through write-downs arising from the downgraded remnants of the broken-up insurance companies. Ugly.

Delta-Northwest deal may be at risk (AP)
If there’s one thing we know about the working if airlines and their unions, it’s that seniority is a very big deal. So big that it makes merging airlines tough, because nobody wants another 1000 pilots jumping ahead of them in the seniority queue. More senior pilots get first dibs on the routes they fly, while the less senior ones fly the redeye from Gary, IN to Iceland. So yeah, that big Delta-Northwest deal, which was supposed to be announced any minute now: hung up, due to pilot seniority issues — at least according to the AP.

2008 Democratic Presidential Nominee (Intrade)
We said yesterday that the markets were predicting solid wins for Obama and indeed they were right. In the case of Wisconsin, probably more solid than anyone thought. With the big margin of victory, he’s now trading at around $.80/dollar, basically his all-time highs. Even in Texas he’s up big now. Meanwhile, here’s a discussion on Intrade and carry.

H-P Posts 38% Quarterly Profit Gain (WSJ)
Admittedly, we totally thought HP was dead five years ago, just like everyone else did. And when it showed a little life post-Carly we thought that was just a fluke, and sort of a shame for her that the timing worked out as it did. But the company continues to perform solidly, as its earnings rose 38 percent in the latest quarter, on 13 percent revenue growth. It does see PC growth slowing, however, and it also had some “words” about the US consumer, which weren’t ideal. But, hard to really blame any of that on the company.

Supply Fears Push Oil to Triple Digits (NYT)
Maybe that’s why the airline merger isn’t going through — they’re freaking out about oil again. Just a week ago, there was all this talk about the end of expensive oil, and how it was finally on a sustainable downward drift. And then it hits $100 again, on the ever popular “supply fears”.

$$$ Natalie Bancroft [Portfolio]

$$$ The 1st Annual TimothySykes.com Crap Company Chart Pattern Awards [TS]

$$$ There goes another $15 billion. [The Economist]

$$$ The Sell Side: Joe Herrick, Gutterman Research [LoSC]

$$$ Gold [WallStrip]

CNBC reporter Charlie Gasparino recently answered 21 questions for New York’s Daily Intel, and I don’t want to say he’s been muzzled because nobody muzzles Charlie Gasparino but damn if it doesn’t sound as though, for reasons lost on DealBreaker, Dago’s trying his darndest to come off as some Yanni-loving, yoga-practicing,
‘in-touch-with-his-feminine-side’ New Age puss. For instance, to the question “Which do you prefer: the old Times Square or the new Times Square?” “Charlie” responds, “I actually remember hanging out at the old Times Square as a kid with my friends and barely survived. Any more info will get me in trouble. So the short answer is the old Times Square.”

Come again? The Charlie we know would not have thought twice about detailing what it felt like to shatter a man’s knee caps with a tailpipe he “jimmied off that schmatta Sandy Weill’s car.” Then the deal with allegedly not having any enemies— New York, rather reasonably, asks, “Who is your mortal enemy?” Probably expect him to produce a laundry list of, if not enemies, “former enemies” he’d “taken care of,” right? “Charlie” says, “I generally see the goodness in all of God’s creations.” The whole thing is sickening. And it only get worse from there—“What do you think of Donald Trump?” “Charlie” answers, and I quote, “Nice man.”

For a second, he fails to beat his better instincts into submission. Answering a question about giving money to panhandlers, old Charlie goes into an Italian-English rant about “human waste” and some guy he kept referring to as “Joey,” concluding with, “Piss on those fucking turds. Rompicoglioni!” It’s beautiful. The moment is fleeting, however, and then he’s back to the civilized John Tesh shell of a Charlie we once knew.

Great, now I’m depressed. Go read the interview, I shouldn’t have to bear this burden all by myself. (I’m alone in the office— *someone* went home hours ago “sit on the can in a wifebeater, drowning my sorrows in a six-pack and a plateful of gabagool.” Which is how Charlie would’ve wanted it.)

Charles Gasparino Is a Good Tipper [Daily Intel]

*rompicoglioni m./f. inv. (vulgar) pain in the ass.

Apparently a quiet night at home in the largest living room in Manhattan wasn’t cutting it for Stephen Schwarzman. His birthday celebration was certainly toned down from the multimillion bash at the Armory the year before. But he still managed to make it out for the night with his wife Christine Schwarzman. The couple was spotted by spies for Page Six at Le Cirque on Schwarzman’s birthday, which also happens to be Valentine’s Day.

DealBreaker was unable to determine if Schwarzman ordered the crab salad.

A Night Of Love [Page Six]

The Oracle of Omaha—alleged* whorehouse frequenter—really likes bridge. So much so, in fact, that he told CBS News that, when he’s playing the old people’s game, he can’t be distracted by anything. ANYTHING. “You know, if I’m playing bridge and a naked woman walks by, I don’t ever see her,” he over-shares. Skeptics among you might say, “Come again? We all know that Warren loves the ladies. He’s lying.” Au contraire.

What you must understand about Warren Buffett is that his mind is programmed for just two things: bridge and fucking. The only time he is freed from the prison of his legendary libido is when he sits down with his fellow septuagenarians for a rousing game of bridge. Even when penning his famed missives to investors, he just can’t get fucking off the brain.

Don’t believe us? After the jump, see for yourself a little-studied section of said annual letters, “Fillies I’ve Tapped (Or Wanted To) This Past Year.” Maybe next year, you’ll read through to the end.

*The powers that be made me write that, I know it’s a fact**. Leave your e-mail in comments if you want more info.
**The powers that be are making me tell you that a fact = something I’ve made up in my mind that I’m hoping is true. Make of that what you will.

When he first approached Wall Street to explore plans to rescue bond insurers, New York state’s top insurance regulator Eric Dinallo warned top bankers that they had helped create the mess and that they were facing serious losses if something weren’t done. After weeks of negotiations with an assortment of senior Wall Street bankers failed to produce a consensus on a bailout, it now seems as if Dinallo might push ahead with a plan that could trigger another round of record breaking losses for Wall Street firms.

Dinallo has proposed splitting the companies municipal insurance businesses from the businesses guaranteeing collateralized debt instruments that have suffered under the subprime meltdown. Credit ratings on more than $580 billion of asset-backed securities may be cut, according to Bloomberg. There are estimates that that could trigger write-downs of up to $35 billion. Citigroup and Merrill Lynch are often cited as having the largest exposure to the risk of an insurer downgrade.

“This is one of the worst possible outcomes for the market,” Gregory Peters, head of credit strategy at Morgan Stanley in New York, tells Bloomberg. And by “the market” he means Wall Street.
FGIC has already asked regulators for permission. MBIA has ousted its chief and replaced him with former chief executive Joseph Brown. He’s indicated that he will also seek to split the muni business from the CDO business.

Bond Insurer Split Threatens $580 Billion of Notes [Bloomberg]

It’s now considered a joke but back in the nineteen seventies, the Ford administration asked the public to “Whip Inflation Now” by, among other gimmicks, wearing “WIN” buttons. Inflation was roaring along at seven percent but the public was asked to believe that war-driven spending and an inflated money supply were not the cause of economic troubles. Instead it was magic or something, and little pins could make it go away. That didn’t work out, and it wasn’t until Paul Volker took control of the Fed and raised interest rates that inflation actually got whipped.

It looks like we’re heading back into the era of magical thinking. Plans from our nation’s capital promise to rescue the economy by sending out redistributive “tax rebates.” But the latest economic proposal, dubbed The Atlas Solution, takes wishful thinking to absurd new heights (or should that be lows?). The plan is from a New York shopping center, which is planning on giving away money to stimulate retail shopping. Of course, nothing is added or taken away from the economy by this plan—it is simply redistributed.

“Giving away $20,000 will not solve a thing. Nor would giving away $342.8 billion dollars, if every shopping center in the country was silly enough to do the same thing,” Michael Shedlock writes. (Hat tip: FT Alphaville.)

By far the best is the return of WIN pins in the form of stickers reading “I support the Economy!” The brilliant minds behind the Atlas Solution propose wearing the stickers as their number one solution to our declining economy.

Last week DealBreaker debuted our new look and several new features. Most of the site will still operated the way it always has. Our main column will carry the latest news, rumors and humor from the same stable of writers. Our comment section remains open to anonymous comments, and you can keep up with the most recent reader comments by clicking on the tab above. We still bring you the latest in Wall Street job offerings in our Career Center.

Our new features include a featured stories section on the top of the page, where recent important stories and classic DealBreaker items will be spotlighted. We’ll continuously poll our readers—whom we regard as our best sources for news, gossip and market intelligence—with a permanent poll featured in the center column. You’ll notice the center column also contains two new features—a column highlighting the new “DealBreaker Community” section and “Elsewhere.” The DealBreaker Community is an opportunity for reader to really shine. There you can start a conversation or pick up where one left off. It’s the place for readers to break new stories and start new conversations. Elsewhere will highlight the best stories of the day from all around these here internets. In the column on the far right, we’ve enabled you to sort items by the most read, most commented and most recommended.

There are now more ways to read and organize DealBreaker, and your chance to personalize your experience by registering with us. Several readers have reported problems registering—in particular, the inability to register certain user names or not getting confirmation emails. The confirmation emails are probably being swallowed up by spam filters. If you have attempted to register, or have any other problems with the site, please email us at tips@dealbreaker and we’ll get it manually ironed out.
Now back to our regularly scheduled programming.

“The One Percent,” a documentary about people who are richer than not ninety-six, not ninety-seven, not ninety-eight but ninety-nine percent of the world (I went to college) premiers Thursday on Cinemax and though filmmaker Jamie Johnson couldn’t secure a cameo with Warren Buffett, he does include a dramatic reading of the scathing letter the old guy sent to granddaughter Nicole Buffett after she appeared in JJ’s freshman effort, “Born Rich.” It’s the familial falling out we wrote of a while back, wherein the WB told Trixie she would not be receiving any of his money upon his death. It’s unclear if Buffett’s exclusion of the girl Carney once referred to as “Nikki Sweetsmiles” from the will was an original intent sort of thing (in the note the W says that he never saw the adopted Nicole as a grandchild) and he was just putting it in writing or if it was her appearance in a documentary about how hard it is to be young and loaded, which doesn’t really jive with Buffett’s M.O., that pushed him over the edge. Now, we’ll finally maybe get some answers, though what I’m most looking forward to is seeing who they got to do the voiceover-Morgan Freeman or Wilfred Brimley (the former has the experience, the latter just feel so right).

Earlier: You Say Harem, I Say Whorehouse

Confessions Of The Ultra-rich [NYP]
The One Percent [HBO]

There are gray storm clouds hanging over Wall Street this February but Merrill Lynch’s Greg Fleming appears to be weathering the storm. The Securities and Exchange Commission has initiated a formal investigation into whether the brokerage knew more than it revealed to shareholders about the value of its subprime investments prior to announcing the giant write-downs with its third-quarter results. Federal prosecutors have opened a preliminary investigation, leading to speculation that criminal charges could possibly brought against some Merrill executives. But sources at Merrill Lynch say Fleming, who continues in his role as president of the bank after the losses forced the departures of a co-president and the chief executive, was not involved in the businesses reportedly being scrutinized and they do not expect him to be a subject of the investigation.

In this new ‘Happy Hour’ bit called ‘Backseat Broker,’ Cody Willard, completely disheveled and visibly drunk, rides around town trying to find someone who’ll get in a cab with him and “talk about finance.” Victim number one is Jennifer V. (sounds like ‘Volmer’ but she’s scared of the guy sitting next to her and muddles her words so I can’t be sure). She works in credit derivatives. Cody asks her if there’s anything that can be done to improve the market; better question: is there anything that can be done to improve this segment? No. It is perfection. But, if pressed to come up with something, we can’t help thinking it would be interesting not to have Cody convincing people to get in his cab, but running alongside traffic, seeing who’ll let him into theirs (keep the unkempt look, it’s humanizing). If they want to talk shop, that’s just an added bonus.

Wal-Mart Reports Record Fourth Quarter Sales and Earnings
Topic A for today. Do consumers have any gas left in the tank? Or have they gone into hiding, hording their gold bullion for a new, post-apocalyptic world: Total revenue was up 8.3 percent, though net income crept up just 3.8 percent. And the line everyone will focus on: “Customers were more cautious in their spending in January. In a volatile economy, I believe we are well positioned to succeed. We will continue to strengthen our price leadership around the world.”

POSCO, Vale agree 65 pct iron ore price hike (Reuters)
It’s sort of understandable that the base metals business is booming and consolidating. Posco has become the latest steelmaker to relent to a whopping 65 percent price increase for the iron ore it buys, following a similar announcement from Nippon Steel. It’s bad enough that they have to pay such high prices, but then they have to publicly admit it too.

Credit Suisse Writedowns to Cut Profit by $1 Billion (Bloomberg)
More carnage, this time another $1 billion from Credit Suisse. Why? Turned out they mis-priced some bonds. That’s it, just a little mis-pricing of risk. Sort of like the guy at the grocery store punching a stamp on an item had it set on the wrong number. Just gotta fix that and move on.

Castro Resigns as President, Cuban Commander-in-Chief (Bloomberg)
FInally, a new era of capitalism can emerge at our neighbor to the south. Of course, Fidel hasn’t been doing much since he got sick a couple years ago, so now they’re just dotting the i’s.

Dem Pres Primaries (Intrade)
It’s Tuesday, which means it’s election day, which means a fresh batch of states from our dear Intrade. Wisconsin: Obama $.83; Hawaii: Obama $.96. So there you have it. Solid victories expected in both, with little effect seen by the latest “plagiarism” charges. In fact, the headline numbers about winning the nomination haven’t changed at all, even amidst the media-created Hillary boomlet of the last day.

Northern Rock Takeover Marks Risky Bet for U.K. (WSJ)
Who’s in charge over there… Hugo Chavez? No, in all seriousness, the UK has just decided to up and nationalize Northern Rock, the troubled bank, which has drawn only partial nibbles from the private sector, following its subprime-driven turmoil. Shares will be deslited immediately, though the government has called it a “temporary” solution. Among the private money backers that had been interested were Richard Branson and JC Flowers.

Beef recall is largest in history (Tribune)
This is the kind of stuff that will make even the most omnivorous omnivore feel a little bit concerned about the provenance of their food. The USDA has initiated a record 135 million lb beef recall, following reports of bad practices at a certain abattoire, such as killing cattle that was so sick it couldn’t stand. Guess they weren’t feeding them enough antibiotics.

Ambac in Talks to Split Itself Up (WSJ)
After FGIC made similar noises, word is that Ambac is considering halving itself, hiving off its healthy (for now, so we believe) muni bond unit, while letting its derivatives insurance unit go naked. Not surprisingly, it’s complex work, and it’s still not clear to us how it’s supposed to play out. But theoretically it can be done and Ambac is exploring it.

In a Hotel Deal, Showtime Fights HBO’s Dominance (NYT)
We always feel a twinge of nostalgia for a time we never quite knew, when driving through small town America, where little hotels and motels still announced proudly “Air Conditioning. HBO.” Never seemed that impressive to us, but then again, maybe if we had been born 20 years earlier. Anyway, maybe the signs will get their first makeover in 20 years to “Air Conditioning. HBO. Showtime.”, as the L Word and Dexter channel will soon announce a deal to make it available in Sheraton’s 74,000 hotel rooms. First Sheraton, next, the world.

Sony’s Mr Blu-ray finally gets to forget Betamax (Reuters)
In case you didn’t hear, the mult-year format wars appear to have come to an official end, following a string of presumptive obits. Wal-Mart announced it would go Blu-ray only on Friday and word is that Toshiba, the very company behind HD-DVD, is set to wave the white flag. All of this is good news for Sony, and as the article implies, redemptive, given its backing of the failed and much-maligned Betamax. Had it lost again, it would have brought an intense amount of shame —- probably more than it could handle. But by winning, the shackles of history are unhooked

$$$ How To: Make Big Profits Illegally (and Maybe Keep Them, Too) [NYT]

$$$ 36 Hours In The Life Of A Trading Addict [Tim Sykes]

$$$ Michiel de Boer [WallStrip]

(click image for full power point presentation; via The Big Picture)

Fellow anchors express shock that JC would deign to speak to her, chest bump anyway, commence ‘Happy Hour’ pre-game.

We like to end every week with a special gift for our readers: we’re finding you a new job. So we spent part of the afternoon combing through our Career Center in search of the most interesting jobs. There are dozens to choose from, all categorized according to specialization. But one special one has been selected as our Job of The Week. Not surprisingly, with market attention focused on a new part of the fixed-income world each week, we’ve decided to choose a fixed-income data engineer position this week.

Demand for real-time and closing market data on CDS, Bonds, convertibles interest rates is skyrocketing as investors demand more accurate and timely information about various fixed income markets. Moody’s is looking for a Financial Data Engineer to help it improved its fixed income analysis and research. They want a minimum of three years in a data analysis or research role in the financial industry, and you probably shouldn’t be scared of looking at screens full of numbers.

A small a number of ARS auctions were successfully completed today but most are still failing, according to a person familiar with the matter. All of the major financial institutions have decided to stop “stabilizing” the auctions by taking the securities onto their own books, and there is little sign that this policy decision will halt. Citigroup stopped supporting the auctions on Friday. UBS later this week. Many others had already called an end to their auction support policies.

But there is some life in the market for ARS. Hedge funds are starting to buy some of the securities—when the failure has triggered a high interest rate or when they can get them at a discount. Many investors—both individuals and corporations—continue to have large amounts of capital essentially locked up in the ARS.

The market for ARS was about $260 billion, funds that are now illiquid. This massive illiquidity is having ripple effects across various asset classes and financial institutions. If the failures continue, many hedge funds may see redemption requests as investors scramble to get cash. Investors facing capital calls from private equity funds may also need to need to get creative to find liquid resources. Brokers tell DealBreaker that their clients are angered because many of them were lead to believe that the ARS was as good as cash.

Citic Securities is negotiating with Bear Stearns to get a few more shares of the bank, in light of recent changes in BSC stock price (it went from shitty to shittier). Under the original terms of the agreement, Citic paid $1bn for about 6 percent of Bear; now its stake will probably rise to about 9.9 percent. I don’t really have much to add, because this all seems pretty reasonable in my professional opinion. But I will say that it sort of bums me out a little. Why is Bear Stearns being so rational and honest about this? The old Bear would’ve been all, “What are you talking about, nothing’s changed. Our stock price is the same. Where are you getting this information from?” Nothing I can do, just makes me sad, kind of like the redesign (that’s right, I’m with you! Is that what you wanted to hear? I feel the same way! It sucks! No one consulted me on the changes! Let’s burn this motherfucker down!).

On a related note, one Credit Suisse employee recently shared with me that he’s been telling colleagues, “life’s too short: buy Bear Stearns.” My little ‘takeaway’ ought to be: short Credit Suisse, but it’s not. I think that deal would actually put a lot of smiles on a lot of people’s faces. And that’s why we’re in this business anyway, isn’t it?

And for those who haven’t heard, James Cayne will now be getting high with Eloise. I approve.

Bear and Citic to reshape holdings in each other [FT]
Fancy New Digs for Bear’s Chairman [DealBook]

The government is shutting down its online clearing house of U.S. economic data. EconomicIndicators.gov is maintained by the Economics and Statistics Administration of the Department of Commerce. It brings together data from various government agencies in one convenient place. Readers can see GDP and import-export figures, which are collected by the Bureau of Economic Analysis, and numbers for retail sales and durable goods shipments, collected by the Census Bureau.

Or, rather, they could. It seems that the government is shutting the site down “due to budgetary constraints.” This is being described by many as move to make it more difficult for the public to see just how bad the economy has become. “The Bush administration’s latest move is to simply hide the data,” Think Progress writes.

Barry Ritholtz says it reminds him of the government’s refusal to publish figures for M3, a measure of the money supply. Many suspect that this has allowed the government to inflate the money supply without informing the public. “This new development implies (by parallel comparison to M3) that the economy is actually far, far worse than previously believed,” Ritholtz writes.

Bush Administration Hides More Data, Shuts Down Website Tracking U.S. Economic Indicators [Think Progress]
WTF? Feds Shutting Down Economic Data Site [The Big Picture]

Remember that Houston-based energy fund we told you about yesterday? The one found itself on the wrong side of a natural gas futures trade? This morning the wires have named the fund as Saracen Energy, which matches what DealBreaker was told by readers yesterday.

“The spread between March and April 2009 natural gas futures leaped by more than 50 percent in the week between Feb. 7 and 14,” Reuters reports. For the year, it has almost doubled. Saracen had apparently went short March 2009 gas futures and long April 2009, and got crushed as the spread blew out.

How bad are the losses? Reuters says the fund lost up to $400 million. Platts says it’s more like $700 million to $800 million. Saracen denies rumors that it is selling its book to Goldman Sachs, and tells has sufficient liquidity to continue operations. But a 2006 report detailing the fund’s size before these losses put it at around $1.4 billion, meaning it may have lost half its assets under management in this trade. Amaranth, which suffered serious losses in 2006 after getting on the wrong side of the March-April calendar-spread bet, initially made assurances that it had enough funds to continue operations. Within a matter of days, Amaranth collapsed.

The losses are a major setback for Saracen. Earlier this year, Saracen lost a top trader, Bill Reed, to the Louis Dreyfus Highbridge Energy LLC, an energy trading operation launched by Highbridge Capital Management LLC and Louis Dreyfus Group.

Energy fund Saracen has big natgas trading loss [Reuters]

Some of you have expressed distaste for the new look of things around here. “I don’t like the grey font.” “I don’t like my content on the left side.” “I don’t like having to sign in to write something [Ed. Note: You don’t.]” “I don’t like this.” “I don’t like that.” “I don’t like the italics, I may set up a competing site [Ed. Note: Do it, I fucking dare you].” “I don’t like that there aren’t any Carney Crotch shots.” “Gayest website ever after this redesign.”

One of you bet (yourself) that we probably didn’t have the “cojones” to make a poll asking who likes the new format. I can’t speak for Carney, but you, Guest at 9:02AM, bet wrong about me. Though the results will be absolutely meaningless and not get us to consider even for a second changing it back (it’s so cute that some of you thought it might), I offer you, after the jump, your mother fucking poll. I hope you enjoy it, as least as much as you enjoy the new look of DealBreaker.com

A recently laid off BoA analyst received the following message from her former employer. I don’t know if this sort of thing is common practice, and it’s unclear whether or not the note was serious or just an attempt to crack a joke in the midst of a tough situation (self-deprecating humor about how crappy your bonus are is always good), but let us just say, well-played, Ken Lewis. Made us laugh.

Dear Employee of Bank of America:

Based on your annual earnings, you may be eligible to receive the Earned Income Tax Credit (EITC) from the federal government. The EITC is a refundable federal income tax credit for low income working individuals and families. The EITC has no effect on certain welfare benefits. In most cases, the EITC payments will not be used to determine eligibility for Medicaid, supplemental security income, food stamps, low income housing or most temporary assistance for needy families payments….

Bank of America Personnel Center

Yesterday we pointed out that the freeze-up in auction-rate securities could lower demand for equities as many individual investors found their investment assets essentially locked into these suddenly illiquid bonds. But it’s not just the clients of brokerages who are facing a cash squeeze—the brokers and executives at investment banks are facing the squeeze as well

After the major accounting firms ruled that auction-rate securities were not cash-equivalents, many corporate investors began to reduce the use of these instruments for cash management purposes. But executives at banks such as Citi, Merrill Lynch and Goldman Sachs continued to use the auction-rate securities. For many, the extra two-dozen or so basis points they could earn by holding the securities rather than a true cash-equivalent made them irresistible. For the men and women who manage money and put together complex financial transactions for a living, achieving maximum returns in every part of their portfolio is often a point of pride.

Now that many of the auctions have begun to fail, they find themselves without access to their assets. Ironically, this pain for the professionals may wind up helping their clients. If the auction failures continue, executives on Wall Street may pressure the banks to take action to revive the market. It’s one thing if the clients cannot buy fuel for their yachts. It’s quite another if the broker cannot.

Berkshire Hathaway reports 8.6% stake in Kraft Foods (Marketwatch)
Warren Buffett’s little investment vehicle — this company known as Berkshire Hathaway — announced that it has an 8.6 percent stake in Kraft Foods. What’s surprising is that it didn’t already have one. Kraft Foods just always seemed like such a Buffett stock, no? It did to us, anyway. How many times have you heard some commentator on CNBC say they bought the stock cause their daughter (and it’s always the daughter) was addicted to their macaroni & cheese? Setting aside the issue of carbohydrates for a sec, you’d think he’d have been all over that already.

MBIA, Ambac Rescue May Be Set Before Ratings Are Cut (Bloomberg)
Monoline bailout, Take II. Sitting before a House tribunal committee, Eric Dinalo promised that this time something is going to get done. Maybe there’s no plan in the works, but when you’re being grilled by Congress, you say there is, even if there’s not. Man, yesterday during the Bernanke hearings, it was incredible how he was treated by all these Senators who claimed to have seen the problems of the economy coming for years and years.

Banks `At Risk’ of Another $120 Billion in Writedowns, Says UBS (Bloomberg)
A UBS analyst is calling for another $120 billion of writedowns at various banks. Perhaps that’s true, but maybe he’s just trying to point out, following UBS’ big loss, that other ain’t no good either.

Some Cities Are Spared the Slide in Housing (NYT)
Pretty much as soon as we moved out of Austin to come to New York to write the Opening Bell, we started telling people that housing in our old city was probably a good deal. Seriously, we were total housing market skeptics, except for that one city. Part of it was based on low price-to-rent ratios, while the rest had to do with other factors affecting the economy. But we left and missed out on the boom. As this piece in the Times, bylined-in-Austin as a matter of fact, points out, some cities have ignored the housing bust. There really are two Americas.

$$$ Have a good one, Schwarzman [Daily Intel]

$$$ Looking to fill that $750,000 Hole in Your Budget? [FINalternatives]

$$$ WallStrip Loves You [WS]

Mainstreet.com—the Parade Magazine of money sites—responded to yesterday’s question re: what’s the business angle of Arnold, 4’8 settling down and finally losing his virginity to Shannon Price, 5’7, who sees him as 10’0, except when he’s throwing shit at her?

Turns out there is none, though M-Street goes on for five paragraphs about the issues that can arise when there are disparities in pay between a husband and a wife, the importance of joint checking, some stuff about paying utilities and …who are we kidding? We can’t believe they actually took up the challenge. A for effort, even if the task was impossible. Maybe we should make a regular thing of this: DealBreaker challenging MainStreet.com to write about the most ridiculous news story of the week.

This made me feel slightly better, and if that doesn’t work for you, there’s something else after the jump.

Gary Coleman Secretly Tied the Knot [mainstreet.com]

We’re hearing that a Houston-based an energy fund which took a short position in March 2009 gas futures and long April 2009 gas futures is getting crush. The spread on that trade has been widening all week. Energy traders are abuzz with talk of one fund getting crushed, ironically by taking the exactly opposite of one of Brian Hunter’s infamous trades. He was long March and short April when he dragged Amaranth down.

Unless you are in private wealth management, the term “auction rate securities” might be new to you. But over in the private wealth group, they’ve been treating these things as if they were cash. Clients were funneled into the bonds and told they were the most liquid investment short of actual cash. But yesterday the bond auctions failed in a dramatic fashion, leaving many investors in illiquid positions.

All that you can read in the Wall Street Journal today. But what the Journal doesn’t explain is that this investor liquidity is already having repercussions in the broader marketplace, including the stock market. Many individual investors would use the proceeds from the auction of their bond holdings to purchase equities. Now that they are locked into the bonds, they are effectively frozen out of the stock market. Brokers have told DealBreaker that many clients simply will not be able to purchase stocks until the market for auction rate securities begins operating again, and they expect this lack of purchasers will have a depressive effect on stock prices.

The situation could deteriorate further. Investors who need liquidity might be forced to sell stock, or refrain from making major purchases—such as homes. So far most of the attention of market watchers has been focused on the direct effects of the auction failures. But if this doesn’t turn around soon, there could be major financial consequences.

Debt Crisis Hits a Dynasty [Wall Street Journal]

So how did Soc Gen’s infamous rogue trader get away with building up those huge positions? Joe Seet says the accounting control and risk operations from proprietary trading at many investment banks have serious inadequacies. It’s one part intellectual. The back office staff often lacks experience necessary to understand complex trades. And one part psychological: the back office is all too often awe of the traders. The problem, he warns, is not confined to Soc Gen.

Serious Lapses of Operational Control at Societe Generale; were they avoidable? [Sigma Partnership]

• What Ben and Hank watched to get psyched up for today’s Capitol Hill hearing.

• Is MainStreet.com the worst idea ever? Or is Portfolio just super-psyched not to be the newest kid on the street anymore?

• MBIA wants you to trust the accuracy of their internal risk analysis and forget you ever heard of Bill Ackman.

Eight little words, from one big gay pimp. Since we’re feeling giving, we decided to share the Valentine’s note Billy Ash sent last night. Sort of strange that he begins by talking about how he’s in a relationship, and then has the brass to LOL himself, but he does offer a cyber hug, and you have to assume his are top of the line. So, call it even.

On the fence re: clicking? There’s sage/punny advice to be found. Like “don’t do anything cupid.” Such as, for example, killing your husband. Or becoming a gay pimp.

Billy Ash E-Card [Hallmark]

Our favorite Swiss bank lost a ton o’ money and now a few people are saying layoffs are on the way, two of whom are employees hoping a last second admission of boyhood crushes on Adolf will save their asses (it would help if they could get their hands on a copy of a little indie porno called “Hitler Sucks,” which actually casts the guy in a pretty flattering light). Another soldier in Marcel Rohner’s employ sees things differently, asking, “I don’t know if you’ve noticed but UBS really doesn’t fire anyone (‘cept Jews). I mean look at our losses and layoffs comped to ml, ms, etc.” Love the detached confidence, which should serve him well down at the unemployment office. Either way I think you should a. Keep us abreast of the situation and b. Check out this musical clip, which I think might help thing a little if not a lot.

I spent the better half of yesterday cheating on my spouse which was unfortunate because it caused me to miss this wonderful FBN segment on the “business of infidelity.” According to Todd Morris, Brickhouse Security CEO, “cheating season” begins just after Christmas, picks up steam in January, and comes to a head on February 13. That’s where he comes in—Morris sells a product called the Semen Detector, for “spouses who just don’t know.” Fifty percent of the time you’re just being paranoid; what Brickhouse is really offering, for the bargain basement price of $49.95, is “a good night’s sleep.” Cavuto’s questions are excellent: “What must it feel like for the person being spied on?” “What does this say about the relationship if the suspicion is such that you need to look for foreign DNA?” “Where were you last night, Todd?” His response at the end to Morris’s reflection that it’s sort of bittersweet that things have been so lucrative also cannot be topped: “That’s sad, that’s sad. But, your business is booming as a result, so…” Every cloud, Todd. Every cloud.

Infidelity happens - don’t let it happen to you! [Brickhouse Security]

We’ve just received word, from the same tipster who brought us the joyous news that someone with a head on his shoulders over at the NYMEX changed the channel from Mark Haines’s rack to Jenna Lee’s, that: “CNBC is back today on the nymex, looks like gasparino read your article and broke some kneecaps to get cnbc back on down here.”

Earlier: Fantastic News

Consider the Sport Illustrated Swimsuit Issue Indicator.

UBS Falls to 4-Year Low as Subprime Markdowns Cause Record Loss (Bloomberg)
So was this this kitchen sink quarter at UBS? The bank booked a $13.7 billion subprime writedown and a $11.3 billion total loss, whihc, to use and old and hackneyed joke, means they would have made $2.4 billion, ex-the write down. Not bad, not bad at all. How many major banks can say they made $2.4 billion this past quarter? Eh?

U.S. stock futures lean higher before Bernanke (MarketWatch)
Another up day for the market? We’re starting to put together a streak here. The bull is back. The again, Big Ben is set to speak today. What, exactly, could he say that would make the markets happy? It’ll be funny comparing the questions he gets to the questions that Clemens got yesterday. Our guess is that the politicians questioning clemens did a lot more homework before the event. Just a guess.

The Opening Bell (CJR)
Click on the link above. No, it won’t take you down some recursive hell hole that traps your browser between two dimensions forcing you to call your IT guy. Just thought you should check a new morning roundup of the business news from CJR. It’s written by Ryan Chittum, a “crusty-yet-youthful financial journalism veteran.” Anyway, love the title.

The DOJ loses another Enron criminal case (Houston’s Clear Thinkers)
The government has lost another appeal in the Enron case, this time having to do with the old chief of Enron Broadband. If you followed this story in the mainstream media (MSM, does anyone still say that anymore?), you’d know that the government has not been doing so well in recent decisions. Just kidding. That story died a long time ago.

$$$ Translating Corporate Speak: Wynn [LoSC]

$$$ Outstructuring Outsourcing [GP]

$$$ RSX [WallStrip]

As if he didn’t have enough on his mind, Jerome Kerviel must now bear the shame of knowing he’s the reason individuals with no discernable skills, initiative, brain cells or looks won’t get cannonballed from the back office to the trading floor anymore, so sayeth Bloomberg reporter Fabio Benedetti-Valentini. Sources tell Benicio del Toro that before the SocGen scandal, you could be, for all intents and purposes, “a moza-fuckeeng retarde” and still be executing trades by your second week on the job. Now, not so much. “When Jerome Kerviel pilfered that $7 billion,” Benedetti del Toro Valentini writes, “he wasn’t just pilfering money, he was pilfering a time-honored French bank tradition of promoting incompetents into positions of great importance.” Further digging by Vesit La Giubba Benedetti revealed that that wasn’t the only shit Kerviel fucked up for everyone else. As it turns out, Kerviel fucked everything for everyone everywhere. Look closely, Benedetti Valentini Bruni Pesci notes, and you’ll see that Kerviel can be blamed for: Global warming, Hepatitis C, feline AIDs, and the marijuana drought. One area man even told Benedetti Valentini Mosconi Bruni La Giubba Pesci Gasparino that he believes the rogue trader is to blame for his difficulties rising to certain occasions in the marital bed. “Ma femme, she say ‘C’est la booze!’ but I know Jerome, he had a hand in dis!”

On a related note, I’d like to add that so far no one has correctly matched all 11 Steve’s to their corresponding photographs and the gallery tour/30 minutes of rink time remain up for grabs.

Kerviel Losses Erase Promotion Chances for Clerks [Bloomberg]

How bad must things be up in Armonk?

It’s usually a sure sign of deep trouble when a company blames short-sellers or runs crying to lawmakers for protection. MBIA has announced plans to do both. It’s asking lawmakers to investigate or curtail “the unscrupulous and dangerous market manipulation activities of short sellers,” according to a written copy of testimony it plans to give to the U.S. House Committee on Financial Services that Reuters obtained.

What really has MBIA’s knickers in a twist is that scheduled appearance of Bill Ackman before the committee.

“MBIA notes that Mr. William Ackman is appearing on the hearing on February 14th as an ‘industry expert.’ Mr. Ackman is in fact not involved in the industry in any capacity except as that of a short-seller, and, accordingly, MBIA questions the characterization of Mr. Ackman’s expertise,” the testimony says.

Scandalous. Everyone knows that short sellers cannot be experts. Only corporate management count as experts. Just ask Enron. That damned Jim Chanos guy got up in their face, and he wasn’t even in the energy trading business. They really showed him.

MBIA to urge curtailing short sellers [Reuters]

Wall Street abounds with speculation that Greg Fleming, who has managed to hold on to his position as sole president of Merrill Lynch through a whirlwind of management changes, might finally be facing a challenge that could shake him out of his elevated position.

Fleming’s presidency has endured the worst losses in the history of Merrill, internal criticism, and alleged pressure from newly minted chief executive John Thain. Although the Justice Department’s investigation is in its earliest stage, rumors are already spreading, both within and outside of Merrill, that the threat of a criminal investigation might bring Fleming down.

I just saw (not so) “big al [Greenspan]” leaving the hotel on fifth ave (next to cipriani btwn 59th/60th). Not only does the guy have a Louis Vuitton luggage, he had an orange LV duffle. Seriously, what was he thinking?…I would have taken a picture if hadn’t been so nasty outside. The orange was similar to a “blood orange”, even moz would have been appalled.