$$$ Furry Fund [FINalternatives]
$$$ Elitist for Same [Craigslist]
$$$ The Khaki Letter [LoSC]
$$$ Charges of Insider Trading for a Wall Street Luminary [New York Times]
Archive for May 2008
We’re sorry you are still in the office and not already plowing through your third mojito and sailing away for blackout island. We’d at least like to bring you the good news that the roads are still clear and you won’t spend the first five hours after leaving the office stuck on the LIE inhaling exhaust.
We’d like to but we can’t. According to Traffic.Com, you are totally screwed. The traffic jam on either side of midtown tunnel is completely jammed. So it looks like it is either the LIRR or another Friday night in your usual Friday night haunts, except that they’ll be weirdly abandoned. There won’t even be any girls out tonight because instead of going to some place where they might actually meet a man, they’ll all be seeing some film about girls looking for men.
You’re probably better off staying in town anyway. It’s going to be cold and windy all weekend. Isolated thunderstorms in the morning will become severe in the afternoon. They’re even talking about hail. Good luck.
– Mortgage industry
– Epidermis (his own and all those employees forced to take meeting in the Suntan Chambers)
– Bear Stearns
– Bees
– Chihuahua
Killer Bees and the Housing Crisis [USNews]
Couple cites vacant home in fatal bee attack on dog [Tuscon Citizen]
Carl Icahn got the go ahead from the Federal Trade Commission to scoop up huge amounts of Yahoo stock. Icahn owns around 10 million Yahoo shares now, and has options to acquire another 49 million. He said he’s seeking clearance from the FTC to buy up to $2.5 billion of the stock.
In our not-so-free market, you need the FTC’s approval to make stock purchases worth $63 million or more.
In other news, we just noticed that Jerry Yang and Steve Ballmer apparently played golf together last weekend. They may or may not have chatted about a deal but probably not the straight-up acquisition that Icahn wants. Icahn, of course, hates executives who play golf. Is there any chance that Ballmer and Yang arranged the meeting over golf to piss off Icahn?
Icahn gets antitrust go-ahead for Yahoo stock buy [Yahoo--heh]
Here’s a slightly unorthodox idea we’ve been tossing around, should you sense an impending foreclosure situation on your home. Why not burn the place down? The worst that happens is you get stuck with a pile of money from the insurance company. And what a pity that would be. If it’s good enough for 50 cent, it’s good enough for you.
As we pointed out the other day, a rift has developed on Wall Street over whether access to funds from the Federal Reserve is worth the price of increased regulation. Lehman Brothers is reportedly willing to accept the regulation while Goldman Sachs is said to oppose it, and is willing to give up access to the new Fed facility if necessary. Tim Carney, who writes for the Washington Examiner and is the brother of one of DealBreaker’s editors, takes a look at why the investment banks have split over the issue.
These companies’ financial situations give a hint. Goldman, in its most recent quarterly report, showed a positive gross profit, as it had for the years 2007 and 2006. Lehman, meanwhile, posted a $6.6 billion gross loss last quarter.
Goldman, like the whole financial sector, has plenty of headaches, but thanks in part to its correct bet on the housing slowdown and credit crunch, it is thriving compared with its competitors. Subsidized loans will help Goldman, but the weaker sisters in the industry need them more. Regulations may stabilize Goldman’s position, but they will keep Goldman from improving that position.
Deal or no deal? [Washington Examiner]
As regular readers know, we’ve got a thing for Wall Street history. So we’re really glad that the kids over at Portfolio put together a wonderful interactive feature detailing what happened to some of the once powerful and now vanished Wall Street firms.
Tim Sykes has gone and gotten himself an (online) TV show. Some of you may be disappointed to hear that LiveStock is not a situation comedy revolving around one city boy’s attempt to run a farm, with hilarious hijinx along the way that include “accidental” sex with horses and the like. However, I think you still might enjoy LS, which the host describes as being “like Mad Money,” with him in front of a green screen taking questions which you can ask in real time. For those who’d like to be more passive participants, consider making it an ancillary component of the Vending Machine Challenge. Whoever eats all 35 items and keeps them down while watching this show wins. Good luck to all.
The grounding of Silverjet brings to mind a question George Anders asked the other day in the Wall Street Journal: why doesn’t the airline industry do more to hedge its oil exposure? Without appropriate hedging, airlines are pretty much always speculating on the price of oil.
With oil near $130 a barrel, why does Southwest Airlines stand alone in the airline industry in its aggressive use of hedging to keep fuel costs under control? Southwest has locked in more than 70% of its jet-fuel requirements this year at a price equivalent to $51 a barrel for crude oil. By contrast, other big carriers have hedged 30% or less of their fuel needs this year. Those carriers generally expect to pay the equivalent of $85 to $100 per barrel of oil under their hedging programs.
Anders’ column suggest the answer might be frequent management changes in the industry. With such regular turnover in the top ranks, the airlines just lack management experience to deal with price changes. Law professor Larry Ribstein has some even more complicated explanations, including the possibility that airline management are concerned about putting complex hedges into their disclosures for fear of triggering memories of Enron. Worse, management may run the risk of Sarbanes-Oxley legal liability if they inadequately disclose their hedges. Perhaps its safer not to hedge.
Why Rivals Don’t Copy Southwest’s Hedging [Wall Street Journal]
Apparently Deloitte’s securitization group, known for being big fans of the mortgage, asset backed and CDO stuff, was “gutted” yesterday afternoon.
Silverjet, the U.K. airline which flew exclusively business class flights, is permanently grounded. It has run out of cash after it failed to secure $5 million in emergency funding, Bloomberg is reporting. Founded 16 months ago at the peak of the credit fueled financial boom, the airline fell victim to falling demand for trans-Atlantic business travel and rising fuel costs.
It’s a rough time for airlines. More than a dozen have collapsed in the past six months as oil prices skyrocketed. The industry may report $40 billion in combined losses this year, according to Bloomberg.
In an ironic twist, the last Silverjet flight took off from oil-rich Dubai today.
(Silverjet was, at some point, a DealBreaker sponsor.)
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