When the country's three largest banks reached agreement on Friday on how to structure a $75 billion fund to prop up distressed securities, an exhausted group of its top planners gathered in a Bank of America conference room to toast their success with 12-packs of Bud Light.But the celebration might have come too soon.
Having settled on the fund's composition, officials from Bank of America, Citigroup and JPMorgan Chase will now have to raise more than $60 billion of the fund from dozens of financial institutions around the globe in the next few weeks. The goal is to have the fund operating by the end of the year. But the big question is: Will it actually help?
The answer, some analysts and big investors say, is probably not much. The backup fund will not save troubled structured investment vehicles, or SIVs, that hold billions of dollars in packaged loans, though it could delay their demise. It may help calm the turbulent credit markets by preventing a sharp sell-off of securities, though analysts say the fund will probably not be able to offset the deteriorating prices of the securities.
Ripped straight from today's headlines? Not really. Try November of 2007, actually. And that bailout plan bit the dust too.
Who the hell drinks Bud Light at the closing party? Well, I suppose it was only the end of a structuring party. Maybe the good stuff was packed away for a bigger event. Still, I have a sneaking suspicion that Bank of America's catering department keeps the cold ones stocked all the time, not just for special occasions. Still think that the post-merger integration with Merrill is going to go smoothly?
Posted by StupidEquityGuy , Sep 26, 2008 11:07AM
MS is getting tossed under the bus... CDS has gone points up front, FT reporting 50% of their PM clients fled the scenes in London with 1/3rd gone in the US.
Cash is flowing out of the front doors faster then Japanese banks can shovel in the back door.
http://www.ft.com/cms/s/0/fc0e74be-8b43-11dd-b634-0000779fd18c.html
Posted by guest , Sep 26, 2008 11:10AM
Was it one 12-pack per "exhausted" member of the group?
Back in the mid-seventies, before I stopped "celebrating", I used to often drink a 6-pack of Bud in quart bottles. They didn't have Bud Lite back then.
The Guy from Delaware
Posted by guest , Sep 26, 2008 11:11AM
SEG,
What probability do you put on MS actually getting money from Japan?
Posted by guest , Sep 26, 2008 11:12AM
@ 2
quarts NEVER came in "6-packs", you poser
Posted by a dead horse , Sep 26, 2008 11:13AM
http://gawker.com/5054879/5-reasons-this-depression-really-is-going-to-be-fun
"If you are a capitalist, Warren Buffet was your hero when you were, like, eight. By the time you started your first private equity internship or whatever you were more like "Ah, Buffet, sentimental old sucker, making his money the hard way like that." Why? Because Warren Buffet made $62 billion over a six decade career investing in real companies over the Very Long Term, and that is just so unnecessary when you can make like at least a billion dollars in like a year just by taking a 20% fee on some money you got from rich folks plus a whole lot more money you got to borrow from banks at superlow rates, and throwing all that into some algorithm whereby the money makes a gazillion trades a day on some supercomplex financial instruments made up by bankers who got bored of collecting fees splitting up and re-packaging the weary pieces of the American economy and in any case, now you somehow make a half penny on the dollar every time some ratio goes below pi and none of it requires any entanglements with companies that actually produce stuff at all (thank god because that would be awkward.) Well, putting all that money through all that pointless action was not for Warren Buffet. Not because he worries about detachment from labor or any of that Marxist crap, but because it actually did just seem so pointless. (Buffet once said of gold: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.") Anyhow, so all this madness goes on for a few decades, generates a little "liquidity crisis" and suddenly Goldman Sachs has to become a real bank, which basically means the Smartest Richest Most Elite Motherfuckers on Wall Street are forced to sit acknowledge the existence of the Actual Economy. Put a wonkier way: Exchange Value, Meet Use Value! And Buffet sees that investors are worried about this, but he knows it's a good plan for the Long Term everyone laughed at him for caring about, so he plows $5 billion into it at supergood terms and suddenly everyone's like, "Damn, that Buffet, he really is pretty smart." And smart turns out not to be incompatible with good!"
WOW
Bess, go work for Gawker - between your wet dreams for O^3, the fact that you actually understand all those stocks and bonds and derivatives and other formulas that make you a penny every time the ratio goes below pie, and the fact that you're not retarded would make you the best writer there. Also, then I'd never have to read something like that.
Posted by guest , Sep 26, 2008 11:16AM
back in '07 Budweiser was still an American company, so they were trying to also prop-up the good ole USA's alcohol producing industry.
sadly their attempts to do that failed also.
the did however successfully return the cans for the 5cent deposits. Wheeee!
Posted by guest , Sep 26, 2008 11:16AM
"Still think that the post-merger integration with Merrill is going to go smoothly?"
15% spread and it looks like the financials are running out of mayo. Short selling back on line in a few weeks and MS will be coming up the History channel. They had their chance, hesitation creates delay and delay creates injury.
Posted by Carneys Mom , Sep 26, 2008 11:19AM
ha 75 billion. that probably seemed like a lot at the time.
Posted by StupidEquityGuy , Sep 26, 2008 11:20AM
I honestly don't know... The CDS market woke up and smelled a corpse... why is yet to be announced. The whole counter party risk fear is obviously prevalent in all of the major banks.
To show you just how bad it is... the FED wants Joe Six Pack to borrow against his 401k now, because the banks which form it, don't have the cash or credit themselves to provide the service.
If you go to the FED website the article is posted here.
http://www.federalreserve.gov/pubs/feds/2008/200842/index.html
WASHINGTON (Dow Jones)--As the crisis on Wall Street makes it harder for
U.S. households to obtain credit from banks, one huge source of financing is
being underutilized by consumers: themselves, or at least their retirement
savings.
That appears to be the conclusion of a pair of Fed economists who argue in a
paper that, "despite potential gains from borrowing against 401(k) assets
instead of from other sources, most eligible households eschew 401(k) loans,
including many who carry relatively expensive balances on credit cards and
auto loans."
"We estimate that households with access to 401(k) loans could have saved
about $3.3 billion in 2004 - about $200 per household - by shifting debt to
401(k) loans," wrote Fed economists Geng Li and Paul Smith.
Posted by guest , Sep 26, 2008 11:22AM
@#4...
Technically you are correct. I would buy the quarts 6 at a time, hence the 6-pack reference.
BTW, when you do quarts, you can't be a f'n pussy and take little "sippy drinks" the way the chicks do. Every blast had to be a major one. Otherwise the quart would warm up before you finished.
The Guy from Delaware
p.s. The only quarts I ever drank were Bud, Miller, and Reading. I don't recall any others being available. Do you?
Posted by guest , Sep 26, 2008 11:28AM
Can someone just tell gasbags to shut the fuck up - bueller- anyone??
Posted by guest , Sep 26, 2008 11:30AM
@7 you're an idiot. The only thing you should comment on is your masterbating!
Posted by MostOffensive , Sep 26, 2008 11:44AM
time warp to the future? http://blogs.wsj.com/deals/2008/09/24/mean-street-page-c1-the-wall-street-journal-sept-24-2011/
Posted by StupidEquityGuy , Sep 26, 2008 11:52AM
Here is an interesting chart of the JPMutual estimates for home losses based on their three cases...
http://4.bp.blogspot.com/_pMscxxELHEg/SNz4cRNk7VI/AAAAAAAADf4/E4Uq455GlYI/s1600-h/JPMPrices.jpg
Posted by guest , Sep 26, 2008 12:06PM
@ 10 guy from delaware
OK, OK
hell a lot of brews came in quarts -- Carling Black Label comes to mind. Not to mention Colt 45.
Totally off the sauce now? too bad :-(
-- clueless regulator
Posted by guest , Sep 26, 2008 12:10PM
@ 12 why is he an idiot?
Perhaps if more people had been talking reality for the last year and many people had listened we would not be in this mess.
The problem is in the people talking up these stories. The have been bull shitting this market for a year.
One of the reasons that main street does not believe this is a "real problem" for them is because all the people in authority (president, congress, senate, treasury secratary, fed, CEO's analyst's) have been telling them "there is no problem", despite the evidence to the contrary.
Perhaps, instead of this bull shit, we need to start talking about the how bad this problem really is. Lets start talking worse case scenerios with facts.
In a reuters story yesterday if you look at estimates for the S&P 500 in 2009 they are suggesting 24% growth. My response to that is BULL SHIT.
Posted by guest , Sep 26, 2008 12:23PM
Yea #7 listen two #12 and
go beet it sweety!
SPODE
Posted by StupidEquityGuy , Sep 26, 2008 1:05PM
Any rumor control on who gets their FDIC applied spanking tonight after market? I have heard one, but not sure if its true or not...
~SEG
Posted by guest , Sep 26, 2008 6:13PM
I can't believe that there are 18 comments on this story AND NO ONE MENTIONS MIKES HARD LEMONADE??????