In the wake of the worst single day performance on the Euro stage in recent memory for the Dollar, you might sit up and take notice. Of course, an injection of $700 billion is going to impact the dollar however you do it, so I say ignore the European foreign exchange nerds all together. Still, some are tempted to read this as a mandate on the bailout and (by extension) those doing the bailing.
I guess we should expect to see certain congressional democrats, fresh from the scrapyard holding shards of their favorite legislative wreck skyward in hopes the heavenly bailout magnet will pick them up, citing with authority the nuances of global foreign exchange to belittle Hank and his brethren in the hopes the might get some scraps that will keep their mouths busy with chewing.
That's not to say we turn our nose up at changes designed to increase transparency, make the bailout financially painful enough to try and encourage firms to use it as a last resort, rather than a wheelbarrow of money for the taking, allow the Treasury to keep warrants in the bailees (not to be confused with the Baileys, Hank, take it easy). But when we start slipping into stimulus programs (which tend to be pretty useless even when you just write checks to taxpayers), price controls on executive pay, and the kitchen sink, well, someone should point to yesterday's market performance and note that, while index futures seem to have the market set for a flat open this morning, the clock is ticking.
All this presupposes that Hank knows what he is doing, and that throwing cash at the problem will fix it. It seems pretty clear that, in order to do any good, the Treasury is going to have to buy assets at significantly overvalued prices. Perhaps, in fact, this is why transparency is still an issue. If, as the UK has been prone to do in similar circumstances, purchases or borrowings are shielded, there isn't any new pricing data to trigger mark-to-market write-downs. Hmmmmm.
Will it help? That, I think, is far from certain. Time will tell. And you can always short the indexes (for now).
Posted by guest , Sep 23, 2008 9:08AM
first
Posted by guest , Sep 23, 2008 9:09AM
too verbose. did not read.
Posted by guest , Sep 23, 2008 9:10AM
question, am i allowed to post on message boards re: typical wall st firm rules?
Posted by guest , Sep 23, 2008 9:11AM
HOLDING THE BAG
NEWSWIRE--As Congress considers bailout legislation, there is uncertainty whether it will provide homeowners with mortgage assistance.
Halloween's still weeks away,
But tricks of finance start today:
Some get gift bags in the billions,
Others, pennies (mere civilians).
Whether treat's insane or small,
Depends if street is Main- or Wall-.
www.newsandverse.com
Light verse, ripped from the headlines
Posted by guest , Sep 23, 2008 9:24AM
Terrible writing.
Posted by guest , Sep 23, 2008 9:28AM
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection- -a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end. ...It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.We must not forget that, for the last six or eight years, monetary policy all over the world has followed the advice of the stabilizers. It is high time that their influence, which has already done harm enough, should be overthrown.
--F.A. Hayek in 1932
Posted by Anal_yst , Sep 23, 2008 9:29AM
@ 3
You should be relatively (key word) fine, just don't be stupid.
@4
Go away.
@ ep
While I'm not particularly a fan (I believe harsh critic is more accurate) of his, Evan Newmark (rather unsurprisingly) waxed romantic about how great of a job Hank will do, and how he's the only one who can.
While its easy to dismiss as his typical Goldman ass-kissing, he does make a point: who the hell else is gonna do it? Certaintly, as you've pointed out, the senate/congress can't handle it, the president? ha! Unfortunately, it seems the tag-team of Paulson/Beard is the best we've got, sigh...
Posted by guest , Sep 23, 2008 9:30AM
ep, get out of dealbreaker. bring carney back. you write way too much, none of us have time for your soapbox.
Posted by guest , Sep 23, 2008 9:33AM
@8...agreed in part. Trim down your posts EP...blogs are suppose to provide quick information that is readily and quickly discernable. It is not supposed to be a treatise format or sound like Milton Friedman.
Please take these corrective actions immediately. Thank you.
- Management
Posted by guest , Sep 23, 2008 9:34AM
@8-- you mean carney who would write 10 paragraph long posts? and who invented the soap box?
Posted by guest , Sep 23, 2008 9:41AM
@6
Great quote.
Care to guess who said this:
"As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion."
Posted by guest , Sep 23, 2008 9:43AM
@10...Carney's posts were easier to get through and he had credibility with the readers - EP has just stepped up no manifestos at first are needed... E.g. @5 and @2
Posted by guest , Sep 23, 2008 9:44AM
6 et al. I love that Hayek is suddenly a hero, now that the depression is long over.
Posted by guest , Sep 23, 2008 9:46AM
12 Actually, my impression was that JC knew very little about wall street. just offered up the standard libertarian free market answer to everything. ep on the other hand knows her stuff.
Posted by guest , Sep 23, 2008 9:47AM
The congress is out of their league. They are the congress why don't they get other financial people to explain things to them, besides Hank, and Uncle Ben, Cox and whoever else is going to testify?
Posted by guest , Sep 23, 2008 9:51AM
@14...don't rag on Carney when he is no longer here to defend himself.
Just because you disagree with Carney does not mean he didn't know "his stuff."
And 12 doesn't "presuppose" that EP does NOT know her stuff...its a stylistic and structural critique - not a disagreement of opinion or denigration of EPs knowledge.
Posted by guest , Sep 23, 2008 9:51AM
too, too verbose equity private. i need carney to dumb this down for me. i feel like i'm reading literature. what's jc's new blog url?
Posted by guest , Sep 23, 2008 9:53AM
16 Who said I disagree with JC's libertarian bent? Just sayin that that's all he had to say. Time and again, he demonstrated thin knowledge of markets. Thats all.
Posted by Anal_yst , Sep 23, 2008 9:54AM
@ 8,9,12, etc
I, for one, enjoy most of EP's stuff. If its over your head go get your information elsewhere. Even her longest diatribe so far has taken all of what, 2, 3 minutes tops to digest, and thats without giving it your full attention.
@ 14
Got the same impression sometimes
Posted by guest , Sep 23, 2008 9:58AM
@ 11 Greenspan when his other personality is taking hold.
Posted by guest , Sep 23, 2008 9:59AM
All I read was prematurely. Then I spooged on my desk.
Posted by guest , Sep 23, 2008 10:01AM
how to raise money for the bailout.. sending out nigerian scamming email to everyone outside of the united states! i am sure people will fall for it!
http://nakedoption.blogspot.com/2008/09/nigerian-scammer.html
Posted by guest , Sep 23, 2008 10:01AM
@18...we all liked what JC had to say. We especially like what Bess has to say.
EP...eh not
Posted by guest , Sep 23, 2008 10:06AM
e.p. is smokin' hot sexy. I'll take her over Carney any day.
I want to foul e.p. with my evil seed.
Posted by guest , Sep 23, 2008 10:07AM
"Americans can always be counted on to do the right thing... after they have exhausted all other possibilities."
Old European.
You certainly seem to be trying...
Posted by guest , Sep 23, 2008 10:09AM
@7, you may be correct. Paulson may be the "right" one to do it, however, that is no reason for us to crown him "king".
Posted by guest , Sep 23, 2008 10:14AM
Btw, All the "old wall street guys" keep saying that this is occurring because they "messed with the market" and you don't "mess with the market". These guys are saying that some companies, at a time like this, have to go under and other "signs" must occur. They may be correct. The most ominous thing they are saying is that no matter what hank and the boys do, the market will do what i has to do and it won't be pretty.
Posted by guest , Sep 23, 2008 10:14AM
@Anal_Yst...
Are you still here? I have a question.
The Guy from Delaware
Posted by guest , Sep 23, 2008 10:16AM
I want to know when the Feds are going to go after all of the douchebag civilians who committed FELONY MORTGAGE FRAUD by lying on their phony mortgage applications, and the Mortgage Broker CLOWNS who abetted them, which is ALSO a FELONY. How about some restitution from those who were CRIMINALLY responsible, rather than just whacking their Wall Street enablers and innocent stakeholders?
Get rid of Mortgage Banking Commissions all together and we'll see less fraud. Get rid of FNMA and FHLMC and we'll see less political corruption.
Oh, and by the way Chris Dodd and Barney Frank also belong in Jail for what they have done. Why should they get a pass?
Posted by guest , Sep 23, 2008 10:17AM
they should add a provision to the bill which stipulates no more bearish reports from MW.
seriously, how many times can you cut #s?
Posted by StupidEquityGuy , Sep 23, 2008 10:26AM
I like MW... She has the ability to see the future, the balls to say what she sees, and the face that is harsh enough that you have to listen to her words because out side of JBL, she is safe from mental images that typically distract the male race.
~SEG
Posted by guest , Sep 23, 2008 10:42AM
Wow, watching CNBC. Liesman certainly is living up to his name. Mark Hanes is speaking for people who do not want to see Paulson have total control. Guess Paulson and Company have Liesman as their spokesman. That can't be good.
Posted by guest , Sep 23, 2008 10:54AM
"It seems pretty clear that, in order to do any good, the Treasury is going to have to buy assets at significantly overvalued prices."
Bullshit. Far from clear, at all. Repeating it like a mantra doesn't make it any clearer.
Posted by guest , Sep 23, 2008 11:00AM
EP,
I like your blog but the main problem is your anonymity. I know you have a day job, but you just can't blog anonymously anymore. We need to know who you are, where you worked and everything else. You have ZERO credibility.
I have read some of your blog in detail (e.g., Project Spy) and I have a hard time concluding that you're not a fake. The level of detail about highly confidential matters at your firm is so high that it would seem impossible that you haven't been fired or indicted yet.
Posted by ep , Sep 23, 2008 11:05AM
Funny, large portions of the Economist are published anonymously.
Sorry, I must decline your offer.
Posted by guest , Sep 23, 2008 11:07AM
Well, that's bullshit. The Economist has a masthead with names on it.
Posted by guest , Sep 23, 2008 11:12AM
Fuck this program - ben just said government will bay resaonble and as close to possible as "hold to maturity prices" - in otherwords way above market!
Hank and Ben are going to recapitalize banks and take their toxic paper off their hands - all at taxpayers expense.
Posted by guest , Sep 23, 2008 11:12AM
Well, that's bullshit. The Economist has a masthead with names on it.
Posted by guest , Sep 23, 2008 11:12AM
@ep
Loosen up on the prose. Way too much filler sentences.
Posted by ep , Sep 23, 2008 11:15AM
"Why is it anonymous? Many hands write The Economist, but it speaks with a collective voice. Leaders are discussed, often disputed, each week in meetings that are open to all members of the editorial staff. Journalists often co-operate on articles. And some articles are heavily edited. The main reason for anonymity, however, is a belief that what is written is more important than who writes it. As Geoffrey Crowther, editor from 1938 to 1956, put it, anonymity keeps the editor 'not the master but the servant of something far greater than himself. You can call that ancestor-worship if you wish, but it gives to the paper an astonishing momentum of thought and principle.'"
Posted by guest , Sep 23, 2008 11:20AM
Great news
Bernanke is going to pay way above market prices for MBS in fact they are going to pay close to "hold to maturity value". So the fed is going to recapitalize the banks by paying way above market prices for their toxic waste.
All on the taxpayers dime.
This will do nothing to aid the over all economy and merely add to the weakening US dollar.
Posted by guest , Sep 23, 2008 11:20AM
Great news
Bernanke is going to pay way above market prices for MBS in fact they are going to pay close to "hold to maturity value". So the fed is going to recapitalize the banks by paying way above market prices for their toxic waste.
All on the taxpayers dime.
This will do nothing to aid the over all economy and merely add to the weakening US dollar.
Posted by guest , Sep 23, 2008 11:24AM
@40 - It's a feat of remarkable hubris and arrogance to compare yourself to The Economist. Get real.
First of all, you're not a group of the best and brightest hashing out divergent views through rigorous debate.
Second of all, you are supposedly at junior-level exec at a private equity firm and not one of the most important financial periodicals in the world.
Posted by guest , Sep 23, 2008 11:25AM
riiiight, EP is like The Economist like Triple T is like KKR.
Posted by ep , Sep 23, 2008 11:32AM
Be this as it may, I am still going to decline your kind offer.
Posted by guest , Sep 23, 2008 11:50AM
actually, EP has less than zero credibility as she is a market participant that's talking her book without any transparency. Obviously not to be trusted.
Posted by guest , Sep 23, 2008 12:02PM
I just read Andrew Ross Sorkin's most recent column about Hank Paulson's power grab. To my shock and astonishment, most of what he said was very close to several posts I had put on Dealbreaker over the last several days. The concluding part about Venezuela came from another source.
Hey, Andrew, I want your salary and the chance to appear on CNN too! Quit cribbing my stuff!
Not only does Dealbreak contain tips about breaking news, it provides the same insight and analysis you can read under famous bylines in the NY Times several days later!
Posted by guest , Sep 23, 2008 12:05PM
Two corrections to the above: Second paragraph, I meant CNBC, not CNN. Third paragraph, I meant "Dealbreaker," not "Dealbreak."
Posted by guest , Sep 23, 2008 12:11PM
I think ep is witty. I like her. However, I do agree that her prose could be tightened up. I've gotten to the point where if I see her byline, I don't carefully read the post -- I skim it to see if there's any useful information, then go to the comments.
ep -- if you want to be read, you've got to cut it down.
By the way, when Carney was here, the abuse he got from the readership was unreal. I'm sure he's glad to know you miss him when he's gone.
Posted by guest , Sep 23, 2008 8:12PM
Piss poor writing.
EP, don't talk condescendingly to me about free markets. We're all in on the joke, you don't have to explain it to us.
Posted by stimpy tec , Sep 23, 2008 10:21PM
@50 not EP, did not read