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Dear Tim Sykes -
Seriously, take your right hand…bring your fingers in to your palm, now fold your thumb over. Tada a fist.
Now take that fist, and power bomb your own anus.
Sincerly,
Grandma Sykes
AFBIX.
@1 – That was amazing. Actually burst out laughing at my desk here. And no one laughs here. So it must’ve been special.
Hahaha!! Looks like the chicken-shit hedge funds are crying already and making impotent threats of law suits. Hahaha!!
What they continue to deny is that Uncle Sam can do damn near anything he wants, and once he is seriously on your case, you’d better capitulate sooner rather than later.
http://www.marketwatch.com/news/story/sec-bashed-over-short-selling-ban/story.aspx?guid=%7BFDC364F7%2D7BBF%2D4F48%2DA66C%2D01572807D287%7D&tool=1&dist=bigcharts&
I watched Bloomberg TV today, not CNBC. A man on there said that 1000 or so hedge funds will go bust before year-end. Why?
1) Because transparency is not their friend.
2) Black-box investments aren’t going to flush anymore.
3) Their sources of funds are drying up.
4) Clients aren’t going to invest with them without knowledge of risk.
5) Borrowing of shares for shorting will really have to occur.
6) Short positions having to be divulged defeats their secrecy.
7)Regulations are coming their way.
8) One day in jail for a hf employee who is arrested for a securities violation could wipe out client trust in an instant, and where would hf’s be without clients?
There are more, but I couldn’t write them all down, and I don’t remember them.
I know I’m going to love watching those thieving bastards scramble.
The Guy from Delaware
Forget all this noise.
The real issue is the whereabouts of Dick Fuld, and how Fuld became more universally despised than Carrot Top.
the chickens always come home to roost…
Fuld will be ____ within a year.
Now what goes in the blank????
Bess,
Thoughts on Carney having left?
@1…that was awesome. As unique a comment as i’ve ever seen!
the hedge funds are going to have to buy the investment banks or little banks to gain legitimacy.
Hey, How about someone start a bear run and naked short the shit out of BX, FIG and OZM. They aren’t on the SEC’s protected list.
Wouldn’t that be fun? OZM will be crying instantly to their masters in the UAE for more funds.
Hahaha.
The Guy from Delaware
http://www.fdic.gov/bank/individual/failed/ameribank.html
No one saved this bank! Where was Bald and Beard on this one.
@#9…
Does the Fed allow a criminal enterprise to buy a bank?
The Guy from Delaware
@12, yes.
Shaw, SAC, etc. Those guys wouldn’t get blocked from owning a botique.
TGFD…low even for you and you are a scumbag if we ever knew one.
SPODE
@12: The Fed is a criminal enterprise, so why not?
depressing week all around. Goodbye John Carney, we loved you. Goodbye Lehman, we loved you too.
Isn’t it possible to emerge from Chapter 11?
@17…yes. see airlines.
Monday should be a great day to short MF Global … if the regulators permit .. Kevin Davis has already lost 5 pints thru the asshole but .. according to the doctors , there may be 3 pints remaining
Could someone answer a question for a non-Wall Streeter?
I was wondering whether we will have any trouble finding buyers for the trillion or so in treasuries we will presumably have to issue to pay for all this. Isn’t it now completely obvious that this nation is going to have to deflate its national debt at some point? Not only is there no political will for tax increases, it seems to be a political imperative to propose new tax cuts every four years.
That being the case, why does it make any sense for the Chinese or whoever to buy our treasuries when they are likely going to be paid back with cheap dollars years down the road? Aren’t we going to have to raise interest rates on our treasuries to make them attractive to buyers? In turn, won’t that raise mortgage rates and hurt the housing sector we’re trying to help? Unintended consequences and all that.
Tgfd – you are why democracy sometimes scares me.
All the reasons that you gave for hedge funds to blow up are exactly the reasons why the fannie, freddie, leh, aig, and bsc all blew up. It is exactly the reason why the rest of the group are in trouble.
Hedge funds don’t pretend to be anything but high risk investments for high net worth clients.
Can you say the same thing about the common stock of AIG, LEH? Yet they used more leverage in the past 4 years than many hedge funds.
And to pile fact on your fiction yu may be suprised to learn that there are NO financial instituions in the top ten naked short sales companies. Sears is number one.
More fact: short sales as a percentage of float MS and GS under 4%. For reference purposes short sales as a percentage of float for GM and Ford over 25%.
@1 – YOU ROCK !
http://d.yimg.com/us.yimg.com/p/rids/20080910/i/r2743230565.jpg?x=400&y=262&q=85&sig=AIVtXA_uQeWtS1BCuQ75yg–
Can anyone tell me why this is on the front page of Drudge above the headline about the Dow being down 34 points on the week?
Do the people giving the finger to the fire represent the SEC telling black box investors and shorts to go fuck themselves?
is it the rest of the world watching the dollar crash and burn?
people who hate Tim Sykes?
the possibilities are endless…
#21, just read something on some imploding conservative’s blog where he/she quoted something from a reputable paper about how congress was interested in saving the car makers.
Larry Kudlow’s Goldilocks has been found.
http://news.yahoo.com/s/ap/20080920/ap_on_fe_st/odd_goldilocks_burglar
tgfd, you’re starting to piss everyone off. please go away.
just read this on michelle malkin’s blog:
from:
“The Mother of All Bailouts = The Death of Fiscal Conservatism
By Michelle Malkin • September 19, 2008 10:27 AM ”
“On September 19th, 2008 at 8:57 pm, unseen said:
On September 19th, 2008 at 5:00 pm, allrsn said:
history has shown that eveytime we bail some industry out of it self created problems-the problems get worse. Its time to get rid of the RINO’s. Its time to let business know there will NEVER again be a bail out. We come ever closer to socialism!
I wish people would study history. We bailed out Chrysler and the taxpayers made money off the deal, we bailed out the Savings and loans and the taxpayers made money off the deal. The taxpayers are getting 11.5% interest on that 85 billion loan to AIG plus 80% of the company. Iw ould call that a great deal. These CDO’s and bad MBS that the gov are going to buy from the banks will most likely end up making money for the gov. The gov can hold these assets for the life of the loans they do not have to keep capital against the asset. They don’t have to worry if some of them go bad. It places a price and makes ALL the other MBS’s liquid thereby enabling a market to form for them. Instead of the vaule going to zero there will be real property behind them and vaule. this is all a plus to the taxpayers. As far as the bailout if a depression comes most people on this board saying no to the bailout will be the first to request aid. A depression means 25-30% unemployment. do you think your job is safe? If you lose your job can you continue to make your payments with no income? what happens when your life savings disappear due to fear on Wall Street. Will you be one on the soup line or going hungery as farms lose their farms. A depression is very very very bad do you people get that. this isn’t a game. this will impact 10 100’s of millions of people. you think this bailout is to save some people on Wall Street. this bailout is to save you the avg citizen from financial ruin. you think that your credit card would even be accepted if this bailout didn’t come? would you rather have to carry a wheelbarrow full of dollars to the store to get a loaf of bread? America has been pampered too much. They do not have any idea what is waiting once the gov stops the bailout. financial ruin the likes no one as seen. Death and starvation. Do you get it now?”
http://michellemalkin.com/2008/09/19/the-mother-of-all-bailouts-the-death-of-fiscal-conservatism/#comments
@26…fuck off. it’s the weekend. go have a drink, take a bath, plug in a toaster, and drop said toaster into tub with you.
You can leave now.
YouRock@#21…
Democracy scares you?
“All the reasons that you gave for hedge funds to blow up are exactly the reasons why the fannie, freddie, leh, aig, and bsc all blew up. It is exactly the reason why the rest of the group are in trouble.”
FYI, the big difference between the hedge funds blowing up and the others blowing up is that nobody, including the Fed, SEC, and Treasury, gives a shit about the hedge funds. Everybody wants them to blow up; everybody except a handful of clowns on Wall St, who of course are of no consequence.
“Hedge funds don’t pretend to be anything but high risk investments for high net worth clients.”
Exactly the reason nobody gives a shit about the hedge funds.
“More fact: short sales as a percentage of float MS and GS under 4%. For reference purposes short sales as a percentage of float for GM and Ford over 25%.”
You sound like Cox at SEC before he saw the light. GM and Ford make a product and aren’t entangled in the US & world financial systems the way GS/MS are. A failure at GM or Ford would not shut down the system. People would just buy another brand of car.
BTW, GM and Ford also have some very hard, brick and mortar assets that are worth something so they can’t go to Zero. What does GS/MS have? A couple of buildings stuffed full of paper and infested with a bunch of overpaid shitheads, some confident clients, and a reputation. A bear raid on them destroys the reputation, and there go the clients. What do they have left? The buildings, the shitheads, and the paper. Oh yeah, I almost forgot. They still have the debt too.
“Sears is number one” on SEC’s list.
This one gives you away. Sears Holdings is a very large financial institution.
I was doubting that you ever even went to a B-school. The Sears thing really convinced me that you don’t have a clue and that you don’t appear to have any good sense either.
The Guy from Delaware
@28: “BTW, GM and Ford also have some very hard, brick and mortar assets that are worth something so they can’t go to Zero”
They also have way more debt and pension obligations than those assets are worth, so there’s no question the equity is going to zero.
Next.
The Guy From Delaware @#4
You have quite accurately summed up not only the hedge funds, but also the proprietary trading desk at every investment bank such as Goldman, MS, Merrill, JPM, etc.
I know the American public’s grievances towards the Wall Street type. But don’t forget, the short sellers are only shorting financial stocks because they have no clothes!!! They are waaaaaay undercapitalised and all will go belly up without government intervention.
I don’t blame the hedge funds for trying to make a buck (don’t forget numerous hedge funds have gone belly up in the last 24 months because they made wrong bets). You live by the dollar, die by the dollar.
You really should apportion most of your blame towards the Wall Street CEOs and regulators that allowed this crisis to happen in the first place. It is the total lack of effective regulation and oversight that got us into this mess. The politicians up on Capitol Hill are using the hedge funds as scapegoats for their own failure. Don’t get blindsided by these politicians who get millions of campaign donation from Wall Street.
The ultimate irony maybe that the treasury and the Fed might really squeeze the hedge funds out of the business while letting the Wall Street investment banks off the hook and resume their old corrupt ways.
hey guys, is there a Hank Paulson merchandise shop?
In Dealbreaker index news–
Ron Blarney posts: down 98.5%, halted
Bess flaming commenters: up 10%
Equity Private warm welcome: down 22%
Schwarzman crab-hands pics: up 48%
ShamWOW references: up 2%, up 563% YTD
Asian rice reports: down 42%
Stevie Cohen cock-worship: up 6%
Weisenthal Opening Bell typos: up 67%, curbs in.
Proshares Ultrashort Yahoo posters: down 32%
NY Times Breaking News 9:54 AM ET:
Financial Bailout Proposal Puts Cost at $700 Billion; Would Raise Debt Ceiling to $11.3 Trillion
@ 30:
“You really should apportion most of your blame towards the Wall Street CEOs and regulators that allowed this crisis to happen in the first place. It is the total lack of effective regulation and oversight that got us into this mess.”
That’s somewhat reasonable, particularly in terms of failing to properly hedge risks. But you really can’t forgo blaming the American house-buying-citizen. The ones who failed to get properly educated on, or even bother reading the specifics of, what is the biggest financial transaction of their lives.
Your POV sounds like the far too common idea that somebody should always be looking out for you. As in, “If I couldn’t afford to buy that house Dick Fuld shouldn’t have put into place a way for me to get the loan.”
OffTheHook@#30…
Thank you for your insight; however, I remain with the vast majority of Americans: “Hedge funds are to blame” for the recent debacle.
Slobs like Cohen have the skills to manipulate markets and to throw accelerant on an already raging conflagration. When that conflagration seriously endangers the entire financial system, when people’s life savings vanish, when money markets are collapsing, and when we are staring into an abyss, why should we care about Cohen’s f’n right to short? I’m certain that about a million people would gladly kill him if they new who he was.
Moreover, desperate measures have been taken. I hope that Wall St I-B’s don’t “resume their old corrupt ways.”
Things are coming to pass as I predicted on DB a few months back. Look for a new uptick rule and for a new Glass-Stegal Act. Banks and brokerages won’t be co-mingling funds for too much longer. When I heard someone on TV say that an MS/WB merger “would give MS access to $Billions of WB depositor funds”, I knew that Glass-Stegal isn’t too far off. Also, MER and BAC will have harsh restrictions on use of Depositor funds. I would count on that.
Your financial theories tend to break down in extreme environments. When 3 $Trillion vanishes from the US economy in just a few days, something isn’t working right. The SEC yanked a big piece (shorts) out of that financial-theory, money-moving machine, and the machine stopped. Things are now returning to stability. A new, redesigned piece will be put back into said machine, and we’ll see how that works. If it starts to go berserk again, we’ll stop it and put in another piece.
The govt is generally not so financially skilled as the pros on Wall St. The Govt has great power and authority, though, and I’m thankful that we have Paulsen in the Treasury. He has Wall St’s skills and knows how the Wall St crooks function.
I care a whole lot more about the finances of the people of this country that I do about the finances of Wall Street’s workers and the fortunes of Wall St’s thieves.
@#33…
I read that in Wilmington’s News Journal this morning. It went to press sometime late Friday evening; the paper was delivered at 4am today. Where have you been?
The Guy from Delaware
http://jobs.alleyinsider.com/job/0bb909b361df7ded42b7ec36dee3f75c/?d=1&source=site_home
Carney are you moving to San Fran?
@ TGFD beinging to doubt your literacy abilities.
My point about hedge funds vs. financial instituitions was that they have been operating in the same manner for a number of years with the blessing of the SEC. At least hedge funds don’t pretend to be anything but high risk. Banks have been pretending for years that they are acceptable investments for main street when in fact they really are not.
As for 1000 hedge funds blowing up – and everybody being happy. Do you actually remember LTCM and the consequence of that blow up?
As for short sellers being the reason why financials are dying – i was merely trying to point out that the facts son’t suppost that premise. But apparently you don’t let facts interfer with your conclusions.
As for SEARS that point was about naked short selling. Again the premise is that naked shorts are driving financials into the ground. The facts are that of the 702 protected stocks on the SEC list “banned short list” none appear in the top ten most naked shorted list.
The only reason that sears exisits right now is because a hedge fund bought it in 2004 (eddie lambert). Otherwise it would not be in existence. But again don’t look at the facts. FYI – sears hildings was not deemed a big enough financial institution to be included on the SECs banned list.
As for short sales driving the financials into the ground. How can that be when less than 5% of the companies floats are actually being shorted. The answer is that short sellers are NOT the reason why MS and GS were off so much this week. It was fundamental long sellers who were liquidating positions. But again don’t let facts get in the way of your conclusions.
Finally as for GM and Ford both are basically bankrupt and in need of a bailout. One of the reasons that they both have such large short positions as a percentage of thier float is because of all the convertiable debentures they have outstanding. But again don’t try and understand the hundreds of reasons a companies stock may be shorted just go with the simple black and white answers. Even when you back out the convertiable debs, they still have larger short positions than GS & MS and nobody is suggesting that short sellers are the reason for their demise. Everyone knows is is because of incompetent management and horrible product lines.
Finally as for you conclusions re Ford for GM and Ford shutting down not having an effect because we can always buy another brand of car. That is just stupid. They may not have the same effect on the world financial system as AIG – but get a clue. Probably put directly 400,000 people out of work and indirectly 1 milllion.To say nothing about driving housing prices in Michigan to zero. Don’t forget that all those with pensions would now be at the fed looking for a hand out.
You have your opinions – great. But you might want to let the facts start to inform you opinions. Or perhaps not, just hold fast to you simplistic black and white views of the world.
ps – do you still believe that their are WMD in Iraq? do you still believe that Iraq had a part to play in the 9/11 attacks?
Good luck with Sarah Palin. In your world is she not the best VP candidate ever?
YouReallyShould@#34…
“But you really can’t forgo blaming the American house-buying-citizen. The ones who failed to get properly educated on, or even bother reading the specifics of, what is the biggest financial transaction of their lives.”
It is sad that you continue wanting to blame the ‘ignorant’ home buyer for the credit crisis when you must know that a column of numbers or long division scares the hell out of most americans. Like it or not, that’s how it is.
The whole system is based on trust, and when trust is abused, the system breaks down.
On one end, the buyer trusted the mortgage goon. The mortgage goon new the buyer was shakey, but he also new that Wall St would buy the mortgage. Maybe he thought Wall St new what they were doing, but more than likely he also was a greedy, unscrupulous jerk.
On the other end, the bag-holder investors trusted the AAA ratings from Moodys/Fitch/S&P, and the rating agencies trusted the clowns from Wall St who presented turds in a guilded bag for AAA certification. There probably were some underhanded deals here too.
In the middle is left the thieves of wall Street. They created and marketed the complicated, cutting-edge, structured investments we now know as toxic subprime debt. This is where nearly everyone is correctly placing the blame.
To bring things into focus for you, and to help soften your stance against the ignorant homeowner, I am including below a brief excerpt from my “Treatise on Women”, a work that is still in progress. It may also help you understand in part why I am so popular with the ladies.
Here is the excerpt:
—————————————————–
What I find most distressing on db are the cruel comments about “the little people, the ignorant, the dumb, the uneducated, the 50% fat, the poor”, and my personal favorite, the “pear-shaped” women. Why do they deserve your scorn, your arrogant condescension? What did they do?
Weren’t they little girls once? Didn’t they have thoughts of pretty little dresses, of tea parties, and dreams of being a ‘princess’? Although the place they lived would hardly befit a princess. And where are they now? Decades later they see the lines, the wrinkles, the fat, the near hopelessness. They may have little ‘princesses’ of their own. Their husbands may be worried about losing their ‘menial’ jobs. Money is tight. There may be health issues, problems with alcohol, problems with abuse. Their teeth aren’t so nice any more. They can’t afford dental care. They don’t smile much.
And they’re not very good at math.
They listen to someone in a position of trust, a bank loan officer, a mortgage goon, or to some other bad actor in this dismal drama. “You can do this, now is a good time for you; prices are going up, you can build equity; I’ll do the paperwork, I’ll help you refinance later.” “Can we really; a home of our own? And with a yard, a place for the girls to play; we can have cookouts. I can plant some flowers; I love flowers.”
And so, the second act closes.
Now we are into the grim third act, the one that doesn’t want to end. The light of her American Dream has been extinguished. The nightmare ensues. Her husband’s job is shaky; maybe it’s even gone by now. Bills lie on the kitchen table, unopened and unpaid. “What will we do? How can we pay?” That mortgage goon is gone too, his office empty. There’s no equity either; there never was. “How could this happen? Where will we go?” The girls are fighting. The foreclosure man will be there soon. We can almost taste her tears.
I know you can’t help these people, but a little compassion for them, a little sensitivity to the difficulties they face might be nice. And no, I’m not a Liberal.
—————————————————
You have a lot to learn, my friend.
The Guy from Delaware
#34 and TGFD
You are absolutely right that consumers out there should know their limits and should NEVER overextend themselves.
But we also need to be realistic about the general population out there. Not all of them are well educated and are easily persuaded and susceptible to unscrupulous marketing and selling practices. That’s why we have legislations in place to protect consumers from predatory behaviour and from themselves.
I absolutely think it was a case of gross failure in the system, no doubt about it. Greenspan left rates too low for too long. The credit markets exploded and cheap loans were available to everyone and at such a unprecedented scale. The politicians heralded a new age of the American Dream where everyone can own his/her own property. Nobody cared or bothered about the consequences. Everyone saw his/her neighbours getting a new kitchen put in and/or a new pool and/or a new SUV. House prices were on a constant upward trajectory that defied gravity, until April 2007…………….
I still think the regulators in general, no matter how ill-equipped they maybe, are in an cosy relationship with those they regulated. Most regulators adopted a “hands-off” stance until the excrement hits the ventilation as another blogger said. We are seeing the aftermath of it and we are all paying a heavy price.
$3 trillion vanished in a week ( though half of that have returned after Hank’s rescue plan came out) but that is because investors decide to pull money out of US stocks and also due to short sellers.
I agree the Glass-Steagall Act must be re-enacted and modernised to deal with the current challenges we face. But I bet my not insubstantial bottom on it that the politicians do not have the courage to do it because it might endanger many universal banks on Wall Street today. Citi, JP Morgan, even the pre-Merrill Bank of America will have to be dismantled. If the government is serious about re-enacting Glass-Steagall, they would not have let Merrill be bought by Bank of America.
That much I know
Yes, I drank the Kool-Aid
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@39 here
I forgot to mention the roles played by the ratings agencies in this financial metldown.
Hank must have struck some deal with them regarding MBS ratings in order for the agencies not to have put MS on watch.
LiteracyAbilities@#37…
“The answer is that short sellers are NOT the reason why MS and GS were off so much this week. It was fundamental long sellers who were liquidating positions. But again don’t let facts get in the way of your conclusions.”
Answer me this, Why were Monday thru Wednesday huge down days for GS & MS, Yet after the shorts were cut off at 12:01am thursday, Thursday saw a recovery of GS/MS and then after Paulsen’s announcement, the stocks really took off after 1 pm?
As I said in an earlier post, GS/MS have nothing to hang onto other that clients and reputation. They had good earnings, yet they crumbled. 4%?? shorts hurt them terribly when a lot of people were watching and when word got out about the shorts.
Please quit hanging on to your theories and to your statistics. They really don’t show what happened. Frankly, I don’t believe you. Neither do a lot of other “experts” I’ve seen on TV.
The Guy from Delaware
My appreciation goes out to most all of the db posters on this thread beginning with #29 at 12:30 last night.
I’ve enjoyed the collegial atmosphere here today, and as usual, I’ve certainly become better informed.
Thank you.
The Guy from Delaware
p.s. TGFD has left the building
p.s.s….
@#40 must be mimicking our long windedness today.
The Guy from Delaware
Can someone tell me?
1) Why did Fed not let goldman and morgan go under?
2) How come one can create the mess, sell the mess, then make money by shorting the mess and when you get caught it in it, call your friends (cox) for a timeout by banning shorting of the financial stocks?
Well played Paulson…now I feel better..if you were smart you would LBO’ed GS with your T bill cash..in Jan 2009 when your term expires..now you will just get grief from everyone..
they’re serious going to call this program TARP (troubled assets relief program)? Calling Admiral Ackbar…
@42
Wow TGFD, you’re stupider than I thought.
MS/GS dropped strongly from Mon/Wed because the market has lost confidence that these 2 companies have the ability to continue their short term financing especially when the cp market seized up when the money market funds broke the buck. The TBill 3m yield was close to 0%.
It was not just the shortists but the existing shareholders. They suspect another AIG liquidity crisis and hence they sell/liquidate.
Also, if you had actually looked beyond the rosy figures by MS, you’ll actually realize that MS is the most leveraged bank on the Street (30:1) and their Level 3 assets have increased from 6% to 8% this quarter. Could you blame the market from sensing a forthcoming disaster?
The reason for the recovery on Thurs/Fri is the perception that Paulson’s rescue plan will lift the financial sector from the doldrums and that banning short sales would prevent a further slide on the financial stocks. That perception/expectation naturally brought back a lot of confidence in the longs and hence, the resultant market rally.
Using your blatantly retarded theory, can we also conclude that the non-financial stocks, which also rallied strongly on Thurs/Fri, have been shorted into oblivion by the evil hedge funds.
Get a clue farm boy. This is Wall St bitch. You don’t belong here.
FarmBoyBitch@#47…
Thanks for adding all the gingerbread, genius.
“that banning short sales would prevent a further slide on the financial stocks”.
The ban on shorts worked and will continue to work. Stick your analyses up your ass. Nobody’s listening.
And contrary to what you arrogantly imagine, I belong here as much as you do.
Incidently, Wall Streeters fucked Wall St up, and others from outside are going to un-fuck it.
Get a clue clowm. This is Wall St, candyass. You my find soon that you no longer belong here.
The Guy from Delaware
@TGFD
http://www.nakedcapitalism.com/2008/09/ban-on-short-selling-will-hurt-rather.html
@1 – your a f*ckin’ poet!
Being this is the first weekend in 9+yrs on the street I have worked, I have had time to think about more than usual…and this site is the most encouraging thing out there.
When Rome fell, most citizens in the city of Rome did not work but just entertain themselves (fights at the Colliseum and such)…two things are main attributes to the roman civilization’s failure: the decline of its currency and general decadence. We are currently witnessing both in our ‘civilization’. The fed is raping our currency to avoid a ‘recession’ which is certainly a part of the normal economical cycle. Time to pull the punch bowl away and really suffer the hangover. And to the second, decadence. Our society is certainly showing signs of decadence…our congress is more worried about gay marriage and steroids in baseball than real issues. Our media would rather cover Lohan and Paris Hilton than real issues. It is now being forced to the forefront but I am sure the American citizen will find something else to occupy their minds with than the real issues…It is not encouraging.
That is why I love this site…the people on here do pay attention, they do have opinions, they do get angry! Long live DB! Thank you and yes, Carney will certainly be missed…
link@#49…
Thank you for the link to the Naked Capitalism blogsite thread. I was unfamiliar with NC.
I read the article several times, and I got into the posts too. Just too many to read.
What I gather from the article is the author’s fear of hedge fund and broker/dealer failures and his desire for a return to the uptick rule.
I’ve advocated a return to uptick, and I’ve been slandered by many on db for saying so.
I would not mind seeing hedge funds fail at all. That must be what Uncle Sam and the public want too. HF proliferation over the past decade has been accompanied by one financial crisis after another. I wonder if they’re related.
Uncle Sam yanked out a big link from that “tightly-coupled” financial chain that is Wall St’s money-moving machine, a machine that has become very loud and dangerous of late. The machine has quieted down now and slowed down as well.
We’ll see what happens.
I’m not ashamed to admit that I don’t fully understand the author’s concern about the broker/dealers. I’ll have to read more about it. I guess we’ll see what happens to them too.
Thank you again for the link.
The Guy from Delaware
@TGFD
#49 here.
The main point brought upon by the blog was that the SEC in trying to help the investment banks by banning short-selling, indirectly hurts them
- inability to short sell will hurt the banks’ brokerage business (less revenue, lower stock price)
- abrupt short sell ban may trigger widespread hedge fund explosions, which would hurt the banks who finance these hedge funds (increase in bad debt)
- widespread hedge fund explosions/redemptions may exert new stress on the financial system (think: many mini LTCM bustups happening concurrently)
- short sell ban has caused new problems in other parts of the financial system (eg. inability to short sell will reduce bank’s ability to raise funds via convertible debentures since most buyers need to short the stock to hedge)
The author used past examples of the Fed’s actions to illustrate the unintended consequences:
1) Congress raises conforming limits on Fannie/Freddie to help unfreeze the mortgage market. Result: agency spreads skyrocket, bringing down Bear and a host of hedge funds. Mortgage markets still remain frozen.
2) Fed opens TSLF to unfreeze mortgage market. Result: Carlyle goes bankrupt as people rapidly arbitrage the difference between holding MBS in firms that can and can’t access the new credit facility. Mortgage markets remain frozen.
As for the uptick rule, the reason why the DB readers denounce it is because several academic studies have proven that it is of no significant impact.
Here’s a follow up to the first blog post:
http://www.nakedcapitalism.com/2008/09/hedge-funds-taking-pain-from-government.html
Note the spike in agency spreads and bankruptcy of Carlyle helped precipitate the run on Bear.
So I’m watching a movie on AMC tonight, and who do I see advertising back to back? Morgan Stanley, touting their financial advice and acumen, followed by WaMu, speaking of their great service and low fees.
24 hours after getting bailed out, they’re on the air advertising? How do you spell “chuztpah”?
And let me point out once again that it was the SEC in 2004 that allowed % investment banks an exemption to the 12:1 debt to net capital ratio.
Thus the levergae that is ultimatley bringing down these banks (40:1) was blessed by the SEC. As you can guess of the five companies given this exemption only two survive as of today.
IMO the witch hunt for short sellers is to avoid looking at the SEC, rating agencies and the actual management of the these companies.
As long as we buy into this theory of “evil short sellers” we legitimize their scapegoating and avoid looking at the real problems.
How about the CEO of BSC going on CNBC on the wednesday and saying everything is great when he knew it was not (prime brokers pulling accounts right left and center. Fannie and freddie, everything is great until we find out that freddie was under captialized and they moved realizing their past due accounts from 90 days to 2 years.
Of course there were the occasional abusive short sellers. But there malfeseance cannot hold a candle to the SEC, rating agencies and senior management at these financial instiutuions. The ceo of Freddie Mac made $20 million last year for what – cooking the books?
@54
c-h-u-t-z-p-a-h
@56, thanks, I’m a WASP
@40, too long, didn’t read
Paulson is asking for “above the law” powers to buy MBS, CMBS, and all other toxic crap. His plan is NUTS!
He is effectively asking the American public to trust him with his new $700billion Black Box. We will have no clue how this fund is administered and congress will have NO oversight. Great!!!
Perhaps Paulson does not want to reveal to the public the true extent of the problem and the kind of Chernobyl toxic crap on the balance sheets of banks. But I thought this was like going to Alcoholics Anonymous (you know…..Once You Admit It, You Can Overcome It).
I would not be surprised that He and his cronies uses the $700billion to bail out his cronies on Wall Street.
Fidel Castro would have blushed at what Paulson is doing.
WHICH PLANET, SERIOUSLY
The one where overnight Libor reported high of 6%?
The one where WSJ reported this week that overnight Libor this week remained at 3%?
The one where SEC banned all short selling?
The one where WSJ this week reported SEC banned 799 shorts?
The one where FED banned shorting on just Financials?
The one where FED raised $40 billion last week, TV.
The one where FED raised $8 billion last week, reported
The one where FED raised (special announcement) through Treasury Cash Mgmnt Bills totaled $155 billion, see TIPS auction results
http://dealbook.blogs.nytimes.com/2008/09/21/goldman-morgan-to-become-bank-holding-companies/index.html?hp
“In one of the most sweeping changes on Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night.”