We are huge fans of William Ackman (call us, please?) and Pershing Square Capital. So, it will be no surprise to you that we loved the panache of his “open source modeling” move to make his short-case for MBIA. So, why not open source fiscal policy? I mean, how much confidence do we really have in the Treasury and the Fed at this point? So how much could it hurt if Murray Stahl publicly airs the “Stahl Plan” on CNBC?
The Stahl Plan 10-9-08.pdf
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
too first, didn’t read
Why not have the US govt guarantee mortgage *payments* to banks? This would be a temporary thing for a couple years, only on existing loans, and the banks would be regulated until they bleed.
“Why not have the US govt guarantee mortgage *payments* to banks?”
Fik. Talk about a recipe for disaster.
Can the Treasury insure the settlement of the Lehman CDS auction for a fee?
Take on all of the counterparty risk for a few cents on the dollars?
Good find EP.
@4, read comments under post “Halloween Comes 10 Days Early This Year”
Also, the treasury isn’t an insurance agency. The “roles” of these institutions are starting to grow and bleed into each other, and that’s dangerous: any time government grows it is permanent.
-phobos.
Is this what Monday has in store??
http://upzero.com
I just came across this at CR. I agree. It is a classical fear/hope to get stock from public, and a do a mark up.
Excerpts:
Facts and truth about “..system on edge of collapse”
Read the facts/truth at article below.
http://marketwarnings.blogspot.com/2008/10/financial-crisis-ifm-warns-system-on.html
Plan would be more credible if it wasn’t coming from someone more than ~60% year to date.
EP you need to get “Laura the Debt Bitch” on here to lay the law down with the up-zero and marketwarning guy.
:P
speaking of blasts from the past (blog). Are you not doing private equity anymore if you’re here full time? Doesn’t that mean you have to change your name?
Bankathon, like Jerry Lewis, its time has come… http://www.bankthon.com/?c=us
Vote for mine. It’s the funniest.
http://www.bankthon.com/view.php?c=us&id=249
SPODE
Why don’t we actively lobby for:
“The Concert to Retire ALL World Debt”
Start with McCartney and work form there. If you not in it, you’ll be sorry. Can’t we rent some guys farm somewhere and just got for days until we have the money? then we put out the CD and the T shirts, making sure we have a great sure with Dr. Evil and Mini me and then just keep it going. Of course, the marketing has to be done by Disney.
Sorry for the typos, but the wine is great.
Just in time for the holidays! Unilateral power with no mechanisms for checks and balances necessitated by a manufactured series of crisis is the pattern I am seeing over the last decade, and it is accelerating. http://tinyurl.com/4ofhre
Just in time for the holidays! Unilateral power with no mechanisms for checks and balances necessitated by a manufactured series of crisis is the pattern I am seeing over the last decade, and it is accelerating. http://tinyurl.com/4ofhre
ALL OF YOUR BANKS ARE BELONG TO US. Full bank nationalization in the US and Continental Europe by Thursday. Bank holiday tuesday and wednesday, you wake up on thursday finding out your bank is owned by your friendly government on Thursday.
@13, this is a great idea. Maybe a concert of this magnitude will be the trick to reunite Axl and Slash.
On Friday night, America’s chief accounting body, the Financial Accounting Standards Board, revealed that it would suspend the mark-to-market rules to take account of extreme market conditions. Institutions will be able to use their own estimates of an asset’s worth instead. The move follows pressure from the US Securities and Exchange Commission.
In a “position” statement, the board said: “In determining fair value for a financial asset, the use of a reporting entity’s own assumptions about future cash flows and appropriately
risk-adjusted discount rates is acceptable when relevant observable inputs are not available.”
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4926316.ece
Why isn’t this really being reported?
ALL OF YOUR BANKS ARE BELONG TO US. MORGAN STANLEY IS NOW PART OF THE US FEDERAL RESERVE BOARD
Is there any rule or regulation that is not being turned upside down? Whatever happened to reliance in the rule of law?
“On Friday night, America’s chief accounting body, the Financial Accounting Standards Board, revealed that it would suspend the mark-to-market rules to take account of extreme market conditions.”
This is fucking bullshit. Selling tomorrow to pay for today. Accurate financial statements will be another item we will lose faith in. I’m sure the Big 4 are on their knees right now thanking God for this lottery ticket. Fuck the Big 4 they already put their ass in a sling and balls in a vice when they signed off on last quarters financials.
FUCK THE FASB they’re only making things worse in the long run. How can you have efficient markets and price discovery when the rules are constantly changing? Institutions and their forensic accountants will sniff out the shit and smart money will exit leaving the little guy who does not have this resource out in the cold holding the bag of shit. I have a real fucking problem with this.
SPODE
That spreadsheet from Ackman’s group is out of control! I’ve done my fair share of models, but never have I seen an xls file that’s 125MB and takes 10 minutes to open and calculate initial values.
Here is the text of the fasb statement;
http://fasb.org/pdf/fsp_fas157-3.pdf
@19 – agree that this has been underreported, but i wonder if – at least by its terms – the statement does not mean a significant change in the rules. I thought this was always the case when there are no observable inputs. Would be curious to hear an accountant’s take on the changes. The Times article that describes the change as a suspension of mark to market seems to be an overstatement of what they are doing here.
There are observable market quotes for these assets now. Just because special interest groups don’t like the price doesn’t mean we should relax the rules to benefit the few at the expense of the many.
Sign error in Ackman’s spreadsheet makes it completely wrong. See if you can spot it.
“How can you have efficient markets and price discovery when the rules are constantly changing?”
That is what everyone, and I mean everyone is saying and why no one wants to be the first person to jump into the pool.
“FUCK THE FASB they’re only making things worse in the long run. How can you have efficient markets and price discovery when the rules are constantly changing?”
with you 100% man
What is going on with Morgan Stanley? Why are all the news wires so quiet? Is Mitsubishi renegotiating? Are they going to give them a huge credit line as well? By them whole? Is Treasury investing? Charlie Gasparino!!! Where are you?? WE NEED TO KNOW!!!
Okay, so which one have we decided on? Some journalist somewhere please report on this.
1) mark to market
2) own estimate of asset’s worth
3) hold to maturity
Geez, I’m thinking this whole situation could be like a giant Money Pit. Only it’s not tom hanks and it isn’t funny anymore.
Todays reality/nightmare/rumor…
Lets see if I have this right, we have England adopting Columbus day holiday now, with their version of a possible market holiday…
Germany is now talking about the Mother of All Bailouts for Euro Banks… 500 Billion is the current guesstimate…
Stammering Hank is going to buy junk from US banks… ah fuck it, he is just going to give them cash now…
Morgan Stanley has more cash then market cap, if the deal closes…
Banks are now allowed to use Mark To Myth for their accounting and this is going to bring back confidence in the system.
SAC has tossed in the towel for 08… This one is the weirdest one yet… We appear to be near a bottom or worse this is about to get really ugly…
Liquidity in the equity markets is now going to start to get worse, which will give us the pleasure of testing out the trading speed bumps…
Hummmm…. time to exit stage left and watch the rest of the show from the sidelines…
@30 there is no difference between #2 & 3. mark to maturity is bernanke’s euphemism for mark to model.
@SEG
We are no where near a bottom. SAC and their pack of fags are seldom wrong.
the 300-400 billion € from germany are just for german banks, not for euro banks. It is said that every country has to bail out its own banks.
100 billion are for equity injections, the rest for credit guarantees, Handelsblatt sources say.
@34 -> SAC and their nancies are wrong enough that they gave up when vol has never been higher (a real hedgies wet dream)
Keeping with the spirit of this thread, I’ll revise my plan for Treasury. I’m sure Kashkari and the rest of Treasury read DB hourly, but in case they miss it, does anyone have his email address?
Before the markets open, Paulson should announce a $5-10B preferred (redeemable, ~8% div) in each of the major banks, more or less in proportion to where their CDS’s are trading, something along the lines of:
BAC, C, GS, MS: $10B
STT, BK: $5B
JPM, USB, WFC:
I guess two other things we need (along with #37) is to see the MUFG/MS deal go through on substantially similar terms (it’d be even better if MUFG added some extra cash for a bigger stake), and some consolidation in the regional banks.
If I were Hank, I’d also be on the phone with the relatively healthy banks (like PNC) and offer to support them purchasing smaller banks at a premium (like NCC). Treasury could promise support for the capital raise and could offer a handshake agreement to take some troubled assets with the TARP.
Once we see some strategic M&A activity, I think a lot of private investment will jump on board.
There really isn’t a lot of time to waste in enacting a plan like this. I don’t think the Treasury Secretary can allow the markets to open absent some tectonic news.
Combined with capital infusions by the Germans and British, this would be a big deal.
From Ackman’s letter, Footnote 1:
This model is quite large – approximately 110mb. Each recalculation of this model on a typical workstation – 3.4GHz Dual Core Pentium D with 3Gb of 800 MHz FSB DDR2 RAM – benchmarks at 25-30 minutes. We run this model on an advanced workstation – twin Intel 3.16 GHz Quad Core Xeon X5460′s (a total of eight cores sharing 2 x 6MB of L2 Cache on a 1333MHz front-side bus) with 4Gb of 800MHz DDR2 ECC SDRAM. Recalculating the model on this advanced workstation takes approximately 45 seconds.
Guess I won’t be playing with the assumptions on my thinkpad.
Bill Ackman can suck my dick all day long.
Jim Cramer calls it right again.
Markets on a second, coordinated rate cut before the market opens tomorrow?
@41 — I think it would be yet another signal that they’ve truly lost control of the ship.
Direct equity injections on a massive scale into the financial institutions is the only way to go. Though I wonder what the side risk is to institutions who aren’t “favored” and get their nose in the trough.
In the bigger scheme of things, the ship can’t be saved. You can’t bailout debt holders by issuing more debt to purchase the debt, or purchase equity to force the lenders to issue more debt.
That being said, I don’t underestimate Bernanke and Paulson’s resolve to re-inflate the economy. They’ll do so by any means necessary, and that is the safe bet.
It will be a monumental, yet tragic accomplishment if they succeed in putting an artificial bottom in the housing market. It will be tragic in the sense that it will prolong what could have been a quick yet painful price discovery in the real estate market.
I have been saying for the past 4 days that next week banks would be nationalized. Well, guess what, Today the UK announced they will own 70% of HBOS and 50% of RBS and probably around the same percentages of Lloyds TSB and Barclays. Tomorrow they will have a bank holiday and Paulson will announce similar plans for the US.
ALL OF YOUR BANKS ARE BELONG TO US.
Stock Exchanges are open tomorrow.
Banks are closed, as always, for Columbus Day.
#43 all your banks are belong to us = genius
@44, banks are open in the UK tomorrow. But the plan will be announced either later tonight or early tomorrow morning before the European markets open. Banks will be shut, in order to stop a run. Check FT.com or Times
tick tick tick…
MS better hurry, only about 8 hours until Asian markets open
@30, @33 – Mark to market is ridiculous. Over 70% of the so-called sub-prime mortgages are still performing, but they are only fetching 15 cents on the dollar.
The market is scared, and these values are clearly out of line. When your assets lose 5/6 of their value, it’s hard to stay solvent.
If GM merges with Ford, it could be called “MoFo”.
According to Bbg, Tel Aviv (coming off a 4 day holiday) is down only about 2% after being down 8+% earlier.
I just saw a HOOVERVILLE outside. :-(
Get Hoover out and elect FDR
#42. the problem is, most people only have the profit for the sale of their home to retire on. If the profit drops or becomes non existent and you still have to pay off the mortgage, then many baby boomers will be in serious financial trouble. So much so that your parents may have to live with you. (you meaning not you in particular, just the general you)
Liz Trotta on fax tells media to “man up”
Branson says that Virgin airlines was almost raped by HBOS locking down their working account.
This type of story has to put a hot poker in the wrong place for CEO’s who are running successful public company’s, but who have not diversified their own cash management risk issues.
http://uk.biz.yahoo.com/11102008/140/hbos-crisis-nearly-wiped-virgin.html
The multi billion dollar margin call at CHK last week is another example of a CEO risk event and possible effects to investors.
@54
Love your stories. Bring it on.
#54 saw branson on someone’s program yesterday, actually may have been fox but could have been CNBC. Honestly missed everything he said as I was too busy looking at his olive velvet sport coat and his beautiful face. There ought to be a law against any CEO being that hot.
Stupid Equity Guy (54) is so cool.
hey, I heard that EU markets are going to shut for tomorrow ?
Asian markets will trade themselves to death ?
Stupid bitch at #56
Get the fuck out of here please.
Did anyone actually read Stahl’s plan, or play with Ackman’s model?
Stahl’s plan is interesting (structuring mortgage assets into ETF’s would (theoretically), along with the suspension of FAS 157, fix the liquidity and price discovery issues currently hampering the market for such assets. Unfortunately, nothing like that will ever happen, because it just might make too much sense, and no one in Washington besides Paulson and Kashkari (sp?) have any idea what the fuck they’re talking about.
Anyone try to play with the Model on a laptop btw, debating giving it a shot on a 2-yr old vaio but somehow I fear it might spontaneously combust, doh
#59, I couldn’t get it to load and someone then posted that it took a long time.
Remember that loser with a law degree named John Carney, who used to write stories here…..Well that double-crossing SOB is rumor-mongering over at that “honest” Henry Blodget’s ‘Clusterstock’ website.
Does anyone ever wonder if Paulson reads (or comments) on this blog?
@ 62 – Paulson doesn’t have time to shit right now let alone read this blog.
On the other hand – perhaps with all Bushs spare time he might read this blog – of course that assumes he can read.
@61 – It’s a shame indeed. Just google Henry Blodget and see why he doesn’t work in the securities industry anymore (he’s banned for life). It’s unbelievable that people like those are running financial blogs and pointing their fingers at the “dishonest and incompetent companies”.
@63 I was more thinking along the lines that he or his people would be sowing seeds in the form of blog comments to build assent for his plans. Sounds a little yahooish I know, but totally plausible as the whole ‘astroturfing’ thing is the biggest fad in marketing today
@ 64
Blodget, Grubman, etc are schmucks, no doubt, but is Reingold (etc) any better, just because after making millions they went back and pointed the finger in hindsight?
It looks like the EU is getting their act together… They are trying to speak with one voice now instead of the 15 individuals they have been acting as.
The EU is basically the old articles of Confederation that the US used after the 1776 revolution but before our current consitution was drafted. So the individual states have been / are each trying to handle their own crisis internally, or by laterally as needed.
While the United States has Hammering Stammering Hank at the wheel, they have no such player. B-52 Bendover and the EU equivalent are both waffling wonders…
They know how to keep rescuing their favorite banks while everything else blows ups… Its time to ponder reality beyond the current banker crop. The Masses are getting annoyed.
To little, to late has been the implications of the actions so far. Right now we need the major groups to agree on a framework and announce it as a set plan. Or next weekend, things will be worse then they are today and we will be drafting a new plan.
Its almost as if they are crashing this economy so its perfectly stalls out right at the election day…
To weird…
~SEG
”
FROM THE WALL STREET JOURNAL….Loved it.
Obama’s Magic Presto, change-o!
And now, America, we introduce the Great Obama! The world’s most gifted political magician! A thing of wonder. A thing of awe. Just watch him defy politics, economics, even gravity! (And hold your applause until the end, please.)
To kick off our show tonight, Mr. Obama will give 95% of American working families a tax cut, even though 40% of Americans today don’t pay income taxes! How can our star enact such mathemagic? How can he “cut” zero? Abracadabra! It’s called a “refundable tax credit.” It involves the federal government taking money from those who do pay taxes, and writing checks to those who don’t. Yes, yes, in the real world this is known as “welfare,” but please try not to ruin the show.
Ken FallinFor his next trick, the Great Obama will jumpstart the economy, and he’ll do it by raising taxes on the very businesses that are today adrift in a financial tsunami! That will include all those among the top 1% of taxpayers who are in fact small-business owners, and the nation’s biggest employers who currently pay some of the highest corporate tax rates in the developed world. Mr. Obama will, with a flick of his fingers, show them how to create more jobs with less money. It’s simple, really. He has a wand.
Next up, Mr. Obama will re-regulate the economy, with no ill effects whatsoever! You may have heard that for the past 40 years most politicians believed deregulation was good for the U.S. economy. You might have even heard that much of today’s financial mess tracks to loose money policy, or Fannie and Freddie excesses. Our magician will show the fault was instead with our failure to clamp down on innovation and risk-taking, and will fix this with new, all-encompassing rules. Presto!
Did someone in the audience just shout “Sarbanes Oxley?” Usher, can you remove that man? Thank you. Mr. Obama will now demonstrate how he gives Americans the “choice” of a “voluntary” government health plan, designed in such a way as to crowd out the private market and eliminate all other choice! Don’t worry people: You won’t have to join, until you do. Mr. Obama will follow this with a demonstration of how his plan will differ from our failing Medicare program. Oops, sorry, folks. The Great Obama just reminded me it is time for an intermission. Maybe we’ll get to that marvel later.
We’re back now. And just watch the Great Obama perform a feat never yet managed in all history. He will create that enormous new government health program, spend billions to transform our energy economy, provide financial assistance to former Soviet satellites, invest in infrastructure, increase education spending, provide job training assistance, and give 95% of Americans a tax (ahem) cut — all without raising the deficit a single penny! And he’ll do it in the middle of a financial crisis. And with falling tax revenues! Voila!
Moving along to a little ventriloquism. Study his mouth carefully, folks: It looks like he’s saying “I’ll stop the special interests,” when in fact the words coming out are “Welcome to Washington, friends!” Wind and solar companies, ethanol makers, tort lawyers, unions, community organizers — all are welcome to feed at the public trough and to request special favors. From now on “special interests” will only refer to universally despised, if utterly crucial, economic players. Say, oil companies. Hocus Pocus!
And for tonight’s finale, the Great Obama will uphold America’s “moral” obligation to “stop genocide” by abandoning Iraq! While teleported to the region, he will simultaneously convince Iranian leaders to peacefully abandon their nuclear pursuits (even as he does not sit down with them), fix Afghanistan with a strategy that does not resemble the Iraqi surge, and (drumroll!) pull Osama bin Laden out of his hat!
Tada!
You can clap now. (Applause. Cheers.) We’d like to thank a few people in the audience. Namely, Republican presidential nominee John McCain, who has so admirably restrained himself from running up on stage to debunk any of these illusions and spoil everyone’s fun.
We know he’s in a bit of a box, having initially blamed today’s financial crisis on corporate “greed,” and thus made it that much harder to call for a corporate tax cut, or warn against excessive regulation. Still, there were some pretty big openings up here this evening, and he let them alone! We’d also like to thank Mr. McCain for keeping all the focus on himself these past weeks. It has helped the Great Obama to just get on with the show.
As for that show, we’d love to invite you all back for next week’s performance, when the Great Obama will thrill with new, amazing exploits. He will respect your Second Amendment rights even as he regulates firearms! He will renegotiate Nafta, even as he supports free trade! He will .
Posted by: Robin | Sunday, October 12, 2008 at 02:07 PM”
http://tinyurl.com/4fmw8k
FT blogger made summary below while announced the bottom at the same time?
“Here is a recap of what happened over the last couple of days:
1. Britain decided to partly nationalize its banks,
2. Washington began mulling direct loans from the U.S. Federal Reserve to corporate America,
3. Iceland closed its stock exchange as it slipped towards bankruptcy,
4. the International Monetary Fund warned the world is on the verge of collapse, and urged the world’s developed nations to work together rather than take individual steps (which they say won’t work anyway, because the crisis had become a worldwide problem).
5. And last but not least, this blog (financialtraders.blogspot.com) nailed live for its readers the top and the bottom of Friday’s market action with more than 100 ndx points when NDX ran from 1200 to more than 1300 in about an hour’s time only! :-)”
http://financialtraders.blogspot.com/2008/10/october-2008-market-bottom-ifm-warns.html
“Obama’s Magic
Presto, change-o!”
http://tinyurl.com/3mf5ea
If we nationalize the banks will we have to show a passport at the drive-up windows?
Ah – another good sign – Santander is about to buy the rest of Sovereign Bankcorp. WSJ suggests it’ll go for $2.5B, or about where it was trading on Friday.
I think this is a big deal and will herald the buy up of a lot of the “troubled” little banks. Santander is acting now to get the minimum price and will instantly put Sovereign in good financial stead.
Perhaps not a win for the SOV shareholders, but getting $3.25 is a lot better than getting $0 like the Wamu shareholders got. And, of course, all SOV preferreds (are there any?) and debt will be secure.
It’d be nice to see some of NCC, FITB, HBAN or other other hard-hit regionals get bought up this week – that would go a long way to firming the system.