Andrew Ross Sorkin reports that Treasury officials, probably trying to get Mitsubishi to sign on the damn dotted line, have told the Japanese bank that its “planned investment in the embattled* Wall Street giant Morgan Stanley would be protected.”
U.S. Officials Said to Offer Protection to Japan Investors [NYT]
*Which the Times is presumably allowed to say because it’s not talking about Goldman Sachs, though I would definitely love Morgan Stanley, at this point, to throw a fit over the adjective.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
Mack will issue a statement rebuffing the adjective. I really hope he goes with: Their Excellency, Investment Bank for Eternity, Morgan Stanley Incorporated, Lord of All the Beasts of the Earth and Fishes of the Seas and Conqueror of the British Empire in Africa in General and Uganda in Particular.
second!
MS = Dead Man Walking.
Nationalisation is never good for ALL the shareholders. Even the new ones. MUFG will stay away.
If I, the taxpayer, am protecting another investor, I deserve the upside from their investment. How is it fair that I absorb the downside risk without any of the rewards?
@4, you could say that it is fair because you live in a country that provides freedoms and benefits to its citizens that 3/4 of the world’s population does not have. it would be interesting to see how much “protection” your actual tax dollars provide. then again, life isn’t fair.
Is this really a surprise to anyone? I think I’m going to go vomit.
AIG Knew of Possible Problems with CDS (credit derivative swaps)
http://marketwarnings.blogspot.com/2008/10/aig-knew-of-possible-problems-with-cds.html
@7 – Wake up. The exclusion of the employee was discussed during the hearings last week.
Figure my Citi shares will be worth about as much as Hank Paulson’s toupee when the government is finished diluting the shit out of them. I like Treasury’s strategy on this one – screw current shareholders but protect the new ones, that is, as long as they are not US taxpayers.
OK that’s it… I am pulling out the Big Gun… and deploying it…
http://user.mc.net/hawk/doracol.jpg
An 7 year old 7 standard deviation points from average IQ knew of possible problems with “CDS”
Was I really the only person who knew this shit was a scam?
Come on Eileen.
I dont get it- why does Barclay’s need to be bailed out if they were able to buy Lehman?
@12,
Barcley’s never had the cash to play with in the first place, but the Brit’s know how to play Poker…
You just spotted a bank Re-robbery in the middle of the big game. England was screwed by LEH by a few Big ones or so…
So she funded a Black Adder to fund the buying of asset back at pennies on the dollar, that should have been hers for their retirement accounts…
Do pay attention to who is screwing whom when and where and how…
Peace,
~SEG
another shoe?
“October 12, 2008
America’s Next Major Financial Hurdle: Government Retiree Health Plans
State and municipal governments have failed to fund tens of billions of dollars into health plans for their retired workers. The Governmental Accounting Standards Board was set up to monitor the use of GAAP accounting by the these bodies and is also supposed to collect data on how large the funding deficits of their programs are. Its work is only beginning and may not be done for another two years.
The US Government Accountability Office is not waiting for the results and has already sounded an alarm that most of these government retirement health plans are under water, but very few people seem to be listening.”
“He just does not have enough money to go around. Health benefits are not guaranteed, even for government workers.
Douglas A. McIntyre”
http://www.247wallst.com/2008/10/americas-next-m.html#more
#14
There are many more shoes to be dropped.
Just wait!
Wow, SEG, so they are still mad about the 8B that was called to the home office?
SEG, I concur with you on the BARC, LEH game theory.
What is your prognosis for the EU Banks ? I guess they are in deep deep shit ?
LOL I’m listening to bloomberg radio for the first time ever, and i’m amused that they’re the only radio station i’ve heard that instead of having advertisements about avoiding debt collectors, bloomberg has advertisements for debt collections agencies.
According to Reuters, “As part of the MUFG deal, the company will also provide letters of credit and a credit line to support Morgan Stanley in a move that would reassure investors worried about the U.S. bank’s liquidity”.
This is indeed a lifeline to MS. They are smart to not take investments from the U.S. Why would they do that when they can get away with the Mitsubitshi deal? Also, even with the huge drop in stock price, they were still able to get terms similar to what GS got with Buffet. Not quite dead man walking.
#18, bloomberg radio has a tendency to lull you to sleep.
There is some guy on talking about the whole crisis I’m waiting for the station identification.
The Eurozone member nations will take care of their own banks. It’s going to be a case of “Strength in Diversity”.
The really scary thing will be what happens if a member nation cannot save the banks under its juisdiction. What happens if the Spanish government cannot save the Spanish banks or the Italians cannot save the Italian banks? They will have to seek help from the ECB. What would happen?
Question for all, what can Switzerland do if UBS or Credit Suisse runs into trouble? A small economy like Switzerland does not have the financial resources to bail them out. What would happen? My guess is they will orchestrate some domestic consolidation. Failing that, they will have to seek help from the Germans.
@21:
Exactly what if a small volcano located country who’s sole comparative advantage is fish mongering were to rapidly expand into financial services and were then unable able to support their financial system with their fish based economy? One imagines they might turn to another country with a capital surplus for support.
Of course this is all hypothetical.
Laughter in middle of stock market madness. Details below:
http://marketwarnings.blogspot.com/2008/10/laughter-in-middle-of-stock-market.html
http://www.thelogicgirl.com/2008/10/humor-global-financial-crisis.html
The Fed Acts in Middle of the night:
“Unlimited dollar liquidity …”
http://marketwarnings.blogspot.com/2008/10/unlimited-dollar-liquidity-fed-acts-on.html
ARGHH! all of the comments here are seriously lame. Just a bunch of hacks with their ‘unique’ thoughts and links to other articles regurgitating stuff we already know. I can search through google news or my Bloomberg fine by myself and don’t need comments with links telling me where to go. But, ah wait, their is that fleeting smartass comment telling people to go back to yahoo and the comment showing the naivity to take pride in being a DB reader.
Knowing that most of you are probably yahoo graduates yourselves (I apologize to readers actually working in finance who periodically check DB for bonus info or rumors going around…b/c DB is shady and sketch enough to publish that shit), I hate to intrude on your fun. However, I do have to say that it gives me some comfort and pleasure to know that there are still people like you around. I am so confident that when the dust settles, you people will definitely not be part of the group left standing. To put it nicely, you will be the inferior organisms that perish (i.e. fail to add their weight in value) in the new environment (post-financial crisis). Then, the more gifted financial professionals will not have to deal with the painful yet sometimes modestly amusing realization that people like you exist and actually attempt to be a part of the serious discussion.
I imagine a future where finance as a profession is restricted to people who are actually smart (computer science, statistics, math backgrounds) or have incredible sales strength. There will be no room for the mediocre as there is now and evidenced by yahoo and DB (90% of whom are yahoo graduates/losers themselves, but feel good about pointing out other ‘yahoos’ as you refer to them).
Please, spare yourselves the pain and me the mild amusement but not attempting to comment to my post with the ‘@#’ thing you idiots use.
At 25 : I agree with you
At 25: Finally. Its about time someone said something, as the level of discussion of comments posted on DB have reached sub-prime levels.
#25 Are you ex-Lehman? Cause you sure sound like one.
No. I am not ex-Lehman, though I have two friends and know a few others who worked in Lehman I-banking and trading.
Correction: They still work at Lehman, now Barclays/Nomura.
#25 : Are you ex-Morgan ? Sure you dont sound like someone from other good i-banks ?
@25:
You fucking retard, its the computer science and math majors who caused the fucking mess in the first place.
The model is only as good as its assumptions. But those monkeys are used to taking assumptions as “given”. Nice, work with those “given” historic housing default rates. Or given maximum 1 week declines in the S&P. You’re the same type of moron who thinks the VIX is measure of market volatility. (The VIX measure volatility the same way the weather man tells you the five day forecast, by gauging which ever way the wind happens to be blowing.)
Banks would be better off hiring ex pre-school teachers who’s exposure to the temper-tantrums of 3 year olds would better prepare them for the versimilitudes of mr. market.
Oh, and one last thing, before I let you go. People are blowing the job picture way out of proportion. There is still relatively strong demand for finance professionals (key word there is professionals). I do not for a second think that there is not active recruitment going on in terms of real talent irrespective of the level of seniority. In all seriousness, if you are well-educated, not just ‘groomed’, then I sincerely think that you should still be able to find decent employment on the street. Do not let the panic/rumor-of-the-day press or blogs tell you otherwise. The job market is decent for skilled talent. It is brutal for unskilled talent, such as marketing, redundant modeling, the uncreative positions, etc…
#32. Let’s face it. You are irrelevant. Your thoughts on the VIX or any models are irrelevant. Your barely literate ramblings of how models created by computer science and math majors are the root of the crisis are also irrelevant.
You will never get to have your hands on any device capable of trading the VIX or any other large or complex block of securities. Your opinions do not matter.
While your incoherent ramblings are mildly entertaining and amusing since they portray your under-education and an element of fear and anger that you are confused as to where to direct, they also make me feel a tiny bit sad for your pathetic existence. Well, I’m done feeling sad now and just am amused at your attempt to feel important enough to be on a respectable level of intelligence to undertake discussion of concepts that you obviously have no experience with.
We’ve all enjoyed poking the circus monkey with a stick as its weaknesses, insecurities, anger and fear cause it to squirm and quiver. Now please exit.
#25 Boohoo. We Lazards are having a blast over here.
Interesting. But, I really could give less of a fuck about Lazards or that mediocre bonus that you will get. Lazards is not even a prayer away from being an important financial institution. It’s more like an old-school advisory shop with a tacked on dinky asset management business. Reminds me of the ‘creative mom-and-pop shop spin’ on the traditional broker-deal, but with low-key and sometimes craptastic results. The smaller client-focused I-banking that Lazards represents is not my thing, personally, although I have friends who love it there. But it’s just not my thing. I’m more of a trader (hint). I like managing a portfolio/book and taking on risk and putting heavy research into the securities and (fingers-crossed) making a shit-load of money.
I’m beginning to like this #25 guy, whoever he is.
#37. Thanks, much appreciated.
-#25 Guy
#34/25
I have a feeling I have a better understanding the volatility surface than you. Changing the standard
deviation parameter of black-scholes is the type of idiot back solving assumption that will ultimately result in your being carried out. Either the model works, or it doesn’t, in this case it does not.
Now I ask you, why would I want to trade the index when I could trade the components for greater profit?
-32
Did anyone hear that yahoo on CNBC dismissing the Nobel prize? Comparing economics to psychology and claiming that he wasn’t impressed….
who are these people?
@32 – wow you are so smart; if we had no CS or math weenies on the street, there’d never be any crashes right?
#32/39. Your previous post failed to establish your intelligence or get you to a respectable level where you are justified in throwing around arguments that deserve any sort of attention.
I’m very sorry, but your most recent attempt (via the 39 post) is the same futile attempt at disguising under-education and the sad fact that you don’t know that you are in over your head.
So, you decide to throw around black-scholes and vol surfaces. Okay, fine. I commend you for effort of knowing the names of a couple major ideas in field. But, honestly, before you start your self-confident conjecturing about the implied vols from b-s being used to ‘back solve’ an assumption, I would advise a couple categories of courses that may help you develop a better understanding:
-Stochastic Calculus/Processes
-Derivatives/Option-Pricing/Asset Pricing Course (both discrete and continous)
It is hard for me to correct your misunderstanding, since your assertions are incoherent. I mean wtf does “changing the standard
deviation parameter of black-scholes is the type of idiot back solving assumption that will ultimately result in your being carried out” mean. I do not even know where to begin. I guess a general answer is that every model has differing input assumptions. The implied vol of any option in the black-scholes pricing model can be ‘backed-out’ from the options prices. Now, you can model the implied vol or, more accurately in this specific case, the future vol, be attempting to determine the forward price and backing out the vol or using your assumptions about vol to back out the forward price. But, there is a fundamental relaionship between forward price and implied vol. I leave that for you to find out. Also, you can use a number of different stochastic techniques (with drift, etc…) to model pricing.
No one claims that the models are accurate nor should they. They are as good as the users and people you create them and make certain assumptions. But, please be careful before you paint this art with the same brush. We are knowledgeable and know what we are doing. We do not need lectures from children. At times, some models don’t work, but you are ignoring the many others that model pricing behavior pretty accurately.
Why would you want to trade the VIX? Hmmm, when you come up with a sure-fire way to trade options on S&P vol and track it as closely as the VIX options do, please let people know, you could be very very wealthy. The VIX is not some ETF you dumbfuck. It’s not a matter of holding the same risk for less cost.
This site is really hopeless. I’m done. I have some work to do. Goodbye, it was fun while it lasted. Next time, I’ll just check for the bonus news or rumors going around b/c we all know DB is one of the few places shady and sketch enough to print that shit
-#25 Guy
@25:
No.
What I am saying is stochastic volatility is the same song, different verse. There is no need to make a projection about realized future volatility in order to make money trading the options. Its much easier for me to make money betting that your model doesn’t work than it is to make my own model.
The very fact that implied volatility is necessary invalidates black-scholes to begin with. You’re right there is a relationship between the forward price and implied volatility and knowing that the relationship will change over time unless realized volatility is zero means one can ignore implied volatility all together.
There is an easy way to trade options on the s&p and track it with superior results to the vix, buy and write the individual options on the s&p components at different strikes and trade in and out of them when there are violations from put-call parity. Because your idiot stochastic volatility model assumes each option has its own distribution it won’t take long for parity to be violated.
Keep shorting gamma 25, there’s a place on the curb for you right next to Joe Gregory.
-32
-32.
All of you are pathetic…
25 is the quintessential trader who follows whatever is prescribed in the books
32 is the maverick trader who found flaws in the books and exploited the flaws for his own profit
Ok, you big shit traders, no matter how good your trading strategies (and they probably are your head traders’ strategies as you sound like truly junior desk jockeys trying to impress), you and/or the trading desk/hedge fund where you are employed probably has a hot poker stuck up the ass, looking at a 3Q loss and massive redemptions. So do not come around here trying to show us how smart you are.
However, I do agree with you that the commentary sometimes gets sophomoric and at the level of the Yahoo boards.
@46:
I thought to be sophomoric was the point of dealbreaker, or have I clicked the wrong button and been redirected to the economist?
25 isn’t even a trader; he’s a BS quant guy, either a geek or someone who can’t get out of bed without the charts. Charts and quants cannot deal with headline risk, which is why all these boobs have been taken out and shot.
If you can’t do overbought/oversold short/mid/long term in your head, you shouldn’t be trading.
Hopefully the destruction of at least half the hedge fund industry gets these geeks the #&@^ out of this business.
@48
Agree. 25 sounds like a quant who tries to be a trader but is clearly not ready to be one
@48 @49 -> plenty of quant heavy shops having good years (+ in Sep and Oct and + on the year)