Worker Killed In Wal-Mart Stampede (NYP)
You don’t have to vacation to Mumbai to be savagely murdered. Just position yourself in front of a throng of sale-crazed animals. Anytown America will probably get the job done but if you really want to up your chances, you gotta go with epicenter of batshit blood-thirsty insanity, i.e. Long Island. A 34-year old Wal-Mart employee was trampled to death this morning at a WM in Valley Stream after being knocked to the ground while trying to restrain the throng of “savages” trying to get their hands on a deeply discounted flat screen. In the same stampede, a pregnant shopper was pushed over and may have suffered a miscarriage.

Update: The Post has added fairly disturbing video footage of paramedics attempting to revive the employee.

Citigroup Chairman Says New Bonus Systems Aren’t ‘Magic Bullet’ (Bloomberg)
Sir Win Bischoff, speaking from experience, told a bunch of Swiss bankers in Zurich today that, “By itself, more and retention-based compensation is not the magic bullet because it certainly didn’t stop us from running up very large losses…You here in Switzerland, and particularly our friends at UBS, have done a lot of good work in this area [of shrinking bonuses]. However, it’s not the only answer.” SWB sagaciously added that “two consecutive quarters of profits without any major writedowns at the world’s major financial institutions would be enough to restore confidence,” and then put the under/over on how many years before that’d happen at ten, and took the over.

Firm Shuts Hedge Fund After Losses (NYT)
BlueBay is shuttering its Emerging Market Total Return fund, and Satellite is said to be winding down all funds.

We Hear…(Page Six)
As previously reported, Billy Macklowe’s wife, Julie, has been dismissed from Steve Cohen’s lair. Page Six wonders if this will affect the former Sigma portfolio manager’s spending habits. Not if the e-mail J to the M sent out to family, friends, and foes is to believed. According to Macklowe, she left Stamford on her own terms, and is starting a new fund, to be named JMACK Capital.

Rescue Plan Strained by Lack of Staff (WSJ)
Anyone need a job? Surely there are 40 unemployeds reading this. You’d have to move to Washington, and report to the follically-challenged, but at least it’s work.

The current Treasury has so far struggled to keep up with the task of hiring enough people to handle the $700 billion financial rescue package passed by Congress in October. The man now in charge of running the Troubled Asset Relief Program, Assistant Secretary Neel Kashkari, said the department’s Office of Financial Stability, with about 40 full-time employees, is operating at half-staff.

Federal banking regulators, who must approve the applications from banks before they go to Treasury, said there is a backlog of unprocessed applications for relief. Outside observers said the difficulty of quickly building a qualified staff may be one reason the Treasury abandoned its original plans to use the TARP to purchase assets from financial institutions, deciding instead to inject capital into the banking system.

“I don’t think that was a small part of why Treasury in the end abandoned the asset-purchase program. It’s very people-intensive,” said Wayne Abernathy, executive vice president of financial-institutions policy and regulatory affairs at the American Bankers Association.

New York City to Celebrate 75th Anniversary of the Bloody Mary on Red Monday (PRNewswire)

NEW YORK, Nov. 28— Thousands of bars and taverns in the Big Apple will be celebrating Red Monday for the 75th anniversary of the Bloody Mary. The drink which is an American institution originated in Manhattan by a famous French bartender named Ferdinand Petiot when he came here in 1933. New York State and local officials will proclaim Bloody Mary Day and honor the granddaughter of Petiot with a citation and a Bloody Mary toast on Monday, December 1, 2008 at 11:30 a.m. in the middle of Times Square at 1552 Broadway.

$$$ Extreme Makeover at Morgan Stanley [NYT]

$$$ The Agony of Dan Zwirn [II]

$$$ Daimler Faults Cerberus in Talks Over Chrysler [Dealbook]

$$$ Morgan Stanley to sell $5.25 bln in notes Wednesday [Reuters]

$$$ That’s it for us today. Happy Thanksgiving. Brief posting/moral support for those of you working on Friday. Remember, it could’ve been worse— you could have been on the Indians’ side of the encounter. (Sporadic holiday updates may find their way in if EP drinks too much.)

10:46: Selling Short S&P 500 index futures now @ 851.75

News before the mic cracks: Paul Volcker will chair Obama’s Council of Economic Advisers Economic Recovery Advisory Board.

They figured out that it would be better not to have a specific time to start the daily Obama announcement, so when they miss it we can’t make fun of them for it.

10:47: And… begin.

10:51: What do I have to do in order to get into one of Obama’s cool non-cabinet level, totally powerless clubs?

CNBC has the right idea. They are posting the Dow figures right next to Obama live. Did they do that last time?

The Obama people have also figured out to keep Obama’s segment short. That is killing our index short theory. Ugh.

Q. Does the Bush Administration suck?

A. Yep. I am focused on the middle class worker. I’m going to create a team to implement my plans.

Q. Hey, is this weekend going to be busy at the malls?

A. I’m going to the mall, baby. The rest of you all are going to be pinched.

Q. How are you going to pay for all your programs? What specifically are you going to cut to pay for it? Also, what’s with this Volcker thing? Where is our change? (Wow, who let this guy in the room? They have started using McCain’s screeners I guess).

A. Whoa, nelly. How many questions are you asking? Look, there aren’t any democrats worth appointing who haven’t spent years in Washington. Volcker hasn’t even been in government in years, sheesh, where have you been all this time? Ok, that’s it. Happy Thanksgiving.

Covered theoretical short @ 853.75. (-2 points). Hmmm, this short government speech thesis requires government officials to babble more than Obama has. Give him this, he learns quick. He got killed for his first press conference.

As Thanksgiving and the holiday season quickly approach, Americans across the country have started to think about what they will do for friends and family this year. Despite challenging economic times, the one gift valued most by consumers costs nothing - expressions of gratitude.

According to a recent Ipsos poll sponsored by Citi’s ThankYou Network, there is a near unanimous agreement - 95 percent of Americans stated they feel “really good when others thank me for something I have done or accomplished.”

Nearly all respondents (19 out of every 20) of the “Rewarding Life” survey stated a belief that “more than anything else, getting a genuine thank you from someone is the best kind of reward that you can get.” In fact, when asked about the most meaningful reward they have ever received, the most common unprompted answer is a “sincere thank you.”

With so many Americans placing great value on genuine appreciation, businesses can tap into this sentiment to expand the ways they thank customers to enhance relationships. Nine in ten respondents (90 percent) agreed that it is more important than ever for businesses to reward loyal customers.

At the same time, 72 percent of Americans said they are surprised when a company thanks them for their business, indicating that there are opportunities for businesses to engage customers by showing more appreciation.

“Now more than ever, businesses should be expressing their thanks and appreciation to their customers,” said Gordon. “Through the Citi ThankYou Network, we have made showing appreciation and thanking our members a core value.”

Heartfelt Thanks, Fulfilling Relationships Top Wish List This Holiday Season [Business Wire]

Remember the good old days? The latest financial sporting fad was predicting the imminent death of private equity. LIBOR meant something. Someone was going to make a killing in commodities, you’ll see. Endowments were the BSD’s to emulate on the buy side. Yeah, that’s definitely over with this news:

The dean of Harvard’s Faculty of Arts and Sciences has called for an immediate freeze on staff hiring and strongly encouraged department heads to consider canceling faculty searches.

In an e-mail to department heads Monday, Michael Smith, dean of the largest Harvard faculty, outlined immediate steps in response to the worsening economic climate.

“Given our heavy reliance on endowment income, these losses will have a major and long-lasting impact - one that will require significant reductions in our annual expenses,” Smith wrote.

[…]

Harvard’s endowment before the economic crisis was $36.9 billion. It’s unclear how far it has fallen, but Faust recently referenced a Moody’s projection of a 30 percent decline in the value of college and university endowments this fiscal year.

Ouch.

Then again, -30% is the new “killing it” so, perhaps someone should give those guys a raise.

Harvard freezes staff hiring, scrutinizes faculty searches [The Boston Globe]

If you want a measure of:

A. How broken the credit markets are, or;
B. How totally fucked we are,

The fact that credit default swaps for 10-year protection on U.S. government debt have jumped to 56 points is a good candidate. Which one is really at work here, A or B is anyone’s guess.

“There is a lot more money to be spent and it is not clear how it is going to be financed,” said Tim Brunne, a Munich-based credit strategist at UniCredit SpA. “Credit spreads don’t reflect expectation of default, just the uncertainty over the enormous cost to the government.” [emphasis ours]

Yeah, we don’t get that quote either.

The Fed’s new plan to kick-start markets for loans to students, car buyers, credit-card borrowers and small businesses means it will be taking on credit risk by buying debt. The central bank pledged to purchase as much as $500 billion in mortgage-backed securities as well as up to $100 billion in direct debt of Fannie Mae and Freddie Mac, the world’s two largest mortgage buyers, and Federal Home Loan Banks.

Treasury Credit Swaps Soar to Record on New $800 Billion Pledge [Bloomberg via Alea]

That giant sucking sound you hear is your hedge fund liquidating. Or, it is if you are Ross Perot. The former presidential hopeful’s fund Parkcentral Global Hub Ltd., had apparently levered up in a big way and the unwinding is proving to be painful. One surmises from the article that a crash in commercial mortgage backed securities is one cause.

We urge Mr. Perot not to feel too bad. There is a long history in the United States of failed bids for president crippling a man, reducing him to an irrelevance as anything but an object of suspicion, and this becoming so withering that the kilowatts consumed by his (admittedly unwieldy) home consume the attentions of dozens of nay-sayer hanger-ons.

The woes of these funds promise to put more strain on the banking sector. Banks that have made short-term loans to these funds mightn’t recoup all their money even if the funds liquidate. Parkcentral Global Hub Ltd., the fund overseen by Parkcentral Capital Management LP, a Plano, Texas, firm controlled by the Perot family, peaked this year at $2.5 billion in assets. It used borrowed money to amplify its bets, said people familiar with the matter, and began dumping assets last week.

That leverage helped hasten the fund’s meltdown as the commercial mortgage-backed securities, or CMBS, market cratered last week, and the borrowings also could leave lenders with tens of millions of dollars in losses, the people said.

A Parkcentral spokesman Tuesday confirmed that the fund has been forced to liquidate to pay off creditors, but he declined to elaborate. He blamed the “unprecedented upheaval of the capital markets in general and the freezing of credit markets in particular.”

If you know anything about us, you know we’re big fans of getting up in people’s faces all self-righteously, even—especially— if it means we have to throw the risk of stalking and aggravated assault charges into the mix. Though this has been a long cherished pastime of ours, it seems to have a real, topical place in this period of financial ruin, as many a Wall Street CEO has first caused the collapse of his or her institution, and second retreated to his her her custom-fitted, hermetically-sealed condom, despite the fact that there are a few people who would like a word with these masterful stewards of capital. So, we were delighted to see that Fox News correspondent/Geraldo Rivera doppelgänger Arnold Diaz took it upon himself to show up at former Lehman Brothers CEO Dick Fuld’s home in Connecticut, clad in a leather trench coat, looking for answers.

Related: Bill O’Reilly’s attempt to smoke Stan O’Neal out of his cave.

AIG’s Cassano Under Investigation (Reuters)
The ex-head of AIG Financial Products is under Federal investigation for his role in the loss of Billions of dollars, which many see as the catalyst leading AIG to financial ruin.

The announcement comes on the heels of AIG’s announcing that they had completed the $40B sale of preferred stock to the US Treasury under the terms of the TARP. Also newsworthy of AIG: FT is reporting that AIG’s Edward Liddy has agreed to accept a $1 salary as some symbolic move.

“This gesture by AIG is appropriate and I encourage other firms to wake up to the new reality on Wall Street and follow AIG’s step quickly,” Mr Cuomo said in a statement.”

I’m sure you meant “quickly follow AIG’s step” Mr. Cuomo, but that aside, what’s the rush?

Porsche backs away from buying VW majority this year (Reuters)
Something about “ridiculous prices.”

EU Stimulus Plan Proposal (DJNewswires)
“The European Commission proposed Wednesday a sweeping stimulus package worth EUR200 billion, European Union sources said.

The sum, the equivalent of 1.5% of the European Union’s gross domestic product, was more than the EUR130 billion that commission chief Jose Manuel Barroso had said previously that he was looking for.”

Russia Threatens To Step Down Oil Production, Prices Respond (BBC)
While the Price reaction was minimal, there’s the off chance that this could have a lasting effect. Russia has been rogue to the policies of OPEC in recent years, acting effectively as it saw its own best interests. We’re seeing a stepping in line, however, as Russia is positioning itself with OPEC in Oil production cuts.

Some issues here to pay attention to: they’re not actually aligning themselves with OPEC, merely following OPEC’s most recent move. Also: they’re probably drunk.

108bps Drop In China Key Rate (Bloomberg)
I’ve always been a fan of odd-lot cuts, as they seem remarkably arbitrary. I don’t, for instance, see how one comes to the 108 number: why not 109 or 110?

“The cuts are aimed “at ensuring sufficient liquidity in the banking system and to promote steady loan growth so that monetary policy can play an active role in supporting economic growth,” the bank said in a statement.”

Inbursa buys 26MM share block of C (CNBC)
The big question here is whether or not this signals Carlos Slim’s tacit nod of approval for Citi.

Why CNN Can’t Cover The Credit Crisis (Infectious Greed)
IG is covering what amounts to an organized rant on how MSM is botching the coverage of the liquidity crunch, and as a bonus there’s a Suze Orman bashing.

$$$ A former Lehman Brother, who considers Amsterdam the birthplace of the capital markets, is filming a documentary on what the Europeans think of this crisis.

$$$ Bank robberies on the rise. [NYP]

$$$ The Paulson Plan: ‘Truly Idiotic’ [Deal Journal]

Muffie Benson-Perella, moonlighting today as ghostwriter for Fortune Editor at Large Patricia Sellers, wonders in her “Postcards From the Pinnacles of Power” column why Lehman wasn’t saved, given its extensive “presidential connections.”

Dick Paulson, Hank Paulson’s brother, great-grandson of Theodore Roosevelt, and great-great-grandson of Theodore Rosevelt, President Bush’s second cousin, and Jeb Bush were all wonderfully nepotistic opportunities to keep conspiracy theorists buying Reynolds Wrap to wrap around their heads for years. (Flash trade idea: Short the Rank Group, Ltd., and go long tin futures before spreading the word that Reynold’s Wrap is actually Aluminum foil). So why didn’t Lehman get saved?

Wasn’t it a mistake to let Lehman Brothers fail? Treasury Secretary Hank Paulson was asked this very question in a Q&A that ran in yesterday’s Wall Street Journal, and he replied, “We didn’t have an option.” He said that Lehman had neither a buyer, as Bear Stearns did in JPMorgan Chase (JPM), nor adequate assets to justify a life-saving federal loan.

Lehman Brothers’ presidential connections [Fortune CNN etc.]

Apparently a union in Boston takes issue with the fact that Blackstone isn’t doing anything to prevent foreclosures. Plus, it’s Thanksgiving on Thursday. And really, the opportunity was apparently too good to pass up. Holiday-themed “protest” pics after the jump.

Aw, looks like it’s give up your paycheck day! The former chairman of the Swiss bank, Marcel Ospel, former vice president Stephan Haeringer, and former chief financial officer Marco Suter are forfeiting not all but part (two-thirds) of their salaries “and other payments…,” which amount to approximately $27.7 million. During the last year of the troika’s magisterial reign, UBS ran into a mere $40 billion in write-downs and losses. A spokesperson for the group said today that they “want to make it clear that they are facing up to reality [though] the move to forfeit the remuneration is entirely voluntary and should in no way be construed as an admission of guilt in a legal sense.”

3 Former UBS Executives Forfeit Pay [AP]

“Nothing is happening just yet. One more screw up and he is definitely gone. Based on what I’m hearing, it’s fluid. Does this mean Pandit’s out? Probably not, but maybe so. He’s got like half a mistake left. Unless the board gives him more leeway. I don’t know; I’m not in the board meetings.” — Charlie Gasparino, CNBC, 11/25/08

Chaz is right, you know. The only question is, what will the the career (at Citi) ending fuck up be? The sources I’m talking to have mentioned four possible scenarios. The situation is fluid but what they’re telling me thus far is that it’ll be one of the following:

A. Vikram gets wasted and confesses to Meredith Whitney that C’s balance sheet is “completely made up.” Follows up with a drunk email (from his work account, natch), that Gary Crittenden “selects random bar code numbers in place of the true horror story that will soon engulf this cesspool and consign it to the scrap heap of corporate history.”

B. Not knowing it’s verboten, VP is caught using Bob Rubin’s private bathroom.

C. Not knowing it’s frowned upon, VP engages in sexual intercourse with the cleaning woman on his desk. Pleads ignorance, but it’s too late.

D. Truly accidentally but unacceptably nonetheless, Mr. Pandit accidentally grazes Prince Alwalweed’s favorite wife’s left breast.

We cherish our readers. They send us tasty treats on a regular basis. Like the purported Citigroup termsheet:

10551985.pdf

Says one loyal reader:

While I have not seen any details around the $309bn in assets being guaranteed as part of the C transaction, I would hope that these are AAA or at least AA rated MBS. As the Fed has been lending against these types of assets under the TSLF and PDCF since at least mid September, it is a bit perplexing how the transaction makes sense. The only way I can get my arms around it is that the Fed was no longer comfortable with its advance rates against the collateral and required C to pony up what is essentially a margin call. Help me out with the logic if I am missing something but:

• C has $309bn in MBS assets. The Fed is likely advancing ~97% on these assets right now under TSLF and/or PDCF.
• Fed has reduced this advance rate from 97% to 90%, which leaves a $20bn hole (7% * $309bn)
• Fed takes $20bn in 8% preferred securities and warrants for $20bn in cash that can be used to repay the Fed to an advance rate it is comfortable with.
• Additionally, C is forced to give $7bn in additional preferred to continue to receive a non-recourse advance on these assets.
• Finally, C is charged a more punitive rate of interest on the financing of these assets at OIS + 300, which is likely 200-250 bps higher than under TSLF or PDCF, with the principal being non-recourse and the interest recourse.

Effectively, the fed went from being long 3-100 risk on $309bn of assets to being long $27bn in C preferred shares and 10-100 risk on the $309bn with a 10% risk share with C and a higher interest rate. I still don’t understand how this is a good deal for C or any of the other banks other than it says that the Fed is serious about not letting the whole system fail (which we knew already).

Apparently that is the question to be asked/answered/debated/shouted about among people who like to self-gratify to the sound/sight of their own words today. Since that, too, is a fetish of ours and yours, we’ll get on board.

The Journal, I’m guessing, seems to believe Bob Rubes and Co. are to blame, wondering aloud this morning, “Why are Robert Rubin and other directors still employed?” The Post, I think, feels the same way, demanding that someone “Bounce These Bozo Bankers” who supposedly “orchestrated the fall of this behemoth.” Charlie Gasparino, too, counts himself among those calling for Rubin’s head (and the board in general but really mostly Rubin), and his vote counts for more than everyone else’s because, as CG told Steve Liesman earlier, he called BS on Bobby first, like, years ago (Gasparino also uproariously opened the bit by saying he’s to blame, so we’ll include him in the mix). Prince Alwaleed, taking the path less traveled, is pretty okay with Bobs and the board but, you might’ve heard, feels quite strongly that Chuck Prince is our number one perp, as does Sandy Weill. A bunch of random readers like to leave comments daily about how Vikram Pandit got us in this sitch, and deranged as they may be, we must still acknowledge (and dismiss) what they have to say. And surely there are more! Since figuring out who, exactly, we should tar, feather, kill and sexually assault (in that order) is of the utmost importance, now that we kinda own this bank, I’ve rounded up the suspects below. Please weigh in. Appropriate measures will be taken tonight.

12:00: Again?

12:06:

Don’t worry. This is NOT all I’ve got. I’ve got more. I’m just not telling you what yet.

Questions.

Q. You know there is just one president at a time, right?

That president is Barack Obama George W. Bush and will be until I am sworn in. But people need to know that I’m president next. I’m next! I’m next! I’m next! They have to know it’s B-Time.

Peter, Where’s your floppy hat?

Q. Aren’t you totally going to fuck this up with a democratic congress AND a democratic administration?

A. Hey, we won ok? Like, with a wider margin than Clinton did. Ok?

Ok, where’s my plant question about local issues?

Q. What are you going to do about local money grubbing states are bankrupt. Illinois particularly. Huh? Huh? You going to forget your friends?

A. Oh, we are going to be working closely with states, and local governments. Just like we are going to work closely with Republicans. With the current administration. With France. With Iraq. With Iran. With North Korea. And friendship doesn’t come into this. That’s the old way of doing business. So, thanks for the help on the campaign. Now go pound salt. (Shhh, relax, the camera is on, we’ll chat later. ‘kay? Thanks. Bye).

Q. How are you going to keep this massive spending spree from getting out of hand and how are you going to keep these programs from becoming permanent bloodsuckers attached to the treasury?

A. I’m going to make all medical records electronic. Wait for it… wait for it…. No? Ok, cause that’s what my team is here for. They are going to take care of it. No really. Don’t worry. Got it all under control. What? Market? Triple digit gain wiped out since I started talking? Woah… look at the time! I have to jet. Tomorrow. Same time, same place. More appointments.

Let this be a lesson to you, girls. It’s pretty bleak out there and I know that in these tough times, many of you are weighing your coping options. A. Nab an alternative revenue stream by booking hookers for pay or b. Saying fuck it, I don’t have it in me to become a junkie whore, so I’ll just start fucking whores. Go with the latter! Whereas our former governor got off once again for his part in Prostie-Gate, Tanya Hollander, the woman who arranged meet-ups between escorts and customers, including those of Ashley Dupre and Eliot Spitzer, has been sentenced to one year of probation.”

But! Despite only receiving an annual base salary of $1 for 2008 and 2009, and no bonus for either year, Edward Liddy will be “eligible for a special bonus for extraordinary performance payable in 2010.” And, you know what? Giving up that money was definitely worth it. Not because his company is a black hole of insolvency, and not because it was the “right” thing to do and not because he spent most people’s annual take-home (x3) on manicures and pedicures, but because it meant he got to get this figurative hair ruffle/knock on the chin/great job, Champ/whatever you want to call it:

We have received Mr. Liddy’s response to our letter of last week outlining the action AIG will now take regarding executive compensation. AIG has taken a positive step by eliminating bonuses and salary increases for its top executives. Taxpayers have been slammed with a one-two punch seeing their investments dwindle while simultaneously having to fund the Wall Street bailout with billions of their tax dollars. It is only fair that top executives, who benefit the most when firms do well, should also bear the burden of the difficult economic consequences their firms now face. This gesture by AIG is appropriate and I encourage other firms to wake up to the new reality on Wall Street and follow AIG’s step quickly. The taxpayers of this country deserve nothing less.

He’s also been granted permission to attend Andy’s birthday party-cum-fundraiser this year, which is huge.

STATEMENT FROM ATTORNEY GENERAL ANDREW CUOMO CONCERNING AIG’S DECISION TO ELIMINATE BONUSES FOR TOP EXECUTIVES [Office of the Attorney General]

Last week in the midst of a discussion on politics, we became convinced that the United States, world class home of spin doctors, host to the largest investor relations focused university program in the world (i.e. the entire State of California), a country unparalleled in turning fiction (particularly earnings) into fact, a least temporarily, had no peer in the political bullshit arena . Our favored presidential candidate is elevated above the masses on a dais, as if the figure of a heroic Greek statesman, after all. Who could rival the innate obscenity of U.S. star fucking, so ritualized from repetition at this point as to roll off us like mercury off a greased duck’s back?

Russian Prime Minister Vladimir Putin will hold a live call-in show on national television next week, in what analysts say may signal the start of his campaign to regain the presidency.

The broadcast will be held “in the first week of December,” Putin’s spokesman, Dmitry Peskov, said by phone today. The exact date will be announced later this week, he said.

[…]

Putin, who has remained at the center of power as premier since stepping down as president in May, last week vowed to protect Russians from another financial collapse like the 1998 default in a speech to United Russia’s annual party congress. He will use the call-in show to further cement his credentials as a national leader in a time of crisis, said Olga Kryshtanovskaya, a political analyst at the Russian Academy of Sciences.

“This is to maintain his status as national leader,” Kryshtanovskaya said by telephone today. “He needs to remind everyone that he is the most important person in the country and can solve problems in difficult times.”

And you thought the “Fireside Chats” were impressive. Hah…

President from 2000 to 2008, Putin held an annual nationwide call-in for the past seven years, broadcast live and lasting several hours, with questions on a wide range of issues submitted by TV link-up, phone and Internet. The event dominated TV news coverage on the days it aired.

November 25, 2008, 8:21 am Fed Announcements on Household Credit, GSEs

TALF Announcement

For release at 8:15 a.m. EST

The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

Under the TALF, the Federal Reserve Bank of New York (FRBNY) will lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department-under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008-will provide $20 billion of credit protection to the FRBNY in connection with the TALF. The attached terms and conditions document describes the basic terms and operational details of the facility. The terms and conditions are subject to change based on discussions with market participants in the coming weeks.

New issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums. The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans. Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads.

TALF Terms and conditions (72 KB PDF)

GSE Announcement

The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)-Fannie Mae, Freddie Mac, and the Federal Home Loan Banks-and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. Spreads of rates on GSE debt and on GSE-guaranteed mortgages have widened appreciably of late. This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.

Purchases of up to $100 billion in GSE direct obligations under the program will be conducted with the Federal Reserve’s primary dealers through a series of competitive auctions and will begin next week. Purchases of up to $500 billion in MBS will be conducted by asset managers selected via a competitive process with a goal of beginning these purchases before year-end. Purchases of both direct obligations and MBS are expected to take place over several quarters. Further information regarding the operational details of this program will be provided after consultation with market participants.

The fifth shoe drops. Now credit card, student loan and auto debt plus SBA loans. Just makes you want to be a debtor, doesn’t it?

Fed Announcements on Household Credit, GSEs [The Wall Street Journal]

Amid all the head scratching and hand wringing in yesterday’s Morgan Stanley crisis review piece in the Wall Street Journal, an interesting series of data points seem to have largely gone unnoticed. They are here:

You will notice that the lethally dangerous brew of frozen, toxic evil concentrate that is short selling delivers a blow reminiscent of the impact made by a down pillow during a teenage girl’s slumber party. The stock opens at $22.83, that price having been set by the market way before a slew of short selling and already down from the prior day’s close of $28.70. From there, and despite taking what looks like rather significant short volume all day, peaking at 500,000 shares sold short per minute just before the lunch hour but hitting 300,000 shares per minute again by the close, it closes at $21.75. Even the massive spike and the consistent 200,000 shares short per minute rate in the hour before lunch only pulls the stock from $23-$24ish down to $18 or so. On top of this, during the last two hours of trading, which saw the most sustained short selling volume for the day, the stock recovered from $17ish to $21ish.

So, on what frantic anti-short parties insist is the worst most manipulation-laden day the stock had seen and when the stock was supposedly most vulnerable to rumor and innuendo, this is the best short selling could do? This is the evil bear raid tool we are supposed to be terrified of? Not only had the damage already been done (and not by short selling or even the $25 billion Deutsche Bank credit line revocation rumor) but the stock was essentially flat compared to the prior day’s open, which was $23.89.

But none of that matters. Nor does the fact that the firm alienated and lost so many of its cash rich hedge fund clients by scape-goating them, and required $9 billion in equity followed by another $10 billion from the government. It was the evil shorts who killed Morgan Stanley. Right?

Anatomy of the Morgan Stanley Panic [The Wall Street Journal]

Wachovia Execs Could See ~$100MM In Severance (DJNewswires)
Banking’s bastard child from the south - the one that lost $33B in two flat quarters - is paying its top 10 people $98.1MM on leaving. I’m more curious about what happens after the merger - does Wells get greedy? They’ve now got enough assets to shore a massive investment arm, and here’s enough talent on the street to build five banks; is anyone going to take advantage of the situation?

Goldman to Sell $2 Billion In FDIC - Backed Bonds (NYT)
” Goldman Sachs plans to sell at least $2 billion of new debt that will be guaranteed by the Federal Deposit Insurance Corp, with pricing expected Tuesday, according to a market source familiar with the sale.

The debt will mature no later than June 30, 2012, the source said. Goldman Sachs is the sole bookrunner, while Citigroup and Morgan Stanley are joint leads, the source said.

The debt is guaranteed under the FDIC’s Temporary Liquidity Guarantee Program, and investors are watching the deal as a test case for demand under the new program.

Citi Has A Credibility Problem (Reuters)
And, the light comes on. It’s finally starting to sink in that Banks don’t tell people everything, and that their repeated calls for transparency aren’t gong unheard. Well, that’s not fair: people hear you screaming they just don’t give a shit (promise).

“Citigroup Inc’s repeated assurances that it did not need additional capital, followed by its quick about-face in accepting billions of dollars in aid from the U.S. Treasury, has many investors wondering what other banks are hiding… “The biggest question is what, as the owner of bank stocks, do you really own?”“

No, the biggest question is “why are investors holding bank stocks?” If you don’t have all of the information you need to hold the security, here’s a tip: you shouldn’t be. You don’t get to own bank stocks just because you want to, risk free.

Your House Is Worth Less, Or: How To Mislead the Public With A Worthless Headline (FT)
The median home price has fallen by 11.3%, reaching $183,300 according to the National Association of Realtors. But this doesn’t necessarily mean your house is worth less (though, it probably is). For those of you too far removed from statistics, the median of anything is found by counting your way to the middle. There’s no trending, smoothing, or averaging; it’s much like finding your way to the middle of a ruler, just put a finger at both ends and slide it to the center: when you get there, you’re home.

There’s ways to skew the median so as to make it smaller, that have nothing to do with the price or your home (or even homes in your neighborhood). All you have to do is build houses that cost < $183,300, en masse.

What’s more likely than a sudden shift in new construction, however, is that there was a shift in prices coupled with new construction of lighter/cheaper houses - but that, too, is pure conjecture.

Dubai Having A Bad Month (BBC)
Dubai is one of the few regions in the Middle East that isn’t oil rich, which is causing some issues for the poor little fella here of late. The Government has had to pull two lenders out of the gutter, and state affiliated firms are sitting on $70B in debt; not bad for an area with only ~2.6MM people.

HSBC Going Forward (Reuters)
While the article touches on whether HSBC would look at Citi’s assets (no one cares about that anymore) it clearly states as a byproduct where HSBC is going - and that they’re intent on getting there. BRIC markets are still expanding, EM markets are going to grow into flourishing stabilized commerce centers - and HSBC sees itself in the middle of all of that.

Plus, they’re not bitching or defending themselves, which seems fresh for some reason.

Google’s Looking At Cutbacks To Contract Labor (Reuters)
Google currently houses about 10k contract laborers, of which some are going to get cut; is this a sign of things to come for the big G?

$$$ Deals: To Canada and Beyond
In our M&A Roundup for the week ended Nov. 23, four of the ten largest North American deals involve Canadian natural-resource companies — in a slow period that shows signs of picking up today. [CFO.com]

$$$ As part of a drive to cut $15 billion in costs, GM is no longer keeping the 562 clocks in working order, which will eliminate the expense of replacing and disposing of the clock’s batteries and the cost of resetting them twice a year for daylight-saving time.

It’s not the only new measure GM is taking to save every last nickel. In its Renaissance Center headquarters, employees working late have to climb stairs when navigating its labyrinth of lower floors — the company now stops the escalators at 7 p.m. In designated cleanup areas of certain offices, the company has changed the type of wipe-up towels it buys. In a memo to employees, a staffer explained this will lower GM’s “cost per wipe.” [WSJ]

$$$ Lehman bankruptcy triggers $301M fumble for NFL’s Giants [The Deal]

$$$ “I and others were mistaken early on in saying that the subprime crisis would be contained.”— Bernanke [The New Yorker]

Harvard Business School 9-197-3922 November 1, 2008

Background

In early 2007, piracy was a fragmented industry characterized by fierce competition amongst the many pirate “crews” operating along Africa’s East coast. A series of successful projects and the elimination or acquisition of several firms in the spring and summer resulted in substantial consolidation in the industry and by early 2008 70% of the market was dominated by three firms.

Pillage, Inc. is the surviving entity resulting from the hostile takeover of the Black Band of Ali Nefani followed by the murder of Ali Nefani, his right-hand man and their families. Thus founded in 2007, it fell to Abdi Balan Aned, newly appointed CEO of Pillage, Inc., to consolidate his position with the volatile board of directors and articulate his strategic vision for growth.

Bloomberg is trying to play off the biggest two day market gain since 1987 on the Citirescue. Hogwash, we say. Only the revealing of Obama’s Economic Superfriends could have such an impact. 58% gain on a loan guarantee? Next think you know Bloomberg will be claiming Latin American Debt Forgiveness is responsible for emerging market recoveries.

U.S. Stocks Post Biggest Two-Day Rally Since 1987 on Citigroup [Bloomberg]

We told you a few weeks ago that Merrill had canceled Christmas and now the firm has finally gotten around to breaking the news to its employees. It seems that even though certain offices had their shit together, and the scratch to throw a little soiree, ML gave Kris Kringle the finger across the board.

Led by CFO Gary Crittenden.

2:01: Gar is late. Hold music.

2:04: Michael Roberts, head of corporate bank takes the mic. Given what happened last night, we thought we take a sec to chat with you, our corporate and investor client and counterparties.

2:05: Guy named Paul takes the mic. Thanks for your confidence and enduring parternship. We will emerge a stronger bank.

2:05: Gar in the house.

-Tremendous amount of turmoil. It affected our stock price, specifically.

-We had conversations with those who regulated us, and decide to go forward with those conversations.

-We got a lot of capital out of it. “The form in which we did it was innovative.”

-“The implications for us is that the capital we’re required to hold against the assets the gov’t is now responsible for has gone down.”

-Before last week, our capital position was strong. Now it’s extraordinarly strong. We have the highest tier-1 ratio of any financial institution.”

-Let’s take stock of what we’ve done in the last year at Citi, which may have been “overlooked in the newspapers.”

-5 primary business lines, which we said we intended to grow, an agenda we’ve been busy working at.

-Costs are substantially below fourth quarter of last year.

-Reduced non-productive assets.

-Worked very hard on liquidity, and now it’s substantially better than a year ago, especially ‘cause of the cash injection from the government.

-Reduced risk concentrations.

-Working hard on our talent agenda.

-“Our liquidity has doubled.”

-“There’s cash associated with what we just did this weekend.”

Gary says he’d be happy to take questions. Awesomely, he does. From Paul. A Citi executive.

Paul: Can you comment on our intention to continue supporting our country network at Citi?

Gary: “The thing that distinguishes us is that you can deal with us and we’ll support you around the world in one unified network, in lots of types of businesses. At our core, it’s the network that we offer that sets us apart. It’s going to be a world class operation going forward.”

I bet a lot of you who’ve lost your jobs or are expecting to lose your jobs and maybe your life’s savings and your kids’ college funds and any real reason to get out of bed in the morning think you’ve got it bad. Well dry your tears and get a little perspective you selfish bastards because there are people who are in a way worse place at the moment. People who have little to no prospects at all. People who don’t know where their next meal is going to come from. People who once legally fucked for money except now there is no money. The people I’m referring to, are gold diggers. Except guess what? There’s precious little gold to dig anymore (your fault, for being unemployed). Page Six Magazine did a little investigative research this weekend and found that ladies who once made a living off you have fallen on seriously hard times. On a Tuesday night in October, three single Slavs gathered at Bagatelle, one with a “plunging neckline,” one who “resembles Scarlett Johansson,” and one who, most attractively, “doesn’t speak English,” and no one approached them. Not even some fat but loaded slob. “It’s getting harder and harder to find a good man,” Sophie, 23, told reporter Joshua David Stein. “Everyone is looking for handsome, rich and charming men but there are less and less of them to go around.” Apparently since the whole financial apocolypse sitch started going down, “wealthy Prince Charmings, already an endangered species on the nightlife scene, have become almost completely extinct. The handsome ones aren’t charming, the charming ones aren’t handsome and many of the rich ones are now poor.”

Desperately Seeking Sugar Daddies [Page Six Magazine]

Ravishing in an a rust scarf and vest against a backdrop of a camels, horses, and donkeys, Prince Alwaleed, who has more or less wedded himself to the idea of being buried with this bitch, whenever that might be, told Maria Bartiromo moments ago that he has full confidence in Vikram Pandit, who he is constant touch with. He didn’t seem too upset with the board, either. P to the A did however note that the FDIC fucked up the Wachovia deal, and blames the deal that wasn’t for the drop in Citi’s stock. Oh, and he told a little story about meeting his “good friend Sandy Weill” in Paris one night, at which time Sands told him, “Prince, I am sorry [for the whole Chuck Prince situation].” Though the Other Prince is “a good man, a gentleman, frankly speaking, the destruction of wealth was his fault.” But no more! “We’ve spoken enough about Chuck Prince. Let’s talk about Mr. Vikram. Let’s give him some time. He’s a man of strong will, he’s a man of vision.” No more about Chuck Prince. No more! One more word about Chuck Prince and I will shut you down, Maria. One more word!

Update: Charlie Gasparino “wouldn’t trust what [Alwaleed] says when it comes to Vikram” because what he said about Chuck Prince “wasn’t classy,” and “not a good moment for The Prince.”

12:08: Late as usual.

The country is in an economic crisis. (Really?)

Actually, it’s a global crisis. We need Tim. (Chant in background: Tim! Tim! Tim! Tim!)

Larry is the starving middle-class guy’s fat, white, rich guy. (Give up some for the Summ!)

12:14: Christina

Christina (that would be Christina Romer, to everyone else) has done “ground baking research.” So, I suppose Thursday is cookie day in the White House.

We have to start today. Not a minute to waste. So we are going to just ignore the fact that there is still another administration in office. We are taking some immediate actions, and addressing the auto industry, the foreclosure crisis, clean energy, infrastructure and the kitchen sink. So we have cut a deal to borrow the set of The West Wing to get things moving quickly.

12:19:

Q. How soon are you going to start all this?

A. Yesterday.

Q. How big is this plan going to be?

A. Really fucking big. So big I don’t want to talk about it right now.

Q. What about the Bush tax cuts?

A. Well, net, net of the 95% who will be getting a net tax cut, that’s net, as I said during the campaign, there will be cuts and they will be balanced so we aren’t going to touch the cuts since we need to get the economy on track, but those who can afford to pay more will pay more so we can all afford this stuff to avoid avoiding tax cuts. But I really can’t discuss numbers. This thing is BIG.

Q. How are you going to afford all this?

A. Well, people might be wondering how we are going to launch this massive program and throw stimulus money during a recession and a massive crisis. Well, we are going to overhaul the entire budget system, the entire tax system, the entire way business is done in Washington, and the entire role of government before we reform the markets entirely and then… well… then we break for lunch.

Q. Didn’t you forget the auto industry?

A. Oh, right. That’s during our working lunch. I forgot to mention that. Well, we cannot allow the auto industry disappear. Not under any circumstances. But, if we have the circumstance where the auto industry does not have its homework done again in front of Congress then we are going to let the auto industry disappear.

Q. Is anyone in the current administration even speaking with you anymore?

A. Hey, easy there. I spoke with Bush and Paulson today, okay? Listen, Congress gave the current administration a lot of authority. Yes, I haven’t even been sworn into office yet, but I am going to be assessing the TARP and directing it from my West Wing Set office starting tomorrow. Ok. Later guys.

Is anyone else getting tired of this folksy act by the Oracle of O? We sure are.

“Oh, those complex derivatives, we leave those to the fancy city-folk. Financial weapons of mass destruction. Exotic. Complex. We leave those to the $3,000 suit investment bankers who we really can’t justify the existence of unless its for us to buy up the most offensively city-folkesque investment bank on The Street. Yeah, we have some derivatives, but they are oh-so-folksy.”

“No, really, they are just index puts we wrote.”

“Well, ok, they are European style options.”

“Well, yeah, so, they have very exotic, customized, collateral requirements. That is, there aren’t really many collateral requirements.”

“No, we don’t have to post collateral in that instance. Yes, that’s unusual.”

“Yeah, they are actually very long dated too.”

“No, not just one. Actually, they are on four different equity indexes.”

“Well, we’ve hedged the currency risk some.”

Look WB, how about you just spit it out: The folksy thing sold well for years, but now its time to just admit you are a savvy player. Stop slapping around Black-Scholes while you have $37 billion in options and a pile of CDS contracts laying around. Then the SEC won’t go demanding more disclosure and force you into big annual report drama.

Buffett Will Give More Information on Derivatives [Bloomberg]

What shareholders would be the the mood for any deals in this environment? Really, it is damn ugly out there. No surprise then that Bank of America shareholders are about as interested in acquiring Merrill Lynch as a kick in the taco. Actually, though said kick has lingering effects, these are still smaller than the Merrill Lynch acquisition would be, meaning that a kick in the taco would be preferable to the Merrill Lynch acquisition. (At least according to a draft of the full page Wall Street Journal ad before the editing committee got a hold of it. Kicking is too mean to put in the Journal, it seems).

There is a sort of self-fulfilling prophecy aspect to this whole thing. Acquiring shareholders grow upset over the widening spread between current share price of the target and original offer. Shareholder approval looks less likely. Arbitrage players press spread wider, acquiring shareholders get even more upset over the widening spread between current share price of the target… etc. etc. etc.

I wonder what our government’s financial supermen and superwomen will do if that deal begins to crumble too. Backstop funding perhaps? That seems to be the most popular arrow in the quiver these days.

Merrill Flinch [New York Post]

Listen, I have every confidence in the gov to fix this bitch, but let’s start by getting the 12-steps right.

That’s right, ladies. Citi has announced it needs 1,000 warm bodies in the Philippines next year. According to the firm’s “country business manager” Mark Jones, “There’s a whole lot of activity moving in the Philippines as we grow our businesses. Citi is moving more equity in [there]. If you look at the business, we’re repositioning globally.” Most of the jobs will be for the Big C’s call center and financial reporting operations which I’m sure you’d love to take issue with but let’s face reality, people. You could do a lot worse. Pack your bags.

Citigroup to hire 1,000 workers in Philippines [Market Watch]

New York Magazine reports that Silda Spitzer, already staffed with bringing the looks, integrity and negative on all counts STD test to her marriage with the former governor, has accepted a position at a hedge fund. Silda began working last month at Metropolitan Capital Advisors, i.e. Karen Finerman of Fast Money fame’s firm, recruiting new investors. Eliot, who’s “thinking about” writing a book, most likely about how he, despite dalliances with a prostie, is still better than everyone else, remains unemployed though heartened by the news, which has bought him at least a few more months of chill time on the couch between 9 and 5.

It was touch and go there for a while but Barclays Plc shareholders have given the British bank the go-ahead on a 7 billion pound ($10.44 billion) capital raise. The fractional owners had been ticked off about not being asked what their feelings were on the round of fundraising beforehand (there was also a matter of Qatar and Abu Dhabi investors getting better terms than existing shareholders). Congrats to all.

Barclays Chairman Says Investors Back Fund-Raising [Reuters]

Citi Gets Guarantees On $306B In Assets (Bloomberg)
This marks Citi as the one of the (if not the) single largest corporate recipient of federal aid in US history, with $45B ($25B first round, $20B second) in pure injections and a tiered backstop of $306B. Highlights: Pandit stays, Cuomo gets his platform for salary caps, it’s the standard preferred purchase on the $20B.

The big question going forward is going to be one of sustained solvency; whether you’re on the side that says Pandit inherited this mess or the side that says he caused it (or at least is responsible for the magnitude of it) you have to admit that this is a hole of incalculable proportions.

Per Infectious Greed the tiers on the $306B look like this:

Citi will carve out $300-billion in troubled assets, which will remain on its balance sheet

* The first $37-$40-billion in losses on those assets will go to Citi
* The next $5-billion in losses will hit Treasury
* The next $10-billion in losses will go to the FDIC
* Any more losses will go to the Fed

Also: the FEDs summary of terms. [FED via IG]

Blackstone Trims Asia Fund (Reuters)

The target size for the new Blackstone fund was drawn back to $200MM from $1B, because of a new trend in finance called “mass redemptions” - it turns out people want their money back when they see shit is going south. Everyone has balls on the upside, but it takes a special kind of brass to hold the downside, people.

“The “event-driven” Blackstone fund is headed by Aaron Nieman, who joined from S.A.C. Capital Management LLC earlier this year, the paper said.”

Futures Are Up (Bloomberg)

We’re seeing strength in the futures, as peer effect and socialism breathe optimism into overnight trading.

RBS Exec Apologizes For Losses (BBC)

“Royal Bank of Scotland (RBS) chairman, Sir Tom McKillop, has said he is “profoundly sorry” for the bank’s financial difficulties.”

After seeing its first yearly loss in 300 years, RBS is considering picking up Vickram Pandit - the move would apparently help cement the chances that RBS qualified for US Government assistance - and maybe even in the 100’s of Billions of Dollars range.

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit (Bloomberg)

As the headline intimates, Bloomberg ha the amount of money injected into the system at $7.4T - though only a portion of that is a direct infusion of capital. While the methods Bloomberg uses to calculate the $7.4T number aren’t spelled out - what I’m absolutely positive of is that if the flyover kids get wind of this, and can figure out what a trillion dollars is, there’s going to be a lot of complaining.

UBS Patrons Come Forward In Tax Scheme (WSJ)

Under the voluntary disclosure program the IRS let’s you come forward, admit you tried to screw them, and pay our taxes and penalties - all without jail time. This, in my opinion is about as just as things can get - we try to screw them, they try to screw us - in the middle we find some kind of agreement.

What’s amusing about this whole ordeal is the sheer volume of the numbers involved: one bank facilitated 20,000 US citizens in tax evasion. As far as conspiracies to defraud go: that’s absolutely, phenomenally massive.

—William Richards

Citi will get $20 billion in cash from the TARP and a $306 billion loan guarantee. The closing fee? The government gets preferred shares in Citi.

Now shape up, mister.

Charlie Gasparino’s “sources on Capitol Hill” tell him the government is going to infuse Citi with 10 to 20 billion dollars. CG adds, “like we’ve said 100 times before tonight, the situation is fluid.” Obviously this is a shock to those of you who’ve been keeping track at home, and have only taken 40 shots (1/fluid mention) so far.

Update: Your guess re: what’s going to happen is as good as CNBC’s, which adds that “all other actions: not off the table.”

Cracks are emerging in the fabric of the Citi deal. First off, there has been no let-up at all in the number of Pizza deliveries per hour (a critical deal closing metric, of course: deal closure probability rises as pizza delivery rate falls) amid rumors that the largest… sovereign… wealth… fund… ev-AH… is losing interest in Citi. But, savvy as they are, could the government just be playing hardball, stretching out the brinkmanship by taking advantage of the Japanese trading holiday.

The Nikkei is, obviously, unchanged, owing to that holiday, with Australia showing early volatility, but currently trading flat.

Since there is very little entertainment to be had watching that slow moving train wreck, we will be watching S&P 500 index futures when Obama announces his financial EMT squad tonight. At present they are trading around 798, with Dow futures pressing 8069 upward. A thin and dangerous day likely.

From Gasparino:

Sources with knowledge of the deal say government officials are now getting cold feet over the plan to buy the troubled assets from Citigroup.

The problem with buying the assets from Citi is political: people close to the deal know that other firms will line up and ask the government to purchase their troubled assets as well knowing that all brokerage stocks got crushed when treasury secretary hank paulson reversed his plan on the tarp to direct capital infusions to the banks and away from buying troubled assets.

And my favorite part, because I know he’s playing to us:

Bottom line: this is very fluid and the situation may change again, but as of now government getting cold feet on plan to buy troubled assets, which leaves direct capital infusion on the table.

You have no idea how “fluid” this god damn situation is. Charlie Gasparino now reports:

The government is looking to buy substantial amount of assets from Citi like a good bank, bad bank structure. The government will absorb much of the losses for Citi if there are losses and Citi would issue preferred stock to the government.

The Feds could buy more than $100 billion in the bad assets if the plans go through. But that doesn’t mean it will pay Citi $100 million [sic?]. The deal is not finalized but could be announced tonight.

Meanwhile, according to Reuters, White House spokeswoman Dana Perino hasn’t heard anything about any talks between C and the federal government. Perhaps they’re on a need to know basis.

Also! Gird your loins, because CNBC is airing a special variety hour tonight called “CNBC Reports: Saving Citi,” anchored by Steve Liesman, Charlie Gasparino, and Michelle Caruso-Cabrera from 8-9, with possible extended programming in the event of breaking news. Jimmy Cayne is expected to avail himself for a satellite interview.

Update: The Journal has heard basically the same thing as Chaz. The paper also cautions that the situation is fluid, which has got to be some sort of copyright infringement.

Charlie Gasparino reports that Citi officials are “working on a plan that could include a capital injection from the Federal government—among other possible ideas. The details have yet to be hammered out and it’s not clear when such a plan would be announced.” The situation is fluid.

Listen, people. I know you all think Citi is on its last leg, about to be cast into the scrap heap of corporate history. However, I received some intel this morning which leads me to believe your worrying is for naught (“intel” = New York Post article). Meredith Whitney gave an exclusive interview to the paper in which she, not surprisingly, tore open Citi’s rectum via her 8-inch spiked heel (this time not at their request). Sayeth Whitney:

“Pandit and his executives are completely naive if they think the share price is not important. Pandit is wrong, Citi will not be able to stay in its current form. It has lost the most money of all the banks, and has the greatest leverage. Citigroup is in such a mess Stephen Hawking couldn’t turn this company around.”

Here’s the thing, gang. Those of you who’ve been keeping track at home are well aware of the fact that M to the W has used this line before. On May 12, the analyst told Bloomberg TV of the Big C’s chances of turning things around, “I think it’s an impossible feat. They don’t have the revenue power, they don’t have the earnings power in so many of their businesses. Even Stephen Hawking could not pull this off.”

Calling Citi out for being a cesspool of ineptitude is what’s made Meredith Whitney famous. If she thought this was the end, you know she’d be laying down some fresh tracks. Because she has phoned it in, you know full well that this thing is far from over. And that’s not just good news for Citi and its shareholders, but MW as well. Now, she’s still got time to pick up the spreader and truss bar from the cobbler’s, where a team of expert welders have been working round the clock to restore the accoutrement to factory specifications. From what we hear, they’re going to need at least a few more weeks. Surely Citi can get its shit together in that time.

Andrew Ross Sorkin lays out the options supposedly being considered by the firm as of last night:

1. “Replace Vikram Pandit.” Not really sure how that’d do shit, or who they’d get to take over, or what kind of half-wits would hear this news and suddenly start believing in the firm if they hadn’t previously, but whatevs. It’d be awesome if it were a 1-2 punch of 1, forcing VP out and 2, replacing him with Chuck Prince.

2. “Sell all or part of the company.” To Circuit Cityi.

3. “A public endorsement from the government.” I want to see Hank Paulson wearing Citi-branded shower shoes, driving a Citi-branded convertible, eating a Citi-branded sandwich, slathering Citi-branded hair-regrowth product on his pate.

4. “A new financial lifeline [from the government].” Will happen, right? Has to? Let’s just keep our fingers crossed the braintrust that is the government doesn’t try and do anything innovative (read: retarded).

5. “Full-page advertisements in major newspapers,” reminding everyone, in case they didn’t know, that Citi never sleeps.

6. “Reinstate the uptick rule.” This would legitimately be more ridiculous than taking out an ad in a newspaper. SHORT-SELLERS ARE NOT THE ISSUE, VIKRAM.

Shares Falling, Citigroup Talks to Government [NYT]

I fear that without a mechanism to skirt U.S. online gambling restrictions all is lost.

$$$ Reuters: “Obama Likely to Consider Summers to Succeed Bernanke As Fed Chair in 2010.” And according to The Caucus: “Mr. Summers is likely to be named as an economics adviser as well, two sources familiar with the Obama transition said, with the expectation that eventually he will be named to the Federal Reserve Board, perhaps as successor to Chairman Ben Bernanke.”

$$$ Air G.M. Grounds 2 Jets in Wake of P.R. Debacle [DB]

$$$ America’s Neediest: Bringing’ Back the Sunshine to AIG [Cityfile]

$$$ Manzke ‘Disgusted’ by Hedge Funds, Seeks Investor-Rights Group [Bloomberg]

$$$ Congratulations to Tim Geithner for receiving the coveted Maria Bartiromo hottie stamp of approval. The $honey noted earlier that the new Treasury Secretary is “devilishly handsome,” and really, not at all sarcastically because I agree with her, that’s all that matters. Everything else will fall into place.**

$$$ Are you excited to have yet another weekend, or at least Sunday night, ruined? Same here! Anyway, do not forget us if you happen to come across any proprietary information or, and this is just a for instance, pictures of Vikram Pandit weeping into a gossamer pillow. bess at dealbreaker dot com, ep at dealbreaker dot com, and texts to 973-495-0177.

**CNBC’s Jeff Macke and fellow Dartmouth grad adds: “He is a sexy beast.”

Sometimes (just sometimes) we cannot help but watch Andrew Ross Sorkin videos. This particular round, while watching the ARSE’s Charlie Rose interview with automotive industry shill David Cole, something occurred to us: the United States has become the world’s leading authority on creating inoperable, metastasized industrial tumors. Not only this, but the creation of, maintenance of and discussion surrounding these tumors has become so integrated in the economic fabric and incentives system of the United States, that it doesn’t even occur to participants that their behavior is part of a highly developed, multi-generationally optimized, metastasized tumor growth system.

Paul Kedrosky’s Infectious Greed is the first place we saw the “too metastasized to fail” concept spelled out. It was inevitable, we suppose, that it would rear its ugly head in spades during this ARSE’s video (focused as it is on the automotive industry). But it was not Sorkin this time, but rather listening to the absolutely and utterly myopic class of denial that David Cole continued to dribble out all over himself whenever Sorkin would let him get a word in, that really drove it home: The United States is geared to reward massive, horizontally integrated firms with extensive and varied moral hazard properties and, moreover, this has become so automatic that these market participants, the David Coles of the world, don’t even realize they are trained this way. Automotive is just the industry up in the rotation at present, but airlines, investment banking and insurance all fit the bill nicely.

The formula is easy once you learn it. You build an entity with large money, employment or political influence multiples, leverage it as heavily as possible, be that with unfunded, pyramid contribution structured pension plans, long term and excessive labor rate contracts, pure leverage, or ballooning health care liabilities, and make sure it touches as many middle class hub points as possible. (This is the metastasized aspect). “Too big to fail” was no longer a viable option once billions of dollars of private equity and hedge fund money in conjunction with cash-rich investment banks could buy up LTCM or Amaranth without much of a hiccup. To enjoy the protections of that kind of systemic failure risk you have to aim your losses at the heart(land) of America now. Homes. Cars. Retirement accounts. Insurance. Annuities.

Listening to the bejowled heads of the big three recite over and over again the multiplier effect they had on jobs from parts manufacturers to car washes made it clear. That is the business they are in. Siphoning cash to their constituents by daring anyone to let them implode. No one even pretends the cars are worth anything at all anymore. It is the jobs, the tax revenue, the health care and the community infrastructure that are the central issue here. They are professional industrial oncologists, not CEOs. They sagely scare the wits out of you so you will sign the consent form and start radiation and chemo (and pay them handsomely for the privilege to do so). Until we sit through a few chemo serious sessions and spend several weeks puking our guts out, we are doomed to find tumor after tumor after tumor one at a time, and pouring a lot of money into the bank accounts of industrial oncologists.

(Oh, as an aside: Hey, airlines, you better get your act together. So far as we know there is no “American Dream Of Coach Class Travel.”)

Video: Sorkin on Rescuing the Automakers [Dealbook]

NBC News reports Obama will nominate: Tim Geithner.

Yes, Los Angeles bank branches are more or less lost tribes in the Amazon, so totally unexposed to real civilization and insulated from the trubs of the modern world in which we live that one must be careful when flying low over them, as they are prone to throwing spears at passing planes. Nonetheless, they are still people, and we should feel their collective pain. Apparently all but one second year analysts in UBS’s LA office have been shown the door.

In more uplifting news, Citi Field is safe, according to Mr. Met.

Well, that was quick.

If Bloomberg is to be believed, Obama and crowd are already setting up pre-packaged bankruptcies for the Notorious B.I.G. 3 who will, true to their namesake, continue nonetheless to spit out albums automobiles long after their violent death. Really, when automotive can’t count on Obama to keep it out of bankruptcy, it really is time to throw in the towel. The move also puts Obama at odds with the fiscal and financial genius of Nancy Pelosi, who ruled bankruptcy out entirely yesterday. (Oh yes, we are going to enjoy the next four years).

We must admit, we have been rooting for the automakers to take a pair amidships for some time now. The entire interaction the Notorious B.I.G. 3 have with the world parallels the rich kid at school, constantly in smarmy negotiations with the professor over lost, missing, eaten, incomplete or outright wrong homework. Always some bargain, some way for an “F” to meld into an “I”ncomplete. Always the thinly veiled threat that UAW-hat wearing, blue-collar uncle (the younger, more bitter brother of that generation) would come over and wrap a wrench around the neck of suede-elbow-patch professor if some compromise favoring our anti-hero was not reached.

We, to start with, are sick of their shit.

So, now Congress gave them homework. It’s definitely time to shut their traps on how many children will die of starvation in the streets of some small Ohio city if taxpayers don’t write a multi-billion dollar check right the fuck now. Either do the work or take the F and we’ll see you at summer school.

Obama Team Said to Explore `Prepack’ Auto Bankruptcy [Bloomberg]

Merrill Lynch, Barcap, Deutsche Bank and Citi are said to have stopped airing CNBC on their trading floors, supposedly because of “irresponsible reporting.” Sounds a bit insane, and I’m really not sure why these institutions would rob their employees of the Gasparino Variety Hour but whatevs. Programming will be replaced by reruns of The Three Stooges, Little Rascals, Parker Lewis Can’t Lose and Two Coreys.

Master o’ the markets Charlie Gasparino just had a little debate with CNBC’s Steve Liesman re: Citi. According to Chaz, Citi will not fail, and there are a couple of ways we can get this bitch back up:

1. Vikram Pandit steps down, “stock goes to $7.”

2. “If your friend Bob Rubin would stop talking to Obama and get working with Pandit, stock goes to $7.”

Now, as you know, we could never hope to compete with the capacious intellect and market moving insight that Chaz brings to the table. But the situation is dire and we have got to make this thing work. Consider this your suggestion box for what Citi can do to pump itself back up. While it would be sacrilegious of us to attempt to climb on the shoulders of a giant, please realize that we approach this subject with the greatest humility, and self-awareness that we could never come close to CG’s level of magisterial thought leadership, and that we’re doing this for Citi. To that end, the first suggestion off the top of our heads is this: Vikram steps down, Gasparino steps up. Now you go.

Whatever it is that is lurking around in the shadows can just knock it off already, ok? We get it. You’re out there. Announcement timed (poorly) to avoid market reaction/panic/action/inaction/fear/hope/disrupting the weekend. How about we just cut all the foreplay and spill it. What do you say?

Jump, jump, for my love.

Apparently, if you were at Citi yesterday, you had a hard time trading in NYSE:GS- glean from this what you will for it is but one of the totally unfounded rumors swirling around us today, all of which have the basic form of Goldman taking over a large chunk of Citi’s deposits. And yes, we do think it is gauche asking how much that’s going to cost.

Supposedly Morgan Stanley is planning to close equity prop trading “globally” (whatever that means). Sounds a bit extreme, but who the hell knows? Apparently the firm is experimenting with its flair for the dramatics these days.

When we asked you this last week, only a little over half thought Vikram Pandit would be boxing his shit up and turning in his ID. Things have changed slightly since then. Charlie Gasparino is hearing talk of VP stepping down, and though the situation is fluid, let’s just determine what’s what now:

Charlie Gasparino reports that Vikram Pandit just held a conference call which CG “was listening in on in my robe and underwear.” Apparently Count Vikula made three points:

1. The problem with stock price is based on fear mongering.

2. Our capital position is very strong.

3. We’re keeping the company together. Smith Barney will not be spun off.

Citi Group Eyes Options, Including Merger (Reuters)
After the losses over the last week the Citi board is looking for options, and futures are up on expectations. I don’t know what there’s going to be for them on the street, though, outside of liquidation and absorption into other firms.

To the point of liquidation, MS has already weighed in with a resounding “no”, while JP Morgan isn’t saying much - but I doubt that after the WaMu integration and writedowns they’re going to have a lot of capital reserve to work with. Barclays doesn’t have much on the table, either - and BofA is at capacity. I think if we’re going to see Citi unwind, it’s going to have to be slow and methodical: I’m sure someone will pick up the consumer deposits, but the rest of the company is probably looking at much less pleasant times.

Harkin Moves Forward With CDS Exchanges (WSJ)
“Senate Agriculture Committee Chairman Tom Harkin plans to introduce a bill Thursday that would force all over-the-counter derivatives, including credit-default swaps, onto regulated futures exchanges.”

Not an unusual or ill-timed move; ICE and the CME have both been pushing forward with their plans for a CDS exchange. The exchange will allow for better regulation of the instrument, which few people actually take the time to understand (though of recent, everyone seems to be talking about them).

BNP IB Unit To Face Bonus Cuts (Bloomberg)
“Europe’s third- biggest bank, may cut bonuses by more than 70 percent at its corporate and investment bank after profit plunged in the first three quarters of the year.”

It’s only a matter of time, BNP, before Cuomo finds a way to annoy the shit out of you, too.

All US Financials To Be Nationalized (CNBC)
Eclectica Asset Management CIO Hugh Hendry is under the impression that all or at the very least the vast majority of US Financial institutions will be under the thumb of the Senate by the end of the year. While the argument isn’t fully detailed, I imagine it’s a variant of the tried and true “too big to fail”.

Paulson Questions Wall St Pay (WSJ via DJNW)
“Mr. Paulson, who had a lucrative career on Wall Street, also questioned compensation practices of the financial-services industry, saying policymakers need to ensure those practices don’t “encourage unsafe and unsound risk-taking or reward failure.”“

“And he took aim at the practice of slicing and dicing loans and packaging them for sale to investors, saying there needs to be a “wholesale review” of such securitization.”

Usually casting stones is a diversionary tactic, the idea being that if you attack something that everyone dislikes, you’ll draw the attention off of yourself long enough that maybe no one will notice how monumentally you fu*#ed things up. I can only imagine that’s what Paulson’s trying to accomplish, as there’s absolutely jack shit wrong with tranching. Let’s review the basics: it distributes default risk across a pool, and it allows for the segmentation of risk classes among risk seekers. Tranching had absolutely nothing to do with the current credit crunch; that’s a myth that needs to get dispelled quickly.

If you’re going to point fingers, it would be wise to start with the mental powerhouses that are the Regional banks. The Regionals, for those of you late to the game, issued loans to speculative contractors, and then facilitated the issuing of loans to cover the original loans, increasing their bottom line. This is only a problem when you consider that they knew that the second round of loans could be packaged and sold - meaning they didn’t face any of the default risk - and the first round couldn’t, which in turn means it was in their interest to make risky loans to cover their in-house loans. America got screwed by the bank at the street corner, not the one on Broad Street.

—William Richards

$$$ Paulson calls for regulating everyone and everything [The Deal]

$$$ I’m Having A Hard Time Trusting This Guy’s Logic… [WSF]

$$$ Bailout Arbitrage: The Sale of National City [Deal Journal]

GENERAL MOTORS CORP GM SAYS INTENDS TO TAKE CONGRESS’ DOUBLE DOG DARE AND DELIVER PLAN THAT SHOWS VIABILITY IN EXCHANGE FOR 25 BILLION

GENERAL MOTORS CORP GM SAYS WILL DELIVER SOLUTION TO PIONEER ANOMALY TUESDAY FOR EXTRA 10 BILLION

GENERAL MOTORS CORP SAYS WILL PROVE COLLATZ CONJECTURE OVER WEEKEND AND HAVE ANSWER ON PRESIDENT’S DESK BY MONDAY MORNING FOR 15 BILLION

FORD MOTORS CORP SAYS WILL DELIVER CONGRESS SOLUTION TO COLD FUSION IN EXCHANGE FOR 30 BILLION

Reuters and Bloomberg have confirmed what we told you eight-ish hours ago: Bearpont Morgan Mutual will be laying off about ten percent of its investment bank staff. Carry on.

To: *IB NA Business Managers

Subject: New Expenses Policy - Nov 20, 2008

Please note that there was a new Citigroup Expense Management Policy
published today which is located on CIBIX.

Items of note and effective immediately are:

1) Late working (OT) car and taxi service has been moved to 10pm

2) Employee celebratory events and holiday parties are non-reimbursable

3) All Non Revenue Generating Travel requires pre trip approval by an
exception approver

4) Spousal Travel is non-reimbursable

Show of hands, who wants to get laid off now? As an aside, there are unhealthy levels of jealousy coursing through my body directed at the lucky bastard with the title of “Exception Approver,” a job I’m pretty sure I could go to town on. “No. No. No. No. No. Maybe… No…No…No…what are you going to do for it? No…No…No….ye-No…No…No…dance for me..no.”

Sayeth spokesman Michael Hanretta (and I’m sure Vikram Pandit would agree):

“Citi has a very strong capital and liquidity position and a unique global franchise. We are focused on executing our strategy, including our targeted expense and legacy asset reductions, and we believe the benefits will be seen over time.”

It wasn’t long ago when we reported to you that Goldman had been kicked out of at least one exclusive oil club. Now we hear the rumor that they are getting out of the oil price guessing game (at least the public version) all-together. Says FT Alphaville:

Goldman’s latest commodities note is out, and this is all you need to know:

Closing our oil trading recommendations Although we have emphasized in the past few weeks that continued weak oil demand exacerbated by constrained credit conditions will contribute to soften near-term fundamentals keeping WTI prices, timespreads and gasoline cracks under pressure, we have left our oil trading recommendations open, expecting that high volatility would provide a better exit point to our trades. The volatility in the past few weeks has mostly been to the downside and the pressure on the oil complex has increased. In the near term, we do not expect significant upside potential and as a consequence we are closing all of our oil trading recommendations.

Odd, we can’t find the “note” in question. Anyone else out there see the smoking research report?

It’s official, Goldman capitulates on oil [FT Alphaville]

Your elected representatives are due to announce something terrifying during an “Auto loan compromise press conference” at 2:30 eastern time.

Is this:

1. A fed loan to the big three? (If so, under what terms?)

2. A program to preserve existing auto loans and encourage the tightwads in auto finance to loosen up? (If so under what terms?)

3. A large hole in the ground on the outskirts of Detroit which will be filled with fresh $100 bills. (This is the cost savings option Republicans fought tooth and nail for).

Winner gets a Ford Expedition.^*

I have a side bet running with Bess on how accurate our readers are with this sort of thing, so pick well.

Four senators reach bipartisan auto aid deal [Reuters]

^* Non-employees of Goldman Sachs or Goldman Sachs Employees are not eligible.

UPDATE: PSYCHE! Leadership now says: No Deal, Howie! The Big 3 will get another shot in December (if they last that long).

Citigroup officials are lobbying lawmakers and the SEC to reinstate the expired ban on short selling of financial stocks, people familiar with the matter said

via Wall Street Journal News Alert.

Three guesses what this news will do to Citi’s stock.

Related: Don’t Short Me, Bro!

Developing….

In case you were wondering whether or not the powers that be at Citi are freaking the fuck out, rest assured: they are! We’ve just been informed that 390 Greenwich has removed the Citi stock ticker from the screens scattered throughout the lobby and cafeteria. Apparently the free-fall from 50 to 6 was okay but watching the drop from 5 was too much to bear.

People, we need to give it up for American Express. In August, the forward thinking firm announced its “Speak up and Speak Out” campaign, wherein employees were encouraged to report their colleagues’ on-site violations, no matter how small or petty, without reprieve, so that the higher ups didn’t have to look like the bad guys and analysts who make time for Two and a Half Men could be taken care of. Excellent outside of the box thinking, we noted at the time. Today AMEX cranked things up a notch yet again. I don’t know how they could possibly top this, but I’m looking forward to the attempt and I’m merely suggesting and not demanding that it involve a giant game of Assassin.

…that have the tendency to wipe out Myron Scholes. Yep. The M to the S froze his largest fund, or we should probably say, froze Platinum Grove Asset Management’s largest fund, since the firm is larger than just one person, you know. All this according to an article in Bloomberg (which has been dutifully tracking his the firm’s impending doom since the markets started coming unglued) which tries to conceal the obvious Scholes lust by sticking the name in the middle and bracketing it on all sides with other firm names and tales of woe. We are not fooled. We know who they are after, and we love every minute of it.

Hedge Fund Assets Shrank 9% as Investors Withdrew $40 Billion [Bloomberg]

Just about everyone took it on the chin this morning, but, of course, the real schadenfreude story we know you care about is Goldman. Well, after hitting $49.00 a share earlier, they’ve managed to crawl their way up the slime pole again to around $53.00 per share. Right about now Buffett is explaining to some skittish investor somewhere that his investment in Goldman was for the long term, and, anyhow, he gets preferred dividends on his stock. Stick that in your pipe and smoke it, cause this is exactly the situation ole WB was thinking of when he gunned from those dividends.

Dead Cat Bounce after the jump.

GEORGE Soros getting into a maroon Mercedes with a mature blonde after a performance of “Speed-the-Plow” and ignoring someone shouting at him, “Thanks for ruining the American economy.”

Sightings [Page Six]

Parting gifts for IBD analysts: two months pay and $15k. And Citi-branded tissues with which to JO&C.

I thought it was just a “Prince” fetish but no. Turns out Alwaleed wants to be buried with this thing. And you know what? I dig it.

Saudi prince to boost stake in Citigroup [CNN Money]

Cuts at Bearpont Morgan Mutual started late yesterday in equities and are continuing today with research being hit particularly hard. Sales and trading are supposedly being shown the door circa now. Apparently “at least” ten to fifteen percent of IB is expected to be affected, with deeper cuts in certain groups.

GMAC Files Application With Federal Reserve to Become Bank Holding Company (Press Release via DB)

GMAC Financial Services (“GMAC”) today announced that it has submitted an application to the U.S. Federal Reserve Board of Governors for approval to become a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). GMAC also announced today that it has submitted an application to the U.S. Treasury to participate in the Capital Purchase Program created under the Emergency Economic Stabilization Act of 2008, conditional upon becoming a bank holding company.

As a bank holding company, GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses. GMAC also expects to have expanded opportunities for funding and for access to capital as a bank holding company. If GMAC’s application to become a bank holding company under the BHC Act is accepted, GMAC Bank will become a Utah chartered Federal Reserve member bank.

GMAC also announced that it has commenced separate private exchange offers and cash tender offers to purchase and/or exchange certain of its and its subsidiaries’ (the “GMAC offers”) and Residential Capital, LLC’s (the “ResCap offers”) outstanding notes listed below held by eligible holders for cash, newly issued notes of GMAC and, in the case of the GMAC offers only, preferred stock of a wholly owned GMAC subsidiary, upon the terms and subject to the conditions set forth in the applicable confidential offering memoranda, each dated November 20, 2008 (the “offering memoranda”), and the related letters of transmittal. The purpose of the offers is to increase GMAC’s capital levels while reducing the amount of GMAC’s and ResCap’s outstanding debt in connection with GMAC’s capital plan relating to its application to become a bank holding company.

Senate To Probe Bond-Ratings Firms (Reuters)
A Senate subcommittee is going to be investigating the involvement of the ratings companies in the recent credit crunch, looking into whether there were conflicts of interests that may have led to the other big three handing out ratings as tokens of affection.

I don’t think there’s any big secret here: the credit companies dropped the ball. Well, they didn’t drop it: they threw it down, peed on it, and capped it with a nice bow. Really though people, it’s the thought that matters.

Iceland May Not Fail, Receives $4.6B Bailout (Bloomberg)
Iceland is looking at $2.1B from the IMF, and another $2.5B from Sweden, Denmark, Norway and Finland. The money is gong to be used to stabilize the currency through recapitalization of banks, which should limit the contraction of the economy somewhat.

Just a note: Iceland reminds me a bit of the quiet kid in High School that went crazy and lit his girlfriend’s car on fire in the parking lot (no, she wasn’t in it). You can almost see these things coming: a slight shift in the eye, their hair just a little too frazzled. All I’m saying is maybe England should consider catching the bus for the next couple of days.

Treasury Yields In Decline During Flight To Safety (FT)
“The yield on two-year US Treasury bonds hit a record low of 1.06 per cent, responding both to the fresh flight to safety and the prospect of lower interest rates. Eurozone government bond futures hit their highest level since March 2006.”

The incentive to save is approaching zero, which would normally mean a bout of inflation; I don’t think we’re going to see that here. Everyone producing consumer goods so over manufactured that they can’t get rid of all of their shit: it’s just sitting in warehouses. I don’t know that food costs will rise considerably over the holiday season, and I can’t see gas becoming overly volatile. What I would worry about is an inflation whip when things start to speed up again, considering the moves in Ms.

$$$ Keep the faith, Vikram! [Cityfile]

$$$ Ackman Pushes Latest Plan for a REIT at Target [DB]

$$$ School [Wallstrip]

Germans. What are they good for? Absolutely no-thin’. Deutsche Bank was supposed to be the one firm not falling off a cliff, not going bankrupt, not canceling its holiday party and not firing everyone to your left and right. And then, oh, what’s that? The upped and canceled their holiday party on Friday, citing fear of looking bad rather than money trubs. And now they’ve announced they’ll be firing one in seven traders from its global markets division. I wash my hands of these people.

And it’s Citi, tonight. Kidding, though how deliciously rich would that be? Prettay, prettay, prettay rich. Anyway, no, it’s Piper Jaffray, and it’s not even in New York, but out in Boston. Revolution Rock Bar, December 18th, 4:30. Don’t even act like you’re not going to try and make it.

The difficult part of this entry is the admission that we actually visited CNN Money, but we can’t help but pass on the lunacy that is an article that find silver lining in a failed $11 billion hedge fund because it invested $32 million in wind power.

Last year, after Tontine purchased 49% of the company, Miscor did a 1-25 reverse split, sending its stock to the $5 range. By mid-January however, the stock had shot up to over $16, giving the fund a handsome 300% return on its money.

In short, the fund spent $32.5 million to acquire a commanding stake in a thinly-traded company that was worth about $98 million in under one year.

Please.

A collapsed hedge fund’s overlooked wind wager [CNN Money Fortune Time Warner Kitchen Sink]

You know, you try and do a little service like warn people before they’re about get their asses torn out so that, I’d don’t know, it doesn’t sneak up from behind and take them by surprise, and all of a sudden it’s like you’re the bad guy. It’s like you, and not the ass reamers, are the ones causing the rectal prolapse. We’ve just been informed that Morgan Stanley was none too pleased with our humanitarian effort earlier this morning in which we gave employees a heads up vis-a-vis getting canned, and in an effort to keep said employees in the dark re: what’s coming at them, blocked access to Dealbreaker, on the the equity derivatives floor of 1585 (and perhaps firmwide but I’m not sure). I’m not going to even act like I don’t care because I am livid. It does me little comfort to remind the powers that be at MS that the last banks to restrict access to this here site were Bear Stearns and Merrill Lynch but I’ll do it anyway because I’m furious. I’m taking care of your employees in ways you never could. And, god damn it, Mack, I sent you a fucking cheesesteak.

Okay. Now that I’ve slightly, but not really at all, regained my composure, I’m going to give you an opportunity to think about how ridiculous this makes you look. Unblock me now and it’ll be water off a duck’s back. Continue this insanity and I’ll have no choice but continue publicly shaming you until conditions improve.

Update: We’ve been informed that the action taken to block Dealbreaker (firmwide) did not have to do with the matter of masking layoffs but the offensive description of the footwear worn by a current employee.

We couldn’t help but snicker a bit at the news, reported via Bloomberg, that Berkshire Hathaway CDS costs have “almost tripled in two months.” Bloomberg attributes the soaring CDS quote to a series of equity index puts Berkshire wrote some time ago. The puts have attracted a great deal of attention almost since their original sale, partly because of Buffett’s often quoted (and seemingly hypocritical) analogy putting derivatives in the “financial weapons of mass destruction” category. (We picture Brooks Brothers clad Femmebots holding suitcases filled with cash and shooting fire from their perfectly shaped breasts while intoning “Here’s your liquidity. Here’s your liquidity.” in robotic-monotones).

As far back as February, Barron’s suggested that those puts could show losses as high as $2 billion in the third quarter. Their near $7 billion paper liability at present would be a painful surprise to anyone relying on Barron’s estimates, if the puts were really capable of inflicting much pain on Berkshire at this point. They aren’t.

It used to be that the Microsoft-Yahoo clash seemed, at its root, a “personality conflict.” Yang and Ballmer’s war of words was, at one point, so pointed that Ballmer was said unable to consider an acquisition of any kind while Yang was still leading the firm. Or, that was the press version, anyhow. Around this time Microsoft spent a period in that Texas Hold’em sort of intentions limbo. When strong, attempt to appear weak, when weak, attempt to appear strong. Ballmer didn’t want to advertise the degree to which he lusted after Yahoo. Nor did anyone at Microsoft want to admit that the firm was (is) dangerously close to obsolescence and irrelevance in the face of Googlesque economies (though various classes of writers literally fell over each other to point this out). So, what exactly are we to make of this:

Microsoft Corp. is no longer interested in buying all of Yahoo Inc., CEO Steve Ballmer said Wednesday, though he told shareholders that the company would still be “very open” to a collaboration on Internet search. His comments sent Yahoo shares diving by 12 percent. Or “Let me be clear,” Ballmer said at Microsoft’s annual shareholder meeting. “We are done with all acquisition discussions with Yahoo.”

Yahoo spurned a $47.5 billion takeover offer from Microsoft in May, and later rejected Microsoft’s bid to buy only its search engine. Ballmer has said repeatedly of late that the buyout remains off the table, though a search-related deal is possible.

Ballmer dismisses Yahoo buyout but open on search [Yahoo Finance (Ha! Ha!)]

Artist formerly known as a director on Citi’s asset backed desk: lump sum of $90,000.

[via NYSE]

This is getting absurd and by absurd I mean the greatest thing to happen to Wall Street maybe ever. Friday, a clown. Today, Gene Simmons. Who could possibly be next? Obviously Gary Busey is my pick, but maybe not because invoking the Buse would mean the masterminds at the NYSE shooting their collective load and it’s only November—we’re not there yet. In my professional opinion, G to the B should be saved for the last trading session of the year. Until then, a few names come to mind: Jimmy Cayne. David Blaine. Gay pimp Billy Ash. Neil Patrick Harris. Charlie Gasparino. You probably can’t come up with anything better (objectively speaking, that’s an all-start team), but I’d love to see you try. Then I’ll get in touch with the appropriate NYSE official and see if we can make something happen.

Earlier: Caption Contest Friday: Wall Street Gets Clown-Faced

Apparently cuts are going down in institutional equity trading, and there is a HR representative in “fuck me boots” (though in this case I guess it’d be “fuck you” footwear) lurking around the fifth floor of 1585.

Really, you don’t get much more full of yourself than this. All we can hope for (and we are really hoping believe me) is that somewhere out there, lurking in the shadows of a moderately priced weekend package for a not-quite-five-star hotel, there is an Ashley Dupre servicing the caped bonus crusader. I’m not too worried. He has become so Spitzerlike that it would be surprising if it was only this Spitz-feature that he lacked.

Wall Street Bigs Won’t Help Cuomo Blow Out Candle$ [NY Post]

In the escalating class warfare that defines today’s economic discourse, one has to be ready for turn-on-a-dime adjustments. For instance:

Hedge funds are lightly regulated investment pools that made rich clients richer and turned their managers into billionaires.

…is the new…

Credit default swaps are insurance-like contracts that promise to cover losses on certain securities in the event of a default.

As you can see, the old hedge fund reference is updated to reflect the fact that there is nothing poor or middle class about either side of the hedge fund transaction.

Getting into the spirit of things, may I propose:

“Greenwich is the new Obersalzberg”? If we tear down a few billionaire’s residences and put in a nearby salt mine and a national museum the metaphor will be complete.

Glitzy Greenwich feels hedge fund pain [Reuters]

[via ABC News]

We began the phase with the all too familiar “We are well capitalized. We don’t foresee additional equity raises being required in the foreseeable future, except in the event of something unforeseen.” This was followed within 30 days with an unforeseen event, another major equity raise and related dilution to existing shareholders.

Next up, the phase best described as “We are announcing write downs that effectively wipe out the last 24 months of earnings. Fortunately, we are also doing an equity raise which gives us 120% of this capital and we don’t expect any further write downs.” This was followed in the same quarter by even larger write downs and another equity raise along with all the pain to shareholders that entails

We then moved into “Though we are not now in a crisis of any kind, and I want to really emphasize that, not… in… a crisis… we now have enough capital to deal with any crisis we are not in or any unforeseen event that hasn’t yet been an eventuality we have had to face.” This was followed by an equity raise.

We then moved into “The financial system at large is in the midst of a crisis. Fortunately, since we planned for this unforeseen event, we have enough capital to weather these difficult times.” A question on the call would invariably spring out: “Are you facing a liquidity crisis?” Answer: “None of our clients or our partners have lost faith in our financial strength.” Q. “So, you aren’t in a liquidity crisis?” A. “We have several employee retention plans in the works, including a deal with the Shake Shack for half price coupons for top earners.” Of course, at that very moment, the firm was getting the last subscription agreement documents signed.

After that was “We are in the middle of a liquidity crisis. Several partners have pulled their lines of credit. We have taken several steps to avoid any downgrade or counterparty credit issues and we believe our strong capital base will show how silly these fears are.” A downgrade and a preferred stock offering with 12% accruing dividends becomes public days later.

Now we have entered another stage of the credit crisis.

“From a very optimistic point of view, the financial liquidity crisis has subsided, for the time being, and the focus has shifted to the real economy,” said Kenichi Watanabe, chief executive of Nomura.

We are officially in the “The crisis is over” phase. Expect unexpected equity raises any day now.

Nomura chief says liquidity crisis over [The Financial Times]

Yesterday we mentioned we were skeptical that Citi was able to get its shit together quickly enough to begin firing its employees merely one day after the 53,000 in cuts were announced. Today, we stand corrected. We’re looking at a new Citi and this is one that moves its ass. According to one employee— previously staffed in Latin American Credit Markets— about 1,000 388 dwellers were shown the door yesterday, with deep cuts in sales and trading and “hedge fund-type groups” like the Global Special Situations Fund (which made it through the day but is expected to be canned in the new few hours). Supposedly today is going to be much worse, especially in LevFin and “any group in FI that remotely deals with either a) hard assets b) securitization c) has a high concentration of old Salomon people.” Apparently the reason given by HR for dragging the cuts out over the week was, “There aren’t enough of us left to do it all in one day.” No word on whether or not Vikram’s planning on pitching in with a few groups, and offering hugs on the way out (not that they’d even be much of a consolation prize, since he’s in the midst of what appears to be a hunger strike and has lost nearly all his jolliness).

Big Three CEOs Flew Private Jets to Plead for Public Funds (ABC)
If only they were based in New York, I’d love to see Andy Cuomo blow a gasket over this one.

Top Traders Still Expect The Cash (WSJ)
Wall St. has been a culture of BSD for at least the last 20 years and if traders, managers, and bankers have anything to do with it, it will stay that way. Unfortunately, in this climate, we’re being hunted: so intuition would tell you to shut the hell up. So, what’s the call?

If I have a vote, I say we fight the bastards until we’re all either dead or in jail - but I have that “Hunter S. Thompson” streak in me.

Notable excerpt from the article:

“The year’s three hottest trading areas — commodities, currencies and interest rates — generally are housed within banks’ fixed-income trading divisions, which also typically include the hard-hit mortgage-trading and credit-derivative products. That is dragging down potential compensation for even the best performers.”

Citi Liquidating Corporate Special Opportunities Fund (FT)
I’ll keep this short, because FT wraps it up nicely:

“The fund faltered even though Citi supplied it with $450m in credit lines and equity infusions of about $320m. It also bought assets with a notional value of $1bn that it placed in the fund.”

If we took the old “Chuck Norris” adages and could somehow find the opposite of them, I think we’d get Vikram Pandit adages. And I would love them.

CNBC Guilty Of Fear Mongering (CNBC)
Deferred Compensation is a perfect example of an Institution offering a value added service through structure. Basically, they just take part of your pay and hold on to it (generally paying interest, which compounds) - when you separate from the company (&v retire) you get the money back. It’s simple: it doesn’t look anything like a bonus, it doesn’t smell like a bonus, and A.G. Cuomo probably won’t investigate it like a bonus (though I’m not promising he won’t bitch about it like a bonus).

But to CNBC, it’s a Payout. Good job, CNBC. We should call salaries “capital distributions” and stock options “shareholder investment payouts”.

Japanese Banks In Need Of Capital (Reuters)
Japan’s leading banks are looking for capital infusions as the slow down works its way across financial markets. We all knew that ripple effects were coming. The initial shock is always a fun shit show, but much like an earthquake you can’t really tell all the damage that’s done until after the tremors stop - small forces can kill buildings and empires after being so thoroughly violated.

Look for the Banks to issue preffereds (and a possible pac-man for Morgan?).

CPI And Housing Starts At 8:30 (Bloomberg)
We’re going to see the CPI fall and Housing Starts are going to be down (of course) but the market should have all of this priced in.

GE Capital Cutting $2B In Costs (FT)
GE is actually looking forward, restructuring its Financial unit (are you paying attention GM?) so as to account for the rising cost of credit and to face potential liquidity issues in the future.

In the move we’re likely to see layoffs and the sale of roughly $90B in “highly leveraged assets”. Also mentioned was a cut in exposure to GE’s bottom line:

“Jeffrey Immelt, GE’s chief executive, has pledged to cut the finance arm’s contribution to profits from about 50 per cent to 40 per cent.”

—William Richards

$$$ Wall Street’s Neediest: We’re Lending a Helping Hand [Cityfile]

$$$ Berkshire’s Credit Risk Soars on $37 Billion Bet [Bloomberg]

$$$ Liveblogging the Senate bailout hearing for automakers [Idiot Inc]

Peter Morici, a University of Maryland professor in a bow-tie, says that giving the Big Three automakers will “create another AIG.” (He also says if Chapter 11 is put off, “the industry will continue to shrink.”)

Short version: They want money.

Long version:

The man about town and possible working girl was just spotted dining at Alain Ducasse’s Adour in the St. Regis hotel. Apparently when he got up from the table, a “wad” of twenties fell out of his pocket.

Related: Spotted: Stan O’Neal, “Lookin’ Good”
Earlier: If They Won’t Come To US, We’ll Come To Them

You just knew that baseball was itching for a reason to give Mark Cuban the kiss-off. And, frankly, there were few teams baseball was less likely to want Cuban to put his filthy mitts on than the Chicago Cubs. So intense is the backroom animosity said to be for Cuban, that it is difficult not to wonder (but only because we have totally unfounded rumors burnt into our DNA) if this entire SEC business wasn’t accelerated just a little bit to give baseball a chance to slap Cuban somewhere other than on the ass. If nothing else, that particular explanation satisfies our romantic need to see baseball in the traditional light of an American pastime. That is, ruled with an iron fist by cigar smoking men who sit in a leather clad office, slightly behind the ceiling light, faces covered in blue-white tendrils of smoke and shadow, rarely speaking- then only in imperative sentences with a few words. “Leave the bag.” “Handle it.” “Keep it quiet.” “Send Bartman his check.” “It’s time to deal with this… Cuban person.”

Charges dent Cuban’s Cubs bid [Chicago Tribune]

We aren’t often prone to agree with Andrew Ross Sorkin (“ARS” to his friends and when writing in third person). In fact, it is highly unusual that we wouldn’t violently disagree with Mr. Sorkin. He is on our side of at least one debate other than the need to change the age of consent in the United States (we only differ here on the direction of the change, it should be noted). We agree that GM shouldn’t get another dime from anyone (including customers) until its already declared bankruptcy. Says ARS:

G.M is using money so quickly that a $10 billion infusion made today would disappear by February. That is why taxpayers shouldn’t fork over a cent, at least until shareholders are wiped out, management is tossed out and the industry is completely reorganized.

Somewhere, back I think when programmers bragged about (and were paid based on) the number of lines of code they had produced, the Big Three got into the business of measuring success with metrics like “we created the most jobs of any industry in the last two decades” or “We employ more people in your state than

Of course, all good things must come to an end and agreement with the ARSE is no exception. In this cause, our slow nodding of the head ceases abruptly with this passage from Sorkin:

So, first, the government would force G.M into a prepackaged bankruptcy now — even before policy makers may think it needs to be.

Forgive us for feeling that, perhaps, the government of the United States shouldn’t be in the business of “forcing” anyone into bankruptcy, particularly “before policy makers may think that it needs to be.” The rather severe potential for abuse by government with discretionary power to force firms into bankruptcy before they seem to need it is a property of this plan that makes it indefensible. Who would review such a decision? Who would make it? Would bicameralism and presentment be required? Or simply an executive order or a finding by an agency? The entire concept sounds awfully “bill of attainder” like to us. We’ll pass, thanks.

A Bridge Loan? U.S. Should Guide G.M. in a Chapter 11 [Dealbook]

It was only a matter of time before someone seriously did it. Claw-back provisions in bonuses at a bulge(esque)-bracket bank. You knew it was coming, but that makes it no less painful. No less painful at all. Even more dramatic, and prone to ignite a firestorm, is its retroactive application. Behold:

Just as bonuses (Latin for “good”) are paid out for good performance, maluses (“bad”) will be meted out if the bank subsequently makes losses or if the employee misses performance targets, UBS said. The maluses could wipe out all previously agreed share bonuses and two thirds of all cash bonuses under stringent new rules designed to align the interests of executives and traders with those of shareholders.

The Swiss bank announced plans for a complete overhaul of its pay system and disclosed that it was taking legal advice to see whether it could claw back previously paid bonuses from tarnished executives. That raises the prospect of UBS demanding and, if necessary, suing Marcel Ospel, its former executive chairman, for the return of millions of dollars of bonuses that he received before UBS collapsed into losses.

Before you get too worked up and start driving around with an Aimpoint topped M4gery carbine slung to your chest, playing Johnny Cash’s “The Man Comes Around” set on “repeat” and sleeping in a bathtub nights, just remember that if this doesn’t catch on, all the talent will drain away from Zurich and to some other, less radical bank. Here’s hoping….

UBS turns bonus culture on its head to claw back millions from failing executives [Times Online]

From: all-mit-bounces@mit.edu On Behalf Of Susan Hockfield and L. Rafael Reif

Sent: Monday, November 17, 2008 4:06 PM

To: MIT Community

Subject: Letter to the Community on MIT Finances

To the members of the MIT community:

Ambitious forward motion is MIT’s signature; we celebrate initiative, innovation, relentless improvement and creative change. Yet as the world’s financial markets continue to decline, they forecast a global reduction in resources. In that context, our challenge is clear: together we must chart a financially prudent path forward, but one that sustains and fosters the essential character of MIT.

S.&P. said the outlook for $500 million in debt of the Citadel Kensington Global Strategy Fund and the Citadel Wellington fund was negative and it warned that the ratings could be further downgraded if their actions and “market conditions fail to result in lower volatility and performance stabilization.” S.&P. also said it was watching the pace of redemptions.

“The downgrade reflects Kensington/Wellington’s negative performance in September and October of this year,” said Daniel Koelsch, a Standard & Poor’s credit analyst. He said their performance was inconsistent with “BBB+” ratings.

Accordingly, the funds’ credit ratings were cut to BBB/A-3 from BBB+/A-2.

Mr. Koelsch noted in a statement that the year-to-date performance of Kensington/Wellington was approximately a negative 39.5 percent as of Oct. 31.

S.&P. Cuts Its Ratings on 2 Citadel Hedge Funds [Dealbook]

At least one hedge fund manager who Porsche made sweet rape to a few weeks back has not been resigned to living in a Beetle outside of his office. Cityfile reports that Highside Capital principal David Thomas and his wife are moving into a four-bedroom in the Fischer Mills Building in Tribeca, purchased for $5.59 million.

Buyers And Sellers [Cityfile]

At the Asian Venture Capital Journal conference in Hong Kong…TPG’s David Bonderman explained the difference between a hedge fund investor relationship and a private equity investor relationship:

“Private equity all has long term lock ups. So you may like our performance, you may not like our performance, but you’re my partner for the next 12 years (makes a smooching, kissy sound here). At a hedge fund, you’re my partner for the next 45 days until you can give me notice and get the hell out.”

Bonderman’s Investment Kiss [Deal Zone via Daily Intel]

Morgan Stanley is said to have just cut heads from its Global Structured Products desk. Supposedly analysts were mostly spared, with VPs and above being shown the door.

Representative Nydia Velazquez (D-NY): Why are foreclosures still increasing?

Secretary Paulson:

I’m not sure how anyone could have missed this one coming, but apparently it is news at Bloomberg. True, things look bad for hedge fund lampreys, but there is still time to repurpose the real estate once used to house in audacious style, those hedge funds that once enjoyed annoying levels of success. Personally, we think that a former trading floor would make a wonderful viewing room for a funeral home. And what childcare facility wouldn’t have its reception area improved with a large salt-water tank complete with three species of shark prowling around the glass enclosure ceaselessly?

Office rents in Mayfair and St. James’s, the London districts with Europe’s biggest concentration of hedge funds, are falling for the first time since 2005 as the alternative investment industry has its worst year in two decades.

London Hedge Fund Alley Rents Fall as Firms Close [Bloomberg]

I’m running out of reasons to justify working at Goldman Sachs. If they get rid of Blankfein Breakfast Sandwich Sunday, in which employees are compensated for coming in on the weekend to cook the books with a delicious and sacrilegious pork-themed treat— probably because sin tastes so good— I’m done. We have it on a good authority that the powers that be at 85 Broad have just hiked vending machine rates. Items which previously cost 75 cents will now set you back an additional $0.20. This on the heels of a ridiculous cost cutting initiative that saw expensed dinners go from $25 to $20, and the downright ludicrous ban on free soda and water. One employee in particular is so distraught that he told Dealbreaker, “In a way I almost feel a twinge of gratitude that 10% of my departed brethren never had to wake up to a workday full of such cut-rate ignominy.” Sure, it sounds like typical smug confectionery entitlement characteristic of a GS employee which would normally get a “Shut up, Winkelried,” but at this point we truly feel unmitigated sadness.

So, according to those who track such things, the 388 Greenwich groups to watch get slaughtered in the near term are global corporate banking, IBD, M&A, and global portfolio management. That we’ll buy. What we’re slightly skeptical about is the rumor that “janitors have already put boxes out on each floor.” Why? Because Vikram Pandit just acknowledged 53,000 people would be getting canned yesterday. Obviously it’s been in the works for a while but this would be an extremely impressive turn around time for any company, let alone an insolvent one.*

It would pretty much be the first time Citi moved its ass on anything. It would also represent the first time the Big C lived up to its promise to pull all-nighters since introducing us to its fantastic new motto back in May (we received word up the cleaning staff putting out the pack up your shit receptacles circa 2 am). Perhaps we’re looking at a new regime at Citi? The only other explanation we can think of is that this is standard protocol for the custodial arts staff, known for expediency and thoroughness practically foreign to the firm at large, and that those in charge of distributing the actual pink slips will fuck it up in short order. (Obviously it goes without saying that we recommend a coup, at least in the c-suite.)

*Get over yourselves, I’m just trying to keep it casual in here.

We share in your outrage (for surely you possess it) following Mr. Spitzer’s gliding skate off center ice without so much as a bloodied nose. We’re not often the ones hissing “it’s a conspiracy,” but with passages like this emanating from the New York Times, it’s hard not to think that “the fix is in.”

In the interview, Mr. Garcia said that although there was evidence that Mr. Spitzer had violated the Mann Act, which prohibits transporting people across state lines for the purpose of prostitution, there were none of the other factors that traditionally weighed in favor of bringing charges, like the use of juvenile prostitutes, or commercial or other exploitation of them.

So let me get this straight. We’re off to other business because the charges we would have brought don’t include statutory rape? This is the threshold we are going to require?

Reid Calls For $25B In Banking Money For Auto Sector (DJNews)
Harry Reid et al introduced a bill to the floor Monday night calling for $25B from the Baking package. Apparently the American public are as attentive as dogs, simply looking wherever people snap - makes it easy to “accomplish” things that way.

“The bill, to be introduced by Senate Majority Leader Harry Reid, D-Nev., Monday evening, would provide $25 billion in low-cost loans to General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC.”

Dutch Insurance Company Aegon Positioning For Bailout Money (Reuters)
The company is looking to purchase a Maryland based Savings and Thrift so as to qualify for US TARP money - it looks like they’ll be seeking anywhere between $1.25B and $4.75B.

Yesterday, we saw Hartford doing essentially the same with an S&L, but this move is markedly different; it’s not a U.S. Entity. While it’s true that Aegon holds Transamerica Insurance - the company itself isn’t based in the United States - which raises the all mighty question: what the hell?

Let’s expound upon that a little bit - what if a flood of Iranian banks started buying Thrifts and applying for money? Who do we let raid the taxpayer vault?

Ford Drop-Kicks Mazda’s Ass Out The Door (FT)
Ford is selling the majority of its holdings (20%/33.4%) in Mazda for $540MM in an attempt to stay alive long enough for Government money.

“Ironically, Ford had succeeded in making Mazda profitable even as its own business struggled.”

UAW Weakens Its Grip On Washington (NYT)
The United Autoworkers Union has long held a firm grip on the policy makers in the East, but it looks as though their influence may be waning. I’m of the opinion that we’re the chief culprits in this: next to us they look like children. The Time seems to agree - in part - but also cites long standing feuds with the Senate, and poor leadership.

Also touched on was the “Jobs Bank at G.M.” which (via UAW) assured that all workers that were laid off from their auto jobs had full pay until they could find other employment.

Yang To Step Down As Yahoo CEO (DJNews)
Yang is stepping down after failed talks with Microsoft, having been with the company since its founding. Yahoo, for those of you who came to the interwebs post Google, was one of the first fully functional search engines. I don’t remember anything before Yahoo, except books, which you can now get on Google.

M.B.A.s Veer Off Path to Big Finance Jobs (WSJ)
Synopsis: The majority of grads are seeking employment outside of IB, as they’re scared the structure is disintegrating. For those staying in the field, they’ll be seeking employment at Boutique and Middle Market houses. The big winners of the purge are going to be Technology and Consulting, who are going to pick up better grads than previously thought possible - as the job everyone really wants is going to be under water for ~5 years.

Paulson’s Fund Buys Troubled MBS (FT
Paulson, seeing that the MBS market is depressed, has moved to purchase the undervalued securities and could stand to make a tidy sum off them.

I’ve always been a fan of the adage: “when there’s blood in the streets, buy real estate.”

At Least One Citi Employee Will Be Okay (NYDN)
“Drug dealing on craigslist has become so rampant that the city’s special narcotics prosecutor has asked the online trading post to curb the ads, the Daily News has learned.

Bridget Brennan’s undercover investigators have bought drugs offered on craigslist personals from dealers ranging from a Citigroup banker to an Ivy Leaguer to a violent felon using a halfway house computer. In the past four years, her office has prosecuted dozens of dealers.”

—William Richards

$$$ “How To Ground The Street,” by Eliot Spitzer [Washington Post]

$$$ Damien Hirst Admits His Art Was Overpriced. Big Guy, your thoughts on the matter? [Cityfile]

$$$ GM Goes All-in (With 2-7 Off-Suit in the Hole) [1-2]

$$$ “I’m going to do what we need to do to keep the system strong but I’m not going to be looking to start up new things unless they’re necessary, unless they make great sense,” Mr. Paulson said. [WSJ]

Remember this?

And this?

They just sold for $25,000 and $18,000, respectively, to a buyer in DC who wished to remain anonymous. Let that sink in. (And give us your best guest re: who shelled out for these masterpieces.)

Earlier: Say It To His Face

So, I’m not saying that Citi senior executives should get bonuses, because they probs shouldn’t. But if I were Vickie Pandit or one of the Pandettes it would really frost my cookies to hear Andrew Cuomo suggest that “At the very least, Citigroup should follow Goldman Sachs’ lead and announce quickly that top executives will not be receiving bonuses this year.” Come on now. They might not be letting on, but Pandit and Co. obviously know they’re scraping the bottom of the urinal league tables. Is it really necessary to make this how they’re inferior in every way to Goldman Sachs, including not accepting their garbage bags of money? If I’m going to give up a bonus, I’m going to do it on my own terms, not because perfect Lloyd did. And furthermore, let’s be honest. Since when does Citi give a shit about what Goldman does? If they were trying to emulate the Masters o’ the U, they would’ve at least made a little money by initiating a buddy system between the prime brokerage and the prop desk in order to facilitate front running of clients. This was poorly thought out on Andy’s part. I move for full bonuses, all cash. Drawn off a small bank in Zurich, Switzerland.

Statement from Attorney General Andrew Cuomo Concerning Bonuses to Top Executives at Citigroup [NY State Attorney General]

Linda: “Ok, I can’t see your nametag. There, Lloyd, is it? C’mon in. Take a seat anywhere. Ok. I think that’s the last of you. Let’s get started. Uh, ok… sir, uh… yes, you… Vi-car, is it? We couldn’t get the large nametags. Are you waiting for someone?”

Vikram: “It’s Vikram, and no… I most certainly am not waiting for someone, thank you very much.”

Jamie: “Relax Vikram. Don’t be a jerk. Seriously.”

Linda: “Ok, let’s take our seats. We have a lot to cover. My name is Linda. Some of you know me already. I’m a specialist in corporate communications, as well as investor and legislative relations. I have managed to keep the U.S. Auto Industry afloat for more than a dozen years with careful subsidy management, tax relief, bailouts and favorable legislation. You could say that I turn corporate frowns, upside down, really. Ok, Lloyd… since you were late, maybe it would be better if you focused your energy on paying attention instead of laughing with your neighbor, yes? Ok. So… moving on. I’m here because… somebody has a little problem with their public image and with Washington… isn’t that right everyone? Yes, well. Who here is facing bankruptcy? C’mon, hands up now. Don’t be shy. Ok, Brady? Eyes front please. Ok. Thanks. Several of you I see, yes. So. Who has the sympathy of their congressional district? I see, no one… no one? Let’s talk about working the angles here. John, how large is your labor union?”

John: “Uh, my… labor union?”

I mean seriously though, can’t you come up with a better pit to shoot yourself in than the interest rate futures pit? I thought everyone knew that the big fortunes are won and lost in the Frozen Concentrated Orange Juice pit. And, folks, if you are going to shoot yourself on a floor at all, please finish the job the first time, right?

Trader shoots himself at Brazil financial exchange [Reuters]

“Mr. Cuban intends to contest the allegations and to demonstrate that the Commission’s claims are infected by the misconduct of the staff of its Enforcement Division.”

I mean this kind of poetry is made by one born to write it. It simply cannot be learned.

The SEC [Blog Maverick]

Apparently the cuts at Putnam Investments today were “nasty,” though obviously not as disgusting as Citi. At least 47 people shown the door, including 12 portfolio managers. CEO Robert Reynolds seems to be doing okay though, but perhaps that’s just the glow of Dennis Kneale.

From: vikrampandit@citi.com

Sent: Monday, November 17, 2008 11:18 AM

To: Vikram Pandit

Subject: Today’s Town Hall

Dear Citi Colleagues,

A few minutes ago I concluded a Town Hall meeting in New York. I shared
with you what I shared with the Senior Leadership Committee last week,
and you’ll be hearing more about it from the leaders of your
organizations in the coming days.

There are a few points that I would like to reiterate:

“SEC charges Dallas Mavericks owner Mark Cuban with insider trading.” - The Wall Street Journal

UPDATE: Apparently it was for “…alleged insider sales at mamma.com”

UPDATE II: Here’s the complaint, and the press release from the SEC:

Cliff Asness’s secretary, not so much, but as of Friday’s close:

AQR Global Stock Selection Offshore Fund Ltd.

Nov 2008: 0.07%
YTD: 0.10%

Earlier: Quantocide At AQR

“Ja, men. We knew this time was coming. Fortunately, as you know, over the years we have made several allowances for just such an occurrence. The tax probe, the protests outside headquarters, I mean it’s gotten so we can’t even secretly help the wealthy avoid taxes in their home countries. Our ‘Secret Accounts for Secret Services’ program for foreign dictators and their inner circle, once our crowning achievement in wealth management, has trickled to a slow crawl. (I understand we lost the Kingdom of Tonga as a client last week). Be that as it may, I believe we may have the answer. As you know, top managers will be publicly required to forgo any bonus plan to comply with the new transparency requirements. Accordingly, effectively immediately, all top managers will be demoted and afforded pay raises.”

Top UBS bankers will not get 2008 bonus [The Financial Times]

The Swiss bank is said to be showing about thirty percent of IB the door, with cuts beginning last Friday.

The Big C has confirmed that it will be cutting approximately 50,000 jobs, as reported over the weekend by Charlie Gasparino. Taking a cue from Dick Parsons’s page, Vikram Pandit told the residents of Citiville, many of whom are about to get the axe, “don’t stop believing.”

Citi Town Hall Presentation [PDF]

Earlier: Dick Parsons To Citi Citizens: “Keep The Faith”

Goldman Chiefs Forgo Bonuses (Reuters)
In the highest profile move of the sort thus far, we’re seeing the heads of GS turn and cough. Here’s the part that really irks the shit out of me:

“New York Attorney General Andrew Cuomo said Goldman had taken “an important step in the right direction.”“

It takes a special kind of arrogance to stand up and tell men that have collectively given up ~3ooMM in personal pay that you approve, especially when done in such a thoroughly condescending I-know-better-than-you we’re-all-proud-of-you-son paternal tone.

Genital Warts have more appeal.

Harftord To Become S&L, Seek Bailout (DJNW)
In a move that’s becoming more popular as instability progresses, Harford is moving to acquire Federal Trust Corp., a thrift holding company established in Florida, and filing for S&L status.

The words “S&L” and “Bailout” have such a beautiful tone to them, I wonder why they aren’t used in conjunction more often?

A Reminder Of Looming Palace Intrigue (CNBC)
Citi is going to be holding its Town Hall meeting this morning addressing the all popular topics “why we’re so great”, “and we kick ass” - just before they announce further layoffs. Granted, it probably won’t be immediate, but I can imagine that embedded in the speech somewhere will be lines like “These are tough times, and tough decisions are required to pull this company that we all love through them.”

Convertible Bond Funds Not Having A Good Year (WSJ)
The Culprit:

“But for a strategy that uses leverage to exploit often small market inefficiencies, one of the biggest problems has been banks reducing leverage and insisting on more capital upfront.”

ABCPMMMFLF: Actually A Federal Acronym (Bloomberg)
Firstly, it’s important to consider just how dumb that is.

Outside of that, this is a program that I could actually get behind: the government is buying up to $1.4T in Paper from eligible institutions, and it appears to be working.

If Detroit Falls, Foreign Makers Could Be Buffer (NYT)
This isn’t plausible: the lag would be too long, jobs would be scarce, and the long term impact could prove devastating.

GM has to survive, as much as I dislike it, and so does Ford in all probability; Chrysler doesn’t show much hope. If we just look at the numbers for GM (from the article) we’re talking about 100k jobs, and if you consider the entire of the auto industry and the network that it relies on, we’re looking at 2.3% of the economic output of the country.

There’s also this to consider: by the sheer fact that we manufacturer (our) cars in this country we create a competitive environment helping to stabilize prices. If we no longer do that, we’re at the will of foreign importers in whole, who can set their price points without regard (well, kind of).

British Economy Balks (AP)
The Confederation of British Industry is calling for GDP growth of -1.7% in 2009.

IMF Needs Money (BBC)
Objectivists generally dislike me for my level of philanthropic endeavor, but even I find this humorous. Why is it that in any “crisis” people have to hold hundreds of meetings in an eager attempt to look so terribly important?

I would argue that the danger facing smaller, less stable countries isn’t considerably more urgent or dire that just a short while ago, and further that the injection of this money is nothing more than show. The idea that millions, or hundreds of millions, or even billions of dollars is going to right-size an economy that has thus far barely tread water (even in the brightest of circumstances) is borderline absurd; effectively like handing out umbrellas in a hurricane.

And the larger countries, their issues are largely structural; there isn’t much that the IMF can do there, either.

U.S. Unemployment To Peak At 7.5% (Reuters)
According to a survey we should find the bottom at 7.5%

Isn’t that the number that J.P. Morgan Chase came up with in the WaMu presentation?

—William Richards

$$$ The Shark, it Has Been Jumped (Middle East Edition) [1-2]

$$$ Where were you on this one, Big Guy? Hirst Painting Flops at `Brutal’ New York Art Auction [Bloomberg]

$$$ John Rogers v Jordan [WSJ]

That’s right, people. The one bank that should be getting down this year without having to worry about petty bull shit like “tax payer money” are joining the Ban on Christmas Party Pile On. According to DB, it’s not about the money, it just looks bad.

All we do all day at DB is root for the jolly elfin’ CEO but some people, people who for some sick reason just don’t get the importance of having a chief executive with the perfect body for reaching out and giving a tickle running your ship, are saying Count Vikula isn’t going to make it. So:

John Paulson, who made a killing shorting the individual mortgages of down-on-luck friends out East, has been forced to slash the asking price of his Southampton home for a second time. The 6,800 square foot house, which the other Paulson bought in 2006 for $12.75 million, is now going for the bargain basement price of $13.9 million. Big P was originally hoping to get $19.5 million, but lowered his expectations to $16.9 million in September after the shack sat on the market for four months.

Hedge-Fund Guru Paulson Cuts House Price Once More [WSJ via Cityfile]

Except to express our total lack of surprise that the Goldman alum Treasury Secretary thinks we are a total humiliation as a nation, (or more precisely: “We have in many ways humiliated ourselves as a nation with the recent turmoil.”) and our equal lack of surprise that he does it while glaring at what must be a spot of mustard on Erin’s lapel and displaying the universal hand sign for “the count is 3 and 2 with two outs.” No, it is nothing more suggestive than that. Besides, he told us Erin is totally not his type anyhow.

Well, Rep. Elijah Cummings is but same difference.

From: vikrampandit@citi.com

Sent: Friday, November 14, 2008 12:48 PM

Subject: Global Town Hall on Monday, November 17

Dear Citi colleagues,

Please join me at a Town Hall meeting at 8 a.m. on Monday morning (complete Town Hall viewing locations below).

I want to talk with you about our accomplishments over the last eleven months and why despite the major challenges currently facing our industry and the economy I continue to be optimistic about the future.

With SAC gone mostly to cash and no idiotic traders to berate 15 hours a day, our favorite Steve has had to find other environments to dominate, other minions to tower over (around) and belittle. The Greenwich Planning and Zoning Commission might seem like a small pond for a big fish like Cohen, but a quick look at their website with the agenda for yesterday’s meeting, betrays a den of Byzantine political maneuvering of the sort not seen since Elizabeth II’s court was the front line of Catholic-Protestant bloodletting.

And thank god for Andrew Ross Sorkin’s DealBook, which kindly provides a electronic copy of the heretical plot final Zoning Commission agenda.

The Big Guy’s inadequately-sized house after the jump.

“Alcohol brings everyone together.” Absolutely goddamn right. I’ve been saying for months the the answer to this liquidity shortage is more liquid courage. No, it wasn’t the repeal of Glass-Steagall that slowly ate away at the market, it was the partial revival of the Volstead Act in the hallowed halls of our investment banks.

The wind is changing, and here was the first clue:

…Kipton Davis, a Prudential Douglas Elliman broker from Virginia, thinks a little bourbon could be good for sales.

Just as a few drinks may coax timid traders onto a dance floor, it could help them muster the courage to buy multimillion-dollar apartments.

That’s why on Wednesday night, Ms. Davis lured a half-dozen bankers, traders and friends on a condo tour of four TriBeCa buildings by offering wine and whiskey at every stop.

Any day now and we can expect Deutsche to quietly re-authorize expenses at strip clubs. We’re calling a bottom. We are counting the days. Go long financial hedonism, friends.

For Apartment Shoppers, Some Liquid Courage [The New York Times] via [Daily Intel]

“BAC trying to sell its existing equities division to HSBC?”

Granted, it probably would’ve been more fitting for a manufacturer of ball gags and executioner’s masks to ring the bell, but this works, too.

Date: Thu, 13 Nov 2008 15:51:13 EST

From: Provost Barry Scherr, Vice President Adam Keller

To: All

Subject: Dartmouth’s Budget Planning Process

Dear Members of the Dartmouth Community:

As President James Wright has informed you, Dartmouth, like most colleges and universities, is facing long-lasting effects from the worldwide financial crisis. It is prudent that we begin to deal with the budgetary impact of this situation, and this message outlines the process that we intend to follow in the coming weeks. There will be further communication with the Dartmouth community as we learn more during the process.
We are committed to working with you through this challenging period to assure that Dartmouth will continue to be a strong and vibrant intellectual institution, as well as accessible to the most promising students of all backgrounds.

October was a particularly volatile month for the financial markets. While the Dartmouth endowment performed much better than the stock indices, its value continued to fall. As a result, we have revised projections about future income from our endowment, on which we rely for more than a third of our operating revenue.

Your mother told you not to bring those filthy things inside, but you snuck them in anyhow. Now, blind, helpless, cold, foul smelling and featherless, the screaming, greedy mouths of the GSEs seem to gape endlessly, never satisfied and eager to suck more capital from the mouths of strained and frantic surrogates, forced to hunt eighteen hours a day to keep the damn things from chewing off a foot in their lust for fiscal calories, or screaming so loudly that your parents may burst in to hear which cat is being brutally tortured. No sooner have they had a hard-won, slime covered bit of roadkill been dumped into their bottomless, sucking orifices than was another immediately required.

Freddie Mac posted a $25.3 billion net loss in the third quarter on surging investment and credit losses as the company announced plans to seek an initial $13.8 billion from the Treasury Department to cover the hole in its shareholder equity.

Treasury pledged up to $100 billion each for Freddie and Fannie Mae when they were put under conservatorship in September to prevent their potential bankruptcy. The government will receive preferred stock for any money given to the firm, and Freddie expects to receive its $13.8 billion request by Nov. 29.

Freddie’s Loss Balloons to $25.3 Billion [The Wall Street Journal]

To: Citi Employees

From: Citi Board of Directors

Sent: Thursday, November 13, 2008 9:33 PM

Subject: Message from the Citi Board of Directors

It is important for us to communicate with you directly in light of recent media coverage of our company. The news coverage about the Chairman of our Board, Sir Win, is irresponsible and completely inaccurate, and we want you to understand and appreciate our perspective on it.

From: President John L. Hennessy

Date: Thu, Nov 13, 2008 at 4:42 PM

Subject: A Message From Stanford’s President

Dear Alumni, Parents and Friends:

Many of you have contacted me over the past few months with questions about the recent shifts in the economy and how the University is affected. I would like to update you on our response to these challenges.