• 31 Dec 2008 at 8:41 AM

Opening Bell: 12.31.08

Picture 476.pngMadoff Investigation Shifts to Offshore Role (NYT)
If, at the beginning of the year, someone had predicted that at the year’s end we would be knee deep in shit from a madman creating a $50B Ponzi scheme I would have simply replied “I’ll buy the drinks for that show”; it’s clear now that by the time this settles I would have been broke and suffering from liver/kidney failure.
At the Times we’ve got Madoff being investigated for his possible offshore activity – adding the “illegal” seems unnecessary as anything he was doing was actually in the commission of the biggest Ponzi ever pulled. They’re looking into tax avoidance and fraud – rumor has it UBS was consulted on the former back in the day but turned the gig down as they only deal with “large scale” operations.
Fed To Purchase $500B In Mortgages, Continued… (Reuters)
The Fed has announced that it plans on following through with the MBS purchase plan. If you weren’t paying attention at some point:
“The Fed selected investment managers BlackRock Inc (BLK.N), Goldman Sachs Asset Management (GS.N), PIMCO, and Wellington Management Co to implement the program.”
Who didn’t see Goldman popping up on the list? Really? I’m a massive fan of nepotism on a personal level, but in the wake of the SEC/Madoff mindfuck it seems that the prudent government move would have been to separate itself from the purchase of assets that could very well (further) influence what players are left on the Banking Field in the near future.
Credit Suisse To Sell Part Of Global Investors Business Line (Bloomberg)
The marginally less tax-evade-y Swiss bank in townhas announced it’s going to sell off part of it’s Global Investors line, which “includes fixed-income, equity and money market funds” to Aberdeen Asset Management for $361MM in stock.
GMAC Uses Fed Money To Create Liquidity (WSJ)
They’re going to be offering loans of the 0% variety on five vehicles, and loans ranging from .9% to 5.9% en masse it appears. I don’t know that any of this will help either the company or the American public/infrastructure at large, but it was a nice thought.
Paulson, Run Amuck (Reuters)
While (the real) Paulson (to us) is looking to buy distressed debt with his $36B baby Paulson & Co, he’s also slinging mud at the rest of the industry for gating redemptions and clawing for survival. Because opening up the Funds for full redemption won’t be anything like a bank run, or cause the sudden sell-off of Billions of dollars of equities. No, Paulson, people are completely rational right now.
UBS Sells Off Bank Of China Stake (Reuters)
“Straitened (sic) Swiss bank UBS AG said on Wednesday it had sold its stake in Bank of China at a discount to institutional investors and would book a gain of a “few hundred million dollars” in the fourth quarter.”
Here’s the story in a nutshell: UBS needs money so they’re selling off whatever they can. Banks (even ones in China) pose an unnecessary risk, so they’re the first to go.


AIG Looking For Fed To Relax (FT)
AIG wants the Fed to back off its rule that purchasing companies have to present 90% cash. The ability to take shares for the pieces it sells off would allow for more bidders, in theory.

–William Richards

41 comments (hidden to protect delicate sensibilities)
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Comments (41)

  1. Posted by guest | December 31, 2008 at 8:51 AM

    UBS sucks.

  2. Posted by Anal_yst | December 31, 2008 at 8:54 AM

    GSAM eh? They must have a pretty darn good track record to have gained such a noteworthy commission…

  3. Posted by guest | December 31, 2008 at 8:59 AM

    T A R P
    Taxpayer Again Reaping Punishment

  4. Posted by guest | December 31, 2008 at 9:02 AM

    Happy New Year biotches.

  5. Posted by guest | December 31, 2008 at 9:24 AM

    Credit Suisse sucks

  6. Posted by guest | December 31, 2008 at 9:58 AM

    you suck

  7. Posted by guest | December 31, 2008 at 10:08 AM

    Why so serious?

  8. Posted by Last Man Standing | December 31, 2008 at 10:10 AM

    As much as I may admire John Paulson, its easy for him to say that hedge funds should not throw up the gates and limit redemptions. with his fund up significantly this year and last, it real easy for him to sit back and say this. I’d like to hear what he has to say about it when (if ) his fund has a bad year and down 30-40% like some of the others.
    All the limitations, gates, etc are all clearly stated in the hedge fund LP docs which every investors signs. As much as we like to poke fun at all the hedge fund guys for this,their bad investment decisions, and their former highflying ways, what they are doing is perfectly within the lines of their funds structures

  9. Posted by guest | December 31, 2008 at 10:14 AM

    MERRY NEW YEAR!
    Bufula bufula bufula hah
    Bufula bufula bufula hah
    Hah hah hah
    Want some beef jerky?

  10. Posted by guest | December 31, 2008 at 10:21 AM

    Weren’t Pimco and Blackrock offering to manage the mortgage program gratis? Out of some sense of civic duty or something? Is that offer off the table? Or did that go off the table when Treasury insisted on a Chinese Wall around these trades?
    “Well if we can’t front-run the taxpayer we’re going to have to get a commission.”

  11. Posted by guest | December 31, 2008 at 10:36 AM

    Does anyone really believe in the effectiveness of chinese walls? It was always seen as more of a PR gimmick at my old firm.

  12. Posted by guest | December 31, 2008 at 10:55 AM

    Oh no!
    http://online.wsj.com/article/SB123051100709638419.html
    I’d better sell my house and leave.

  13. Posted by guest | December 31, 2008 at 10:57 AM

    “Straitened (sic) Swiss bank UBS AG said..”
    Straitened is correct, the sic is incorrect.

  14. Posted by guest | December 31, 2008 at 11:04 AM

    @12
    A Russian scholar who was former KGB doesn’t think America will survive. How original.

  15. Posted by guest | December 31, 2008 at 11:06 AM

    #8 Last Man Standing –
    I think Paulson (and others) point is that while it’s perfectly allowable per fund docs, it’s likely a losing proposition for the fund because it leaves such a bad taste in the LP’s mouths, they still want their money back and won’t want anything to do with the manager (or anyone who has a gate for that matter) in the future.
    And the even bigger slap in the face is when they have more than ample cash to meet the redemptions, like Citadel says it does.
    The only way out is for the fund manager to hold on to the money and totally crush it in 09 and beyond, delivering significant market beating returns.
    In effect, by trying to help their survival, many funds are in fact ensuring their long term demise/marginalization by alienating LP’s and ensuring the future balance of power (fee’s, oversite, gates, etc.) shifts in the favor of the LP.
    To quote Joe Piscopo in “Johnny Dangerously”: You shouldn’t kick me in the balls, Mrs. Kelly. My sister kicked me in the balls… ONCE…

  16. Posted by guest | December 31, 2008 at 11:06 AM

    @8 – Not to mention, Paulson is really only talking his book. Remember, this is a guy who has made most of his money to date on the short side. Of course he wants other hedge funds to allow unrestricted redemptions, because that will force the longs to liquidate even more securities.
    Faster, Pussycat! Kill! Kill!

  17. Posted by guest | December 31, 2008 at 11:08 AM

    Here’s wife Ruth Madoff’s cookbook:
    Great Chefs of America Cook Kosher: Over 175 Recipes From America’s Greatest Restaurants
    http://www.amazon.com/exec/obidos/tg/detail/-/0964125226/

  18. Posted by guest | December 31, 2008 at 11:15 AM

    Too abbreviated vacation-esque schedule; didin’t read.

  19. Posted by guest | December 31, 2008 at 11:35 AM

    If I comprehend the MBS purchases, Pimpco (with > 50% of its net worth in MBS) will be buying back MBS? from itself? Is this going to really happen? Who will set price? This stinks, and all of us just sit here and inhale….

  20. Posted by guest | December 31, 2008 at 11:39 AM

    @19 Goldman and Pimco are positioned to make a killing….going long GS at some point soon.

  21. Posted by NotNasser | December 31, 2008 at 11:51 AM

    #11, Does anyone really believe in the effectiveness of chinese walls? It was always seen as more of a PR gimmick at my old firm.

    Both the Mongolians and the Manchurians seem to have found holes in it when they had to.

  22. Posted by guest | December 31, 2008 at 11:54 AM

    is anyone else bored outa their mind at work? i just want to get home and start drinking heavily

  23. Posted by guest | December 31, 2008 at 11:59 AM

    @9 “Oh no, son. It gives me the wind something terrible.”
    -BeckyBootFan

  24. Posted by guest | December 31, 2008 at 12:07 PM

    Is there any question that Trading Places is one of the top 10 movies of all time?

  25. Posted by guest | December 31, 2008 at 12:14 PM

    RE: drinking after work, my firm just moved to Greenwich and I don’t know where to head at the close. Everyone heading back to the city or will people grab a drink here?

  26. Posted by guest | December 31, 2008 at 12:15 PM

    No arguments here. The scene with Ralph Bellamy and Don Ameche teaching Billy Ray Valentine about commodities was the best….
    “Pork bellies used to make bacon. Which you might put on a bacon, lettuce and tomato sandwich.”
    …Eddie Murphy looks at the camera.
    Classic.
    -BeckyBootFan

  27. Posted by guest | December 31, 2008 at 12:34 PM

    The drunk guy in the gorilla suit was the best

  28. Posted by guest | December 31, 2008 at 12:40 PM

    #25, there’s a couple of decent bars on Greenwich Ave, one near the bottom, near the station, and the Gingerman, higher up the Ave.

  29. Posted by guest | December 31, 2008 at 12:59 PM

    Jesus, @8, of course the guy is going to say that — he’s the last man standing. Paulson is trying to build his business. The due diligence crowd doesn’t understand that what he’s saying is kind of nuts in that any non-equities fund can’t just liquidate into this market, but this will empower them to demand their $$ back and perhaps give it to Paulson w/better liquidity terms.
    @15, there’s some of that too, yea.

  30. Posted by guest | December 31, 2008 at 1:00 PM

    Saw this on drudge and do not know how to post a new topic. Year end story, This guy must have been a disgruntled Merrill Lynch FICC employee who just found out about his bonus as his plane from London got diverted to Houston.
    http://www.wowt.com/home/headlines/36909299.html
    Feds Investigate Airplane Brawl; Man covered in feces…

  31. Posted by guest | December 31, 2008 at 1:00 PM

    There’s a shitty bar on 3rd floor, 2 Greenwich Plaza – across the train tracks. It used to be a hedgefund that also moved up from Manhattan. Too many A$$ clowns working the counter.

  32. Posted by guest | December 31, 2008 at 1:01 PM

    Saw this on drudge and do not know how to post a new topic. Year end story, This guy must have been a disgruntled Merrill Lynch FICC employee who just found out about his bonus as his plane from London got diverted to Houston.
    http://www.wowt.com/home/headlines/36909299.html
    Feds Investigate Airplane Brawl; Man covered in feces…

  33. Posted by guest | December 31, 2008 at 1:04 PM

    @24 @26 Margin call Gentlemen

  34. Posted by Suits | December 31, 2008 at 1:04 PM

    Ax falling today at BofA research. Happy New Year!

  35. Posted by guest | December 31, 2008 at 1:08 PM

    any troubles locating GM today?

  36. Posted by guest | December 31, 2008 at 1:08 PM

    @ Trading Places posters
    “…man, I ain’t seen nuthin since I stepped on that landmine back in Vietcong in ’72.”
    -BeckyBootFan

  37. Posted by guest | December 31, 2008 at 1:28 PM

    “Penelope, I am NOT an angel dust dealer!”

  38. Posted by guest | December 31, 2008 at 1:34 PM

    “I’ll rip out your eyes and piss on your brain.”
    -BBF

  39. Posted by guest | January 2, 2009 at 11:31 AM

    Michael Bienes is a cheap hustler and immoral swindler who has been funneling money to Madoff for years. There is evidence to suggest his relationship with Madoff never ceased and has just been moved overseas to London
    http://mehtafiscal.wordpress

  40. Posted by guest | January 2, 2009 at 11:31 AM

    Michael Bienes is a cheap hustler and immoral swindler who has been funneling money to Madoff for years. There is evidence to suggest his relationship with Madoff never ceased and has just been moved overseas to London
    http://mehtafiscal.wordpress

  41. Posted by guest | January 2, 2009 at 11:31 AM

    Michael Bienes is a cheap hustler and immoral swindler who has been funneling money to Madoff for years. There is evidence to suggest his relationship with Madoff never ceased and has just been moved overseas to London
    http://mehtafiscal.wordpress