For whatever reason the Russians are sort of the of the suburban teenager of the ultra-rich age. They go absolutely crazy at the mall when they have a few bucks in their pocket, and melt down into a pile of sobbing Jell-o when the funds dry up. Russia is very much a bellwether of the luxury market with 18 month latency in this way. Their spending excess on last year’s trend gives firms like Moët Hennessy – Louis Vuitton a perfect opportunity to dump two-season ago hot items that have backed up inventory and charge premium pricing to do so. The risk, of course, is getting stuck when the oligarchs start sucking wind. That would be circa now.
Moscow had 74 billionaires a year ago, more than any other city in the world. Now it has 27, according to Forbes magazine. The 25 richest Russians lost a combined $230 billion during six months last year as the value of their companies plunged along with commodity prices, according to Bloomberg calculations.
As if this were not enough, the degree to which the Muscovite oligarch depends on the acquiescence of the Kremlin in all of his affairs makes the cross attention of Putin an experience that makes being a bailout spending, private jet flying Big Auto executive look tame. After all, Obama, for all his bluster, was never a member of the KGB. (We’re pretty sure on this one).
Sounds like it might be time for Western consultants to hire a pair of AK toting “guides” and head over to draw some consulting fees again. Who’s in?
Party Ends for Russian Rich After $230 Billion Losses [Bloomberg]
Bank of America Corp., the largest U.S. bank, will need to raise $36.6 billion in equity to bring its capital ratios in line with other big U.S. lenders, Oppenheimer & Co. said in a report today.
Given reluctance of investors to buy common shares of lenders, Bank of America is more likely to raise capital by converting preferred stock to common shares or issuing 5.2 billion shares through the Treasury Department’s Capital Assistance Plan, Chris Kotowski, an analyst at Oppenheimer, said in the report. Under the Treasury program, Bank of America may issue shares for $6.24 each, the report said.
Earlier: Meredith Whitney Wants You To Leave Ken Lewis Alone!
Bank of America Needs $36.6 Billion in Capital, Oppenheimer Says [Bloomberg]
Mad Money is “celebrating” its 1000th episode tonight at 6PM (“35,892 sound effects, 16,114 miles on the road, 672 CEO interviews, 987 lightening rounds, more than 1,500 booyahs, 1 rant heard round the world AND….1,000 EPISODES” the press release reads, though we’re pretty sure they’re missing a few things from that list you should feel free to fill in now). How is frequent CNBC guest Nouriel Roubini paying honor to the big boy on his special day?
“Cramer is a buffoon,” said Roubini at a Toronto event titled “A Night with the Bears.” “He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame…He’s not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong.”
Of course, the horse’s ass comments may have been provoked by JC saying recently that Roubs is “intoxicated” with his own “prescience and vision,” but who’s counting?
We don’t much care who started it, we just want to know what it’s gonna take to these two fame whores to realize they’re not so different, bury the hatch and throw back a few in the company of some plaster vaginas.
A judge awarded the Brother of Bernie and Madoff Securities chief compliance officer $10,000 a month last week so he could afford to buy a MetroCard, while the rest of his assets remain on ice. So he’s already been getting a taste of how bad life can get and now, wildly, it looks like things are gonna get worse, because Pedro had to share DNA with the greatest Ponzier of our time. The Post reports that P. Madoff “faces a potential clawback of any cash” he received from his bro, namely certain suspect “transfers” being investigated circa now.
Earlier: Peter Madoff Will Be Able To Afford A MetroCard!
So the guy bought a bucket of shit, so what. Are we really going to hold that against him? I say no. Everyone’s allowed one minor little slip-up. One, everyone gets one, and this is his. To that end, I’d like you all to note that the same rule applies to my friend Vikram at Citi, although I do hold him to slightly more rigorous terms, and that I’ll be including this morning’s failure to wash his hands after taking 30 in the corporate WC in my next report as reason no. 398,153 to can this guy’s ass.
Bank of America Corp., recipient of $163 billion in U.S. rescue funds and loan guarantees, should retain Chief Executive Officer Ken Lewis even after his “mistake” in acquiring Merrill Lynch & Co., analyst Meredith Whitney said.
Lewis “has done a great job” except for the Merrill Lynch deal, said Whitney, speaking to reporters today before appearing at a panel discussion in Toronto sponsored by Sprott Asset Management Inc. She called the Merrill Lynch purchase Lewis’s “one major mistake acquisition.”
Bank of America Should Keep Lewis After ‘Mistake,’ Whitney Says [Bloomberg]
Government To Include Insurers In Bailout (WSJ)
You have to wonder how many of these companies will actually be willing to participate at this point, and what the incentive for the government to suddenly open its doors to the insurance companies is. Aside from those two points, this makes sense.
“The life-insurance industry is an important piece of the U.S. financial system. Millions of Americans have entrusted their families’ financial safety to these companies, so keeping them on solid footing is crucial to maintaining confidence. If massive numbers of customers sought to redeem their policies, it could cause a cash crunch for some companies. And because insurers invest the premiums they receive from customers into bonds, real estate and other investments, they are major holders of securities. If they needed to sell off holdings to raise cash, it could cause markets to tumble.”
Taiwanese Based Firm Sues Apple (NYT)
They’re claiming apple infringed on two patents across several lines (including mac books and iPods) and they’re seeking damages, though no one knows how much yet.
“Elan said it won a preliminary court injunction against U.S.-based rival Synaptics in a dispute over one of the patents mentioned in the Apple lawsuit, after a then-subsidiary unit filed suit in 2006. Synaptics counter-sued.”
Attorney Possibly Next BAC CEO (WSJ)
“Mr. Lewis on Dec. 9 told Bank of America’s 16 board members, including several former Fleet directors who are close to Mr. Moynihan, that the executive might leave the company. Instead, the next day he was promoted to general counsel, a job he held for 43 days before taking over Merrill.”
Taleb Speaks Out: 10 Rules of Life (FT)
Discuss.
Down To $135B (Reuters)
So, given the Bailout bucks are down to $135B, there’s a solid chance that the President is going to have to go back to Congress to seek further funds, which I don’t see as “likely to happen” (I think the pink shirted ladies have thoroughly infiltrated Congress, and have every expectation that Maxine Waters will start showing up at her own hearings wearing the shirts and demanding the robbers return the money). Any thoughts? If the stress tests go south can the President pry enough capital from the hands of the Hill to keep the banks propped up?
Congressional Panel Suggests Firing Bank Heads, Liquidating Banks (Bloomberg)
I’m totally with them on this. Banks are so 1980′s, what we need here and now is a way to distribute money such that it does the most good for the greatest number of people. That’s what makes sense.
“A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.
The Congressional Oversight Panel, in a report released yesterday, also said the Treasury may be relying on too rosy an economic scenario to guide its $700 billion bailout, and declared that the success of the program after six months is “mixed.” Three of the group’s members disagreed with at least some of the findings.”
$$$ A displaced banker guides tourists through the carnage [The Big Money]
$$$ PIMCO Manager On Becoming Fourth Branch Of Government: Who, Us? [TPM]
$$$ AIG’s Bank Payments Probed By TARP Inspector General [Bloomberg]
$$$ Taking stock of AIG ads past. [Playboy]
$$$ A Night with the Bears [CNW Group]
The news that art prices have plunged 35 percent probably would’ve bothered a certain collector of pictures up north, if he had plans to sell, but like we’ve been told over and over and over again, these girls are on display for you to look at but not touch, fondle or buy. So all this really means is that our favorite Southern CT pimp is about to go on a tear, adding to his stable of biatches on tha cheap.
The Mei Moses index, set for release on Tuesday, shows art prices fell 35 per cent in the first quarter, having held up during earlier months of the financial crisis.
The overall index fell 4.8 per cent last year.
The decline accelerated as people who lost money in the financial crisis, including victims of the Madoff fraud, put up works for sale, often at a loss, several art world insiders said.
The selling has particularly hit works by postwar and contemporary artists, they said. The Wall Street elite had favoured such works during a seven-year boom in art prices. The best performing postwar artist, Andy Warhol, saw a decline in the value of his work. A Warhol portrait of Mick Jagger sold for $1.1m in the quarter. The seller bought it in 2006 for $1.5m.
Art prices fall 35% as collectors cash in [FT]
Modest declines. But, we’re in it for the long-term. Right?
The Obama Portfolio (Since Inception): +15.50%
Earlier: The Obama Portfolio
Listen up, ladies: there’s been a lot of whining lately about how much and how hard life is sucking right now, which we’ve played a part in indulging. Moving forward I want everyone to ZIP THE LIP because there’s someone out there who’s got it so much worse. Refer your asses to this.
Here’s some footage from Blankfein’s meeting with the Pink ladies earlier. Unfortunately the only part you can hear is him asking one of them, “How are you,” with the audio track cutting out just prior the sweet nothings that got her to skedaddle.
Update: In this version from The Daily Beast, LB essentially says “Hi, how are ya? Good? Okay, how ’bout this? They’ve all seen it, I’ll address it later, you move your asses now? Work for you?”
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